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This discussion of fan art vs professional art makes me think of the Japanese manga (comic book) market.
They have an extensive gray market in fan-made manga called doujinshi, which are sold at huge comics festivals. Nearly all of which feature characters from mainstream manga and anime.
The copyright laws in Japan allow the companies who own the characters to overlook all this without losing the rights to their characters.
Manga artists often get their start in doujinshi clubs and then go pro. There are also pros who do doujinshi as side projects.
One difference is that Amazon is barring pornography from the get-go, whereas doujinshi are frequently pornographic. (I have never gotten a straight answer from anyone who's been to Japan on what percentage of doujinshi are pornos, the gist of it is "more than a little, but not all.")
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