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Short for fan fiction - when you create a story with characters already established, usually in television or film.

Here's more info - http://www.absolutewrite.com/forums/showthread.php?t=29633&highlight=fanfic

No, fanfic is not published. It can't be, since it's a violation of copyright and trademark. Some people use fanfic to practice their writing skills and some people just enjoy writing it for fun and have no aspirations to a real writing career. I've tried reading fanfic a few times ... I found it a painful experience and not worth my time.

Scribhneoir said:

I've tried reading fanfic a few times ... I found it a painful experience and not worth my time.

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Like any other kind of writing, quality varies widely. There's fanfic written by authors skilled enough to go pro or who are pros writing under pseudonyms, and there's drek, and there's a lot in between.

It's not always just established characters. Sometimes, people will take an established world and focus on brand-new characters.

Quality is a problem, though. Just like any other self-published internet fic, it's hard to find the diamonds in the rough. Those diamonds tend to come from people who also write a lot of original fiction, and not so much from people who just really love the show/book/movie and don't write anything else.