@long4pinkI have messed with this a few times:
https://perchance.org/ai-story-generator
I believe it uses some (old-ish) version of Llama. It can do explicit porn if you guide it in, but will unlikely go there itself. Very dumb, extremely flowery language, gets lost.
I gave it a general description and short intro, let it generation a "long" block of 6 - 8 paragraphs, deleted last two or there and gave it a new suggestion. In one occasion... A few hours later we had a very messy 50k words draft. It often lost track who said what, who's in what relationship with whom, and there was all of like 8 people involved. So I tried a one-person story, and that worked bit better, relatively speaking.
It all depends how you use it. The chat with the same engine (https://perchance.org/ai-character-chat (fork it or save often, the local storage gets dropped whenever the developer mess with it or whatever)) is quite fun, at least first few times around. Perhaps depends how you define your characters, and you do have to shamelessly steer it if you want the action to advance, anywhere.
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I'm "not an author" as no of my experiments have resulted in anything finished (as of yet at very last) or been read by anyone whatsoever, but how I see productive use of such technology...
Let's say I have a project where a younger bro living off-grid is ambushed by his sister literature teacher and her masterclass of love poetry, landing on his head for a (initially) two week getaway, with quickly goes... nudistic exhibitionism with the guy peeping, somewhat shyly at first, and then quite sexually, with him fucking one or more of the students...
So, obviously I would need examples of silly love poems, right? Newsflash, I don't speak English, like at all, like I don't get the sound of it in my head when I write. So I can't possibly do poetry. It doesn't matter, really, but I can't go all description only all the time right? So that's an obvious target for generative AI.
Another, bit more cheat-y, let's say I only really care about one or two of the girls in that group of eight or so. The background characters could be AI driven, and I could incur the chatbots of them for this and that,
how the ai see an "average" girl of said description to react to events or whatever, maybe even their backstory (although it's really bad on that and reluctant to share in my limited experiences). At worst, I could get their dialogue lines in supposedly a style I can't possibly emulate.
So far, that's not really "AI generated" as I see it, "AI assisted" maybe.
Now, generating chunks of action is where I would start to consider labeling it so, even more if I would let AI drive the plot development to significant extent, or rely on it for overwhelming majority of words and sentences laid out for the final product. Like what I described at the top here.