Where does literotica come from?
Literotica.com started in 1998 and continues to be a popular free written-porn site to this day. The term literotica is a portmanteau of literature and erotica.
The earliest Urban Dictionary result for literotica is from 2004. Later Urban Dictionary submissions include multi-paragraph examples of this genre.
There's debate over whether literotica is truly genericized. Some define literotica as the website itself, and make a distinction between the content (calling it simply "erotica") and the site. But others use it much more generally, and there are even other erotica-based sites that refer to their content as literotica. Certainly, the Tumblr and Twitter searches for the genericized sense of the term are prolific.
Straddling this issue is the Reddit community /r/literotica which states both "THIS SUBREDDIT HAS NO OFFICIAL CONNECTION TO LITEROTICA.COM" and "Only post links to literotica.com and to other sites featuring written erotica."
Who uses literotica?
It's important to note that this word is highly specific to the community of those who write short stories with original characters. There are other distinct words for those who write erotic stories involving fictional characters, and while the two communities can overlap, they have their own specific terminology.
There's an interesting question among users of the term whether or not literotica is "classier" than porn. One Urban Dictionary entry states, "Literotica is more that just written porn, it has more appeal that [sic] actual porn because instead of bad actors there are real characters with real stories." Some, however, claim that any type of erotic fiction (including "just written porn") is literotica.
“Literotica saved my lonely soul and I will not be ashamed.”
Reagan James thereaganjames Twitter (March 12, 2017)
“had to step away frm reading a emotionally and pyschologically draining piece of literotica”
untitled. XULU1017 Twitter (March 11, 2017)
“With so much attention given to porn in its video form, sometimes literotica gets short shrift. But, reading sex can be just as much of a turn-on as watching it, and for some, even more of a turn-on: When written well, stories have a way of developing characters and building up tension that ﬁlmed porn can lack.”
Hayley MacMillen, “Porn On The Page: 6 Erotic Fiction Websites,” Refinery 29 (May 24, 2014)