Sometimes I read a great fan fiction and think to myself, "Gee, I wish there was a Paypal button here somewhere, because I feel the overwhelming urge to ram wads of money down this writer’s throat." This is basically impossible, of course; fanfic is considered an illegal derivative work under copyright law, and even the creators that allow it have a no-tolerance attitude towards fans who try to collect money for their work. If fans were allowed to earn money, conventional wisdom claims, it would siphon money away from the original creator and they would lose business. But what if conventional wisdom was completely and totally wrong?

For-profit fan creativity is a huge opportunity, but creators are letting it go to waste because they’re so anxious to protect their copyrights. It may seem counterintuitive, but letting other people make money from your intellectual property can add far more value than it costs—in some cases millions of dollars. How does this work?

It has been estimated that as of 2012, E. L. James was making $1.35 million a week on Fifty Shades of Grey. Now, it is widely known that Fifty Shades of Grey was originally a Twilight fanfic titled Master of the Universe. E. L. James changed the characters’ names from Edward and Bella to Christian and Anna and republished her fanfic as a "new" book. Now she’s a multimillionaire.

So let me ask you a question: how much money has Stephenie Meyer, author of the Twilight series, lost because she sent this brilliant piece of Twilight fanfiction out of her franchise? How many 50 Shades fans would have gone on to become Twilight fans if Edward and Bella had not been renamed? How many Twilight books would Meyer have sold in the resulting publicity frenzy if people had seen 50 Shades as an extension of her original stories? Meyer must have lost millions of dollars and sent away untold potential fans.

Now imagine what would have happened if she had shared her intellectual property with her fans, allowing them to earn money from their work instead of relegating them to non-profit status. E. L. James would not have been forced to "barcode strip" Master of the Universe in order to make a profit, and Meyer could have kept all that money and attention in the Twilight family.

Now, I admire Meyer’s attitude towards fanfiction—she’s one of the few authors who includes a list of Twilight fanfic sites on her homepage—but I think it’s time for progressive authors to start questioning whether the taboo against for-profit fan activity actually serves a business purpose, or if it’s just a reflexive attitude left over from an intolerant past.

Many authors believe that they must prevent fans from "competing" with them, or else readers will buy the fan’s work instead of theirs, resulting in lost sales. This idea sounds good on paper, but it looks strange when you actually try to give an example. Can you imagine a Harry Potter fan saying, "Well, I was going to spend this $10 on Rowling’s new book, but I spent that money on a fanfic instead. I guess now I won’t buy the next Harry Potter book after all."

People like that just don’t exist in real life. They’re only a bogeyman haunting the insecure subconscious of the writing world. Even in the rare scenario where a fan like E. L. James writes a fanfic that becomes more popular than the original, it’s highly unlikely that the original author will be harmed. What is more likely to happen is that all the fans who were attracted by the fanfic’s success will now become interested in the original author’s work and go out and buy a copy of it for themselves. That’s hardly a negative consequence!

Let me give you a recent example of how this worked for me. I had a written a fanfic (nothing particularly special) that a few people clicked on and enjoyed. The story didn’t attract much attention, and the internet had pretty much forgotten about it until a fan of my fanfiction (whee, recursion!) decided to pay a particularly talented fan artist to illustrate a scene from my story. So now someone is getting paid, and that someone is not me, the writer. Was this bad for my "business"? Nope. Immediately afterwards, the story got a big boost in traffic; in fact, all my stories did. Subsequently, a user contacted me to request permission to translate my stories into Russian.

Although I did not receive any compensation from the fan artist, nevertheless their work indirectly benefited me by expanding my fanbase and drawing attention to my work. If I had tightly controlled the for-profit use of my story, my work probably would have remained lost amidst a sea of hundreds of other fanfics. It’s worth noting that the fan art is probably more popular than my original story—but who cares? The more publicity that picture gets, the more fans my story gets. It’s a symbiotic relationship, not a competitive one.

But there are other reasons why authors break into a cold sweat when they imagine an anonymous fan’s literary creations popping up alongside their own stories on Amazon. Writers worry that new readers won’t be able to tell the fanfics apart from the original. The fear is that a new reader will do a search for "The Hunger Games" and discover a one star fanfic named "This Is My Frist Hunger Games FanFic About Katniss Please Read!!!!" The reader will then mistake the fanfic for the real Hunger Games, which has 4.6 stars and 21,746 reviews, and buy the fanfic instead. Mortified by what they find, they will then go and tell everyone how awful the Hunger Games is.

No, it doesn’t make much sense. Nevertheless, there is a genuine concern that this could happen. Fortunately, most fans are scrupulous about giving attribution, and search engines are very good at pointing out the most popular items and sending unpopular work into oblivion. But for the extra-cautious, there’s a simple solution to prevent reader confusion: just require fans to label their work as a fan creation by placing the word "[Fanfic]" "[Fan Art]" etc. in brackets after the title. This would make it impossible to mistake a fan’s work for the original. Simple, no?

But there is another argument often made against for-profit fan creativity. Meyer was at one point threatened with a lawsuit by a fan who claimed that she had stolen the fan’s idea in one of her books. The lawsuit didn’t go anywhere, but you see the problem: if a creator and a fan creator both happen to come up with the same idea, the resemblance between the two creatives’ work could give the fan an opening to sue the creator. For this reason, even authors who approve of fanfic typically refuse to read it for fear they might be held liable.

Such incidents do not happen frequently, but the danger they represent has led many creators to categorize fanfiction as a threat instead of an opportunity. Fortunately, an easy fix for this problem already exists. The solution is to use a ShareAlike license in which creator and fans formally agree to share ideas with each other. This explicitly ensures that creators and fans do not face legal repercussions even if resemblances occur. Such terms are already incorporated into tried-and-true open licenses like Creative Commons ShareAlike. Why worry about a problem that has been solved for years?

Of course, there are many non-monetary reasons why a creator might not want fan creators’ work to become as popular as their own or to appear in a search engine next to theirs. I can’t address these concerns; all I want to point out is that for creators interested in earning as much money as possible, fan creativity is financially beneficial.

In fact, let’s go a step farther. The 50 Shades story is only the tip of the iceberg when it comes to making profits from fan work. Let’s talk for a bit about the untapped potential of crowdsourced creativity. We all know why Wikipedia beat out Encyclopedia Britannica: Wikipedia has (approximately) umpteen zillion contributors who each contribute a single thought to the sum of human knowledge, whereas Encyclopedia Britannica has a relatively small team of paid staff who are experts in their fields. We can learn something very interesting from how Wikipedia completely slam-dunked the traditional encyclopedia biz.

When looking at franchises like Lord of the Rings, there is a clear division of labor. On one hand you have the "official" creators, namely Tolkien, his heirs, the movie studios, and the marketers and designers behind the various toy lines, games etc—a few thousand paid professionals, all told. And on the other hand you have hundreds of thousands of unpaid fans who each contribute a single piece of creativity to the pool: a work of fanfiction, a set of comic strips, a costume, a graphic novel, a short film, a kitbashed action figure. Taken as a whole, the fans have done a Wikipedia on the official creators, haven’t they? They’ve created thousands of spin off novels, a gigantic toy line, and enough artwork to fill a thousand coffee table books. Not all of it is high quality, but even if we assume that 90% is crap and 10% is quality, that remaining 10% is massive enough to totally whomp the efforts of the franchise owners by any measurement.

All this unmonetized fan creativity is money lost for Tolkien’s franchise. Even if they tripled their team of paid professional creators today, they could never hope to satisfy the whole demands of the market, because somewhere out there is a guy with $20 in his pocket who likes Lord of the Rings but is completely obsessed with dinosaurs. Unfortunately for him, LOTR doesn’t have dinosaurs of any kind, so instead our potential customer will spend his money on Jurassic Park merchandise.

Under normal conditions, the owners of the Tolkien franchise would not be able to take advantage of such a tiny $20 niche market; they simply do not have the means to meet the unique needs of all the world’s individuals. But there is another way by which this vast untapped market could be broken into. You see, somewhere out there is a fanfic writer who is working on a Lord of the Rings rewrite with the elves as raptors and Gandalf as a stegosaurus. (I have seen much, much stranger things than this become wildly popular.) This fan—one of hundreds of thousands of unpaid volunteers—has the ability to harvest that $20 in our prospective buyer’s pocket. But none of that money would to go the owners of Tolkien’s franchise. Or would it?

Imagine what would happen if the fanfic writer was allowed to accept the $20. The writer would have a strong incentive to write another dinosaur LOTR fanfic, wouldn’t they? If the money kept flowing and the market kept responding, eventually other fan creators would join in with fan art, a short Flash cartoon, some comics, translations into various languages, a line of 3D printed toys, etc. Meanwhile, the dinosaur fan is now being slowly converted from a guy who was mildly interested in LOTR into a True Fan of LOTR who will now buy "official" merchandise from the franchise owners. But could this ever happen in real life?

It happened to me recently. As a kid, I used to be a big fan of Garfield; as an adult, I had pretty much forgotten about it. But that was before I discovered Mezzacotta’s "Square of Root of Garfield Minus Garfield," a hilarious reinterpretation of Garfield which combines playful mathematics, Garfield scholarship, and ingenious twists to put a whole new spin on strips I had read dozens of times as a kid. After reading through all the Mezzacotta strips, I needed MOAR, so I headed over to Jim Davis’ website to read through his archive of Garfield comic strips. Lately I’ve also been hunting through the local thrift store for his books. I’m still way more fond of Mezzacotta’s interpretation than Jim Davis’ original comics, but the odds of Davis getting money from me have increased dramatically with my renewed interest in the series.

So you see the progression: Fans tap market unsatisfied by original creator. New fans are converted and become curious about the original works. New fans go on to spend money on products offered by the original creator.

Once fan creators begin making money, it starts a virtuous cycle of profits and reinvestment that will allow the creation of ever more complex and expensive productions. Right now, fans are limited in their ability to create movies, games, merchandise lines and TV series because such things are out of their budget range. (It’s not that they haven’t tried; see, for example, this crowdfunding drive where a fan tried to raise $400,000 for a Final Fantasy web series, only to be shut down.) Yet if this stifled creativity and entrepreneurship was allowed to run its course, the results would be impressive.

How many writers dream of seeing their work translated into 24 languages and made into a TV series, graphic novel, toy line, video game and movie? Fans will do much of that for free out of love. But add in money as an incentive, and they’ll take on increasingly expensive, complex and time-consuming projects like the aforementioned Final Fantasy series.

Yet most creators balk at the idea of giving fans the freedom to raise $400k for a project, and here again we run into another deep-seated fear: the idea that someone else will use the creator’s idea to make a zillion dollars, and not give the creator any of it.

Actually, it’s hard for me to imagine how a creator could NOT make money in such a scenario, provided that he was smart enough to use a ShareAlike license. Suppose, for example, that Tolkien was still alive today, and a group of fans raised $10,000,000 on Kickstarter to create a smash hit LOTR web series—all without paying him a dime in royalties. Apparently the expected response is for poor Tolkien to bemoan his predicament on a street corner as he rattles coins in a tin cup. But what about the massive publicity boost? What about the fact that new fans drawn in by the series will be reading Tolkien’s books for the first time in their lives? What about the fact that Tolkien could write a new story set within the expanded universe of the series and get a guaranteed audience? What about the fact that under a ShareAlike license, Tolkien could record his own version of the series with author commentary, then sell it himself as a special edition? Even in this, the most-dreaded of all scenarios, there are tons of opportunities to make money.

But let’s make it easier, shall we? All Tolkien needs to do is change his license terms to read, "You can make as much profit off your fan work as you want, but if you make more than $100,000 a year, then you have to pay me a 5% royalty." So now Tolkien can still make money off the series in the traditional way, and ambitious fan creators can still get funding and start working on that new MMO or animated series. Meanwhile, all the smaller fan creators are not faced with burdensome profit-reporting requirements that would require them to send over $0.25 whenever someone dropped a $5 tip in the bucket.

A license with just four simple rules can overcome almost all of the problems with allowing fans to monetize their creativity:

1. ShareAlike—every idea gets shared with the original creator and all the other fans who want to use that idea. This prevents lawsuits and keeps good ideas from being "claimed."

2. Require fan creators to give credit to the original creator. This drives new fans to the original source so that the creator can share in her fans’ prosperity.

3. Fans should mark their work as being fan-produced by putting [Fanfic] or [Fan Art] after the title or thereabouts. This prevents reader confusion and protects the creator’s reputation.

4. Fans who make more than $100k a year on their activities must pay a 5% cut of the profits to the original creator. This gives creators a share of the wealth if a fan strikes gold, but does not burden casual fan creators with reporting requirements.

It’s time for creators to let go of their old fears and begin to reap the rewards of the crowd. Indie creators can benefit from the added attention their fans’ creativity draws to their work, while bestselling creators can take advantage of hits like 50 Shades to expand the borders of their franchise into new markets. Give it a try: turn your fans into business partners, and see what they can do for you.

Tell people that fan fiction is an important form of political speech that deserves protection, and they’ll roll their eyes. The stereotypical fanfic writer is a teenage girl who writes misspelled stories about vampire love—is that kind of work really worth anything? Maybe there used to be folks like Shakespeare, Dante and Virgil who wrote stories about characters someone else invented, and yes, those stories changed the world, but let’s face it: Vampire love. There’s just no living that down.

Which makes it all the more mind-bending to learn that a man we respect, James Madison, Father of the Constitution and fourth President of the United States, wrote a story about a character he didn’t create. Yes, the same man who wrote the Bill of Rights also wrote a fanfic. Vampires.

John Bull, the character Madison appropriated for his story, was created in 1712 by John Arbuthnot. Though forgotten today, Arbuthnot’s satirical allegory about the War of the Spanish Succession, The Law is a Bottomless Pit, was very popular in its time. John Bull represented England, while other characters represented the rest of the nations involved in the war.

There was no fanfiction.net in Arbuthnot’s time, but that didn’t stop his readers from spinning off their own stories and comics which also used John Bull as a characterization of England. Over the course of a century, John Bull transcended his origins and became Britain’s version of Uncle Sam. To the British he was a hero; to the American colonists, a villain.

Enter James Madison. The retired president was concerned over the growing rift between the North and the South. To give voice to his opinions on how the matter could be resolved peacefully, he wrote a short allegorical story, Jonathan Bull and Mary Bull, wherein a character named "Old Bull" represents England, and his descendants "Jonathan Bull" and "Mary Bull" represent the North and South respectively.

From a modern perspective the story is nothing much to read, but it does raise a rather intriguing question. Why fanfic? What made Madison decide to use existing characters to make his point rather than inventing his own characters like John Arbuthnot did for his own political allegory? And isn’t using other people’s characters without permission copyright infringement?

The easiest way to tackle these questions is to tell you an allegorical story. There once was a comic artist, "Jim M.," who wanted to comment upon the important issue of CIA torture. To make his point, he drew a three panel comic strip. In the first panel, Captain America is taking down a fanatical Nazi commander who tortured prisoners of war for the good of the Fatherland. "You will be tried for your crimes," he promises. In the second panel, Jim M. draws Captain America standing next to President Obama, who is casually observing that although the CIA did "torture some folks," the lapse can be excused because the torturers were patriots who loved their country. In the third panel we see Captain America’s shadowed face as he walks away from a burning American flag.

Suppose Jim M. had created a new character, "Bob the freedom-loving American G.I." to use in place of the copyright and trademark-protected Captain America? It wouldn’t have had half the impact, would it? Captain America’s strong connection to American patiotrism and historic stand against the oppressive Nazi regime makes him an ideal character for Jim M.’s purposes. As for Bob the American G.I., the audience knows nothing about him. Even if Jim M. did try to provide Bob with a heroic backstory, readers would have to wade through 200 pages of unrelated material before they even got to the part about the CIA torture. Without the use of Captain America, Jim M. wouldn’t be able to get his point across.

For Jim M., effective political speech requires the use of a popular icon, not an unknown character. Unfortunately, Jim M. has now opened himself up to a potential copyright lawsuit. If he chooses to defend his fair use rights, it will cost thousands of dollars in legal fees. If he loses, the damages could be even more grave.

James Madison didn’t have to worry about the legality of his political speech because a) John Arbuthnot was Scottish and the U.S. didn’t recognize international copyright laws at the time; b) John Bull had already entered the public domain; c) the creation of derivative works (such as fanfiction) had not yet been criminalized. It’s that last point that concerns Jim M., because it means that he can no longer be sure that the law will protect his freedom of speech. It may, or it may not; either way, it will cost him thousands of dollars in court to find out. Compare that to the situation in Madison’s day: If Madison had wanted to write an allegory where Captain America tries to make peace between the North and South, he could have done so without any fear of repercussions. Before derivative works became illegal, creators had the freedom to make use of the most appropriate character for their commentary without facing any consequences.

So what about Janice, who writes a five page long fanfic in which Edward and Bella visit the 9/11 site and wonder about the direction America is heading between passionate vampire kisses? Being born in 1901, Edward lived through WWII, and it turns out that he has some surprisingly insightful thoughts about the state of America today. The story concludes with Edward, who is telepathic, overhearing the hateful thoughts of his fellow visitors toward a man in a turban standing nearby. But Edward reads the man’s thoughts, and learns that he is praying for the families of the victims.

Could Janice provide the same insightful opinions without using copyright-and trademark-protected Edward as her mouthpiece? Yes, but not as easily. It would be a tough challenge to develop Edward and Bella as rounded characters, then show Edward’s unique powers and lifespan, all without shifting the emphasis away from the issues she wants to explore. Instead of writing a story about the impact of 9/11, Janice would end up writing a story about why her character has supernatural abilities.

Someone skeptical is saying, "Yeah, but do fanfic writers actually write stories like that?" Yes, absolutely! Fan creators make use of their favorite characters to propound their opinions on issues from racial equality to stopping SOPA. In the introductions to such stories, you will often hear the writer explain, "I thought such-and-such a character would be perfect for dealing with issue X because…" These writers have an innate understanding that the use of popular icons allows for powerful forms of expression that would be difficult to achieve by other means. Yet these same writers would have a very hard time proving that their creations are fair use before a judge.

Not that it matters, because such cases almost never go to court. Fair use is too fickle to be relied upon as a defense, and the expense of proving a point is too costly for the average person to bear. What we are left with is a situation where rights holders can basically censor political speech at will. Just imagine if John Arbuthnot had been able to order Madison to take down his story because he disagreed with Madison’s political views. The President was deeply in debt at the end of his life, and like most of us, he could hardly afford an expensive loss in court.

Of course, some would argue that the ability to censor speech is a good thing. After all, suppose that an anti-Semitic fan wrote a story set in WWII where Edward joins the Hitler Youth? If it weren’t for the laws against derivative works, the argument goes, Stephenie Meyer wouldn’t have the right to take down the fan writer’s objectionable ideas.

But it would be a mistake to assume that such censorship powers will always be used for good. Take for example the popular book, "The Education of Little Tree," written by Asa Earl Carter, a now-deceased member of the Klu Klux Klan. Suppose that a fanfic writer decided to have Carter’s main character, Little Tree, befriend an African American boy as a way to express support for the idea that all men are brothers? The same power that gives Meyer the right to take down anti-Semitic speech also grants racists like Carter the ability to discriminate against the minorities they despise.

Most of us support freedom of speech, but for copyright holders, the right to censor views they disagree with has been all but enshrined as a legal right. What would happen, I wonder, if Jim M.’s Captain America cartoon went viral? Would his work be praised by Marvel, or would they send him a cease and desist letter? Would he crumple quietly, or fight it out in court for years?

"Yes," the critics say, "but we could avoid this whole problem if people just wouldn’t write fanfics in the first place. Do your social commentary without using other people’s IP!" You hear that, James Madison? You’ll have to find another way to stop the Civil War. We have lawyers and they don’t like how you’re expressing your "creativity."

Madison cautiously approved of copyright, but I doubt that he suspected it would be used to chill free speech like his story 200 years later. The President clearly knew that derivative works can provide a compelling way to make a point, and as the author of the First Amendment, I’d like to think that he believed that fanfiction should be a protected form of expression. It’s a shame that such a valuable means of public discourse has been almost criminalized today.