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If the future of books looks like a horror story, electronic publishing may help provide a happy ending.

There is an internet meme called Rule 34 which states: ''If you can think of it, there is a fetish for it.'' Rule 35 follows: ''If no such porn exists, it will be made.''

The publishers of the electronic-book arm of Harlequin, that grand dame of the paperback romance, understand these immutable laws better than most. Carina Press sells e-book romance in 11 categories and 17 spin-off niches - including Amish, dragon, angel and demons, space opera, paranormal, fantasy and time travel - reaching to the edges of cyberspace to corral a readership of the most eclectic kind.

Kindling the future ...

Kindling the future.

The personal tastes of Carina's chief executive, Angela James, run to steampunk, cyberpunk and a discreet touch of BDSM (bondage, discipline, sadism, masochism) and she jokes online she's still looking for the author who will write her a space cowboy book in the vein of Joss Whedon's Firefly.

But love stories laced with buffed blokes and sexually game heroines are the genre's current hot ticket.

Fifty Shades of Grey is an erotic romance novel written by an obscure British author and mother of two, featuring college student Anastasia and her millionaire beau who hides a secret sexual predilection for whips and floggers.

This month the trilogy made the jump from underground fan-based fiction to mass market, landing a seven-figure advance for the US rights from Vintage/Random House, and a six-figure sum for the British and Commonwealth rights.

''I certainly see why readers find it compelling,'' James says, ''though it's certainly not the most well-written or original book, especially given its start as Twilight fan fiction.

"But clearly there's a perfect storm of story elements that make it attractive to a commercial fiction audience, and anything that increases the profile of romance, books and publishing is a win for all of us.''

While fans argue over the ethics of a storyline spun from the Twilight franchise and critics dispute its literary merit, Fifty Shades stands as a remarkable example of the convergence between old and new publishing models. Its author, E.L. James, started without a major publisher and marketing machine behind her, her re-imagined tale of the Bella and Edward love affair being published by an unknown Sydney amateur fiction publisher.

A US fan base loyal to Twilight promoted the books on Facebook, Twitter and book review sites such as goodreads.com, generating a word-of-mouth buzz that eventually went viral.

Without the changes brought by the digital age, Fifty Shades would probably never have made its way out of a publisher's pile of rejected manuscripts, a Macquarie University media studies academic, Associate Professor Sherman Young, says.

Digital proved itself the perfect low-cost vehicle for bringing the experimental, risky story to market while social media substituted for the literary critic and the publicist.

It was Young who in 2007 wrote The Book is Dead, Long Live the Book, a prescient prediction of the migration of the physical book from page to screen. Young's observations were made before the advent of the Kindle and iPad.

Publishing is not dying but it is in the midst of enormous upheaval not seen since the invention of the Gutenberg press.

The arrival of the internet retailer Amazon and its aggressive strategy to sell e-books at a loss to build market share has benefited consumers but undermined the very business model of the big publishers. In some eyes, its platforms for self-publishing have rendered the entire author-agent-publisher relationship obsolete.

Publishers are making e-books available simultaneously with p-books and are converting backlists. Only one big Australian publisher, Pan Macmillan, has established its own straight-to-digital imprint although others are soon to follow.

The agency model, the means by which the six major US publishers have effectively limited Amazon's deep discounting, is under investigation by the US Justice Department and the European Union.

The effect of publishers setting a cover price for e-books is more expensive books, but authors such as Salman Rushdie argue that to break this system would be to ''destroy the world of books'', denying a fair return to story creators and their editors.

The digital world is a riotous jungle, publisher Henry Rosenbloom of Scribe concedes, posing all sorts of technical and practical challenges for traditional publishers. But the structural changes under way may be the least of the publishers' problems.

Rosenbloom has warned of a precipitous drop in the value of Australian bookshops' print-book sales, as measured by BookScan. Down 17.5 per cent in December last year, compared with the same period in 2010, the sales trend is accelerating.

Sales fell 23.5 per cent for February and almost 30 per cent for the first two weeks of this month.

E-book sales worldwide have risen exponentially in the past 12 months but not nearly enough to compensate. ''I haven't seen such a collapse like this in a short period of time before,'' Rosenbloom says. ''It's the worst I can remember in 35 years.''

The high Australian dollar, the rise of offshore retailers and consumer prudence are having their effects. Publishers hope the slide is the tail-end effect of the local Borders and Angus &Robertson collapses. But what if it's not? What if, Rosenbloom asks, time-poor and distracted people no longer want to read?

Any wonder Fifty Shades was snatched up by Vintage.

There is a reader for every kind of tale but those of genre fiction - crime, science fiction, fantasy - have always been the market subsidising marginal literary pursuits. Now they are the biggest drivers of the Australian e-book market, Joel Naoum, publisher of Pan Macmillan's Momentum digital imprint, says.

Romance is the biggest genre category of all. ''Women are the biggest consumers of romance fiction. In fact, women are the biggest buyers of fiction, full stop,'' he says.

''Because romance readers are voracious readers,'' James says, ''they'll read across genres, and they're willing to be adventurous and be early adopters in order to have access to a wide variety of content.''

Among its other advantages, the e-reader offers anonymity to women, and men, who might otherwise be too embarrassed to show off their fiction reads to fellow commuters on the bus or train to work.

Naoum says the electronic book is about supplying ''what people are actually reading as opposed to what they think they should read''. Sometimes these fans become the writers. Web-based fiction is flourishing unedited and uncurated.

Fan-written stories based on fictional characters borrowed from books, movies and television such as Star Trek and Twilight are a literary form in their own right.

Slash fiction is another popular derivative in which internet fans write same-sex trysts between, say, Star Trek's Dr Spock and Captain Kirk. Even Nancy Drew gets it on with her amateur detective buddies.

It's mostly fun, written for anonymous web consumption, University of Queensland senior lecturer Toni Johnson-Woods says.

''There is a whole underground community writing fiction and encouraging each other to do so. We are not talking about works of literary merit; that's to misunderstand what's going on. A book is of its time, its place and its audience.''

Elizabeth Weiss, digital publisher at Allen&Unwin, doesn't think much of an emerging theory the e-book will become the preferred format of commercial mass-market fiction and non-fiction and highbrow readers will stick with print. Literary titles published by Allen & Unwin which have sold well in e-book editions include Christos Tsiolkas's The Slap, Craig Silvey's Jasper Jones and Water for Elephants by Sara Gruen.

''Certainly e-book sales have grown faster for mass market/commercial fiction than for other genres, especially in the US and for high profile authors such as Michael Connelly and Jodi Picoult,'' Weiss says. ''However, there are also solid e-book sales for literary fiction in Australia, though admittedly not at the same level as for commercial fiction, and all evidence is that many serious consumers of literary and mainstream fiction have an e-reading device.''

Digital has helped resurrect out-of-print classics and is suitable for long-form journalism, short-story collections and essays and academic texts. ''Frankly I think we should be more concerned with whether or not people are reading at all, instead of whether they're reading romance or some highbrow idea of literary fiction,'' James says.

Young says the future will feature more books, not fewer, and books that are like games and games that are like books. Quick print-on-demand editions will compete with serialised magazine formats, long-form journalism and fictional epics.

In this brave new world, authors can manage their marketing, refine their art in the interactive digital world, and even make money as they negotiate this vast, diverse publishing continuum. But it's time-consuming and distracts from the love of writing.

It's a rare writer who doesn't hunger for a publisher's approval and the bragging rights of a first-edition, paper-and-ink bound book. Even E.L. James understood social media could only get her tale of erotica so far. For now, there's still no substitute for an experienced publisher.