Last week Google reached an agreement with a consortium of book publishers which is being described as the biggest publishing deal in history. Already flush with cash from their massive online advertising division and a plethora of other ventures, Google has now set its sights on the publishing industry, seeking to create digital e-book versions of hundreds of thousands of copyrighted books which are no longer in print.

The New York Times is calling the Google publishing deal as creating “the largest bookshop in the world… even if it is not quite open for business yet.” However, the publishing agreement is still subject to approval by the courts, and the Google bookshop will only be available from within the United States for the time being.

The publishing industry itself is under an enormous amount of pressure these days. With the rest of the world in a race to “go digital,” book publishers have largely remained stuck in the past, utilizing old-fashioned print and type technology.

But these days, there is a sense of urgency within the industry to modernize and take advantage of digital technology and the Internet. Book publishers have paid special attention to piracy issues, such as those which have plagued both the music and film industries, and publishers would like to avoid the same type of digital “sharing” of copyrighted material.

Meanwhile, sales of books continue to fall in the United States, declining one and a half percent so far this year. But sales of e-books are up an astounding 55% in 2008 according to statistics published by the Association of American publishers.

Devices such as Amazon.com’s Kindle (a hardware e-book reader) are also driving sales of digitally downloaded books. Kindle has recently seen a sharp upturn in sales after celebrity Oprah Winfrey endorsed the e-book reader on television. Sony also has an e-book reader which is gaining popularity. Like Amazon’s Kindle, Sony’s e-book reader downloads e-books with a built-in wireless connection and can sync with any desktop or laptop PC.

Slowly but surely, publishers see the public becoming more receptive to e-books, and Google would obviously like to get out in front of the trend. Although web sites like Project Gutenberg, a nonprofit organization, have already made thousands of out-of-copyright books available for free download, Google’s new online publishing house will take things a step further by including copyrighted material that is no longer in print.

The next few years are sure to be interesting ones for anyone in the publishing industry, and we could well see the emergence of Google as a super publisher online.