Shit, this took me on a long stream of consciousness along with my morning coffee. Didn't intend to write something so lengthy. I don't expect anyone to read this, but I also don't want to delete it, so I'm just putting it out there.
The same model that was used for this little writing experiment can also make quite impressive code already. I'm an engineering student and got access to the OpenAI beta for a while, and I played around with this a little.
For example, if you tell it to "make code for a user account registration form for a website" it can do it. I even tried to ask it to write a computer virus and surely enough, it generated code for the most basic virus.
Is this scary? I don't think so. When it comes to making code that does stuff that's already been done elsewhere, programmers already copy-paste. Getting an AI to copy-paste for you is just the same thing with one less step needed. The real challenge of being a programmer is making these unoriginal pieces of code fit together in a bigger context that's always unique for whatever software you're working on.
I think I can say with confidence that the type of AI GPT-3 is will never be able to perform this sort of work. It only looks scary when you do examples like this, but at the end of the day, all it does is predict (very well) what string of letters should come after the other in a given context. It can't do any logic or problem-solving, there's no reason why it should.
The future is all copy copy copy, and personally, I don't sense these stories are in any way competing with my own, because mine change every story.
Human-made writing will likely be the highest quality for much, much longer. In order for an AI to make its own text that can move us the same way a good human writer can, it'll probably need to have a real understanding of the human condition and experience. Even if we get to a point where an AI "technically" writes better than humans, we will always relate to other humans more.
Like, if we started communicating with a race of advanced aliens, and they shared all their art with us, I'm sure we would appreciate it and even recognize that they may be technically better than us at creating things, but the brilliant alien art still wouldn't speak to us personally as much as human art - even with all its imperfections compared to the alien art.
BUT you have to wonder how much originality and appeal to the human condition actually matters in erotic shorts specifically. Even if we're able to produce higher quality shorts, they'll easily be drowned out by the writers who'll be able to produce an insane quantity of "kind of good" shorts. In the week you spend working on your next short another writer could maybe curate out 20 shorts from AI-generated stories. Erotica that's only "kind of good" does the job for most people, it really doesn't need to be original and brilliant.
I can speak from personal experience that AI-generated smut has done the job for me. There's a large community of people using games like AI Dungeon to live out their sexual fantasies in game form. The game works like a personal "game master" that controls the world around you and allows you to do any action you want in it. And, if you go into options and enable NSFW content, it can allow you to go on very pornographic adventures.
You can tell the AI any scenario to play, be it fantasy, modern time, sci-fi, horror, etc. My favorite scenario to play out with it personally was a "Succubus encounter" where I would suddenly wake up in my bed with a succubus in my room.
The same AI model that was used in OP's experiment is used in that game - GPT-3 (with some tweaks, as I understand). Granted, you have to "help" the AI quite a bit sometimes because sometimes it goes off track, or writes something inconsistent (like suddenly replacing a character with someone else), and that frustration is what eventually made me lose interest in the game once the novelty of it wore off.
The reason it's inconsistent is that it has a pretty bad memory, GPT-3 can't keep track of a big context, or it gets too confusing for it to "understand" (not that it "understands" anything, it's just an advanced text-prediction machine). AI-generated writing would therefore be best done in short chunks currently that a writer would have to curate and piece together manually.