More commonly known as photocopy-lore, since we don't tend to use Xerox as a verb in the UK, this was the practice of passing around photocopied jokes and cartoons which were then further photocopied and passed on. As more and more copies were made the content faded and degraded, and was redrawn and retyped which introduced changes in much the same way as oral storytelling.
Although it was popular from the 1960s, when photocopiers became more common in offices, it has fallen out of favour in recent years due to the jokes now being passed on by email and social networking.