The fast-growing online bookseller Tuesday is announcing one of the most ambitious Web clearinghouses for distributing books in electronic form. Besides serving as a new distribution channel for conventional publishers, Fatbrain (Nasdaq:FATB) plans to let authors publish their own works on the site, setting their own book prices and keeping half the profits.

More brainstorms are on the way. A flood of new technologies and business alliances is breaking down barriers to digital books, just as the audio file format called MP3 popularized online is shaking up the music world. The breakthroughs are leading authors to bypass publishers, retailers to become publishers and publishers to become bookstores.

Among the latest developments: Adobe Systems Inc. (Nasdaq:ADBE), the biggest maker of publishing software, today is announcing plans at a San Francisco trade show to modify its widely used document format to protect digital documents from unauthorized copying. Xerox Corp. is collaborating with Adobe and accelerating efforts to market its own copyright-protection scheme. Microsoft Corp. is discussing similar technology, along with software that makes text much easier to read on a computer screen.

Paper isn't going away. Indeed, most of the newest ventures are designed to give consumers a choice of buying electronic or paper versions of books, or both.

But the latest technologies address copyright issues that have slowed most publishers in letting readers download valuable titles. Some Web publishers see an entirely new market for short nonfiction works that can be published quickly and constantly updated.

Crossroads
"The publishing industry is at a crossroads," declares Dick Brass, a Microsoft vice president in charge of technology development. "By 2020, 50% of everything we read will be in electronic form."

Such dreams aren't new. Authors' complaints about stingy publishers probably precede the invention of paper. Publishers, in turn, gripe about the cost of distributing books and taking back those that don't sell. Computer visionaries have predicted that powerful networks, tablet-style computers and other devices would replace physical distribution with a global bazaar of electronic volumes.

While the Web has done just that for newspapers and magazines, books have been slower to change. Most people prefer reading long documents on paper, particularly for recreation. Relatively few people have bought special-purpose devices for storing and reading books, a market that has been hampered by incompatible file formats.

Yet a crop of Web start-ups already let authors self-publish on their sites, usually for a fee. 1stBooks, a unit of Advanced Marketing Technologies LLC in Bloomington, Ind., says consumers have downloaded more than 250,000 copies of books, mainly written by people who aren't well-known authors. Dan Snow, a spokesman for the company, argues that copyright- protection technology has been the missing link in convincing established publishers and big-name authors to move to the Web.

'Piracy issues'
Adobe, by moving to secure its document format, could have a big impact. "I can't overstate how significant it is to finally have a way to finally say to owners of some valuable intellectual property that you don't have to worry about piracy issues," Snow says.

Adobe estimates that it has distributed more than 100 million copies of its Acrobat software, which is particularly popular in applications where users want a printed page to look just like its image on a computer screen. Acrobat generates files known by the initials PDF, for portable data format.

The San Jose, Calif., company plans to offer Web sites a product called PDF Merchant that allows them to encrypt PDF documents and control their distribution to consumers. Adobe also is adding a feature to its Acrobat reader program, dubbed Web Buy, that allows consumers to order and buy the encrypted PDF documents over the Web. Once consumers have given merchants their credit cards, a software key is transmitted to their PCs that allows them to read encrypted documents.

A range of other companies, including Xerox and Intertrust Technologies Corp., have also developed elaborate schemes for protecting copyrighted materials and built relationships with online middlemen. For example, PublishOne Inc., a start-up in Santa Clara, Calif., plans to use Intertrust's technology to securely sell business information over the Web.

New wrinkles
Fatbrain, formerly known as Computer Literacy Inc., is adding some new wrinkles. The Sunnyvale, Calif., company now sells technical books through stores and through its Web sites. It also prints manuals and other materials on demand for technology companies and other customers.

Fatbrain's new initiative, dubbed "eMatter," will let authors upload book manuscripts, set their own prices and get 50% of the royalties for a storage fee of $1 a month. That's much more lucrative than the 5% royalty common through conventional publishers. At 1stBooks, authors must pay a $159 upfront fee, and they get 40% of the royalties.

Chris MacAskill, Fatbrain's chief executive officer, expects the service will be particularly attractive for 75-page to 100-page nonfiction books in fields that change quickly. A writer could take three months to knock out a 75-page document and sell it for $15. Based on 50% royalties, he says, selling 25,000 copies of that document would make the author about $200,000. That's the same amount as laboring 12 months on a 500-page, $40 book that sells 100,000 copies and earns a 5% royalty.

Conventional publishers, including Macmillan USA's technical book operations, also are testing the concept and seem impressed. "We just want to make sure that people can't copy files from computer to computer," says Doug Bennett, president of Macmillan, an arm of Britain's Pearson PLC. "Right now it looks pretty good."