Literary novels, some assume, don't have conventions. Not so. If you're writing a literary novel, you're writing for the cultural elite and they expect, most of all, what's called "fine writing." You can get away with overuse of adverbs and some clumsiness in mainstream and genre novels, but in literary novels, it's a strong convention that the writing is smooth as silk.
Once, stream-of-consciousness novels featuring Faulkner-esque prose, novels of existential despair, and other kinds of philosophical novels topped the list of literary novels, but they are no longer in vogue. One popular form of the literary novel at the moment is called "magical realism"; such novels are imitations of the South American fabulists. Low-life novels are still in. The-suburbs-are-screwed-up novel is still around. Novels of the ethnic experience in America are doing well. Metafiction novels are beginning to fade. Metafiction is self-conscious fiction; that is, the author does not try to pretend the story world is real—the illusion is acknowledged.
Literary novel types are much less stable than the others, so you'd better do a little research before you write one to make sure what you intend to write is current. Read the Sunday New York Times Book Review and the New York Review of Books. They're very up-to-date with what's in and what's out.
Literary novels are marketed in hardback or trade paperback, which are the same size as hardback, but have a soft cover. Many literary novels are published outside of the New York publishing scene. Small presses, regional presses, and university presses are doing a booming business in literary fiction. In fact, there are probably twenty times more literary novels published by houses outside of the New York publishing industry than inside it.
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