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In a purely literary sense, fanfic doesn’t exist. There is only fiction. Fanfic is a legal category created by the modern system of trademarks and copyrights. Putting that label on a work of fiction says nothing about its quality, its creativity, or the intent of the writer who created it.

We have a system that counts some borrowings as legitimate, others as illegitimate.

There was once a conjurer who boasted that he had become god-like. One god happened to overhear, and challenged him to a contest. “Can you do this?” the god asked, scooping up a handful of dirt and making it into a bird. They watched the bird fly away. “Sure,” said the conjure-man, and reached down for a handful of raw material. “Hey,” said god. “Use your own dirt.”