but I think the "novel" as an artistic form is becoming harder to sustain.
I'm talking about the production side as well as the consumption side. People can continue writing books and reading them, but financial opportunities for authors have been declining and will continue to decline.
Perhaps the key metric to look at is: how many authors have published books this year? and what was the median earnings by the author for the book?
I don't mean to sound anti-tradition, but every public domain book you read is a book by a contemporary author you didn't read. There's only a finite number of novels you can read. Novels will remain an important part of our culture, but only in a more retrospective way (much as symphonies and sculpture are).
Having more public domain ebooks out there is a great thing, but it doesn't help contemporary authors in making a living. On the other hand, if you are writing a book about Ruby on Rails or some nonfiction type, it is still a good time to be writing books.
A good novel takes 2-5 years to write; but if there is little commercial interest in financing these projects, creative types (even the respectable ones) will naturally favor more lucrative genres. Writers go wherever the audiences are. And the audiences are renting DVD's and playing videogames. The novel as a genre will survive as long as it continues to attract talented producers of them. I write fiction fulltime (and I've committed a lot of time to practicing the art), but if I were 5 or 10 years younger, I would go into a different kind of writing with a hope of reaching a wider audience. Grassroots projects like nanowrimo provide a reason for hope, but they won't change market realities.
I am not being pessimistic; I am just taking note of where the audiences are right now. Also, as I stated before, reading is continuing; it's just not in the genre of novels. (On the other hand, poetry and more compact on-the-run formats are receiving renewed interest).
Here's an
essay I wrote about the topic.