Writer Neal Stephenson unveils his digital novel The Mongoliad

Author Neal Stephenson has been credited for inspiring today’s virtual world startups with his novel Snow Crash. Now he’s launching a startup himself: Subutai, where he is co-founder and chairman.

The company, based in Seattle and San Francisco, has developed what it calls the PULP platform for creating digital novels. The core of the experience is still a text novel, but authors can add additional material like background articles, images, music, and video. There are also social features that allow readers to create their own profiles, earn badges for activity on the site or in the application, and interact with other readers.

Stephenson said in an interview that this material is an extension of what many science fiction and fantasy novels already offer.

“I can remember reading Dune for the first time, and I started by reading the glossary,” he said. “Any book that had that kind of extra stuff in it was always hugely fascinating to me.”

Subutai is launching its inaugural product today, a serialized story called The Mongoliad about the Mongol invasion of Europe. The company promises to release a new chapter a week. Readers can pay $5.99 for a six-month subscription fee or $9.99 for a year.

Co-founder and President Jeremy Bornstein said the company is experimenting with a new model for publishing books. The traditional model of paying for content may not hold up when the content “be canned and sent around to your friends for free,” he said, but people will hopefully still to pay for content if “the experience is so much more rich, so much more involving.”

Stephenson isn’t writing the book alone. There’s a team led by a writer Mark Teppo; it also includes Greg Bear, author of Blood Music and other science fiction novels. Stephenson compared the experience to writing a TV show, and not just because it’s a team of writers. The Mongoliad will have an ending, but there’s room for sequels and other stories set in the world, so it’s kind of like season one of a show.

Bornstein first showed off The Mongoliad back in May. The first chapter should be available on The Mongoliad website now. There’s also an iPad/iPhone/iPod Touch application going through Apple’s approval process, and an Android app in the works. Subutai is self-funded.