How does it work? From what I gather Amazon gets a license on a popular fiction property, and then fans get to legally make money with their fanfic of that property. Sounds like a good idea on paper, but I can see some possible problems.
So far, Amazon has announced licenses for Gossip Girl, by Cecily von Ziegesar; Pretty Little Liars, by Sara Shepard; and Vampire Diaries, by L. J. Smith. A lot depends on whether they can secure licenses for the really hot properties, and I’m thinking the major players in books and movies (the ones that generate the most fanfic now) might not be that eager to get on board.
Rules say “no pornography,” which from my limited knowledge of fanfic may also put a considerable damper on things.