Generally I agree with the ickiness of crowdsourcing creative. A few things are different in this case that makes me feel okay with this (and being the architect of it, frankly):

1. This is far from 'core content.' I'm not even sure where or how the prose will appear in game. I'll be pushing for some sort of space for it, since I want to highlight the writing/concepts/authors that win.
2. Given the above, the proportionality of effort here is somewhat reflected in the prize value. It's absolutely not fair market value for penning prose commercially, but the team members aren't earning anywhere near FMV for what they've built either. It's an indie project on a indie chain, so we're all taking a hit compared to FMV. By effort proportionality what I mean is this—this is some of the work I've done for the project. I'm paid as a % of sales, which currently is waaaaayyy under what I could make doing that sort of work commercially. The development work is even more skewed. So asking for a short story for some supplementary lore for some low $USD value prizes seems icky on the surface, but hopefully looks a little different when you consider that we're all kinda hobbyist entrepreneurs here.
3. I can't ignore that I have an inherent bias since it was all my idea lol

Those arguments aside, your point is still worth considering. I've not fully done the math on the proportionality and since the team has "equity" one might argue apples and oranges (but are the prizes quasi-equity since they're assets and not cash? The plot thickens).

The easiest fix may be to consider healthier prizes. $100 worth per still ain't market value but it'd be substantial compared to most community-run prizes on Hive. BUT: our marketing budget is pretty teeny, and I'd argue that it might better spent on attracting new users to Hive via the game vs. ensuring very nice prizes for things like this.

Also wanna surface this to the other team members for candid discussion! ~ @asgarth @jarvie @yozen