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In the afterword to his award-winning novelette, "The Merchant and the Alchemist's Gate," Ted Chiang talks of abandoning the idea of a hard sf story in favour of a low-tech, Arabian Nights-style story. In his essay, "Where the Sidewalk Ends," Barry Malzberg quotes Brian Stableford and John Clute on sf being a twentieth-century literature and muses: "One could well conclude that science fiction, having served its essential, originating purpose as a commercial format, was now, like Marx's idealized State, in the process of withering away" (59). In her brief memoir, "Why I Write Science Fiction", Kathleen Ann Goonan recalls her early stories: "At first, it resembled fantasy, and might feel quite at home today, in a market where science and fantasy freely mix in the same work" (63). In the afterword to his shortlisted novelette, Geoff Ryman points out that the correct title of his story is "Pol Pot's Beautiful Daughter (Fantasy)," "because I also wrote a version of the story with no magic in it" (122).

At some point in the not too distant past, when we probably weren't really paying attention, the Science Fiction Writers of America, which presents the Nebula Awards, became the Science Fiction and Fantasy Writers of America. All the way through this forty-third annual anthology of Nebula Award winners and nominees there is an uneasy awareness of this shift in focus. Perhaps Stableford and Clute were right, you only have to look in the bookshops to see fantasy is in the ascendant so maybe science fiction has indeed run its course.

Yet Chiang's story, despite its setting in medieval Baghdad and Cairo, despite the voice that lovingly replicates the tone of the Arabian Nights, is science fiction, and hard sf at that, determinist and rule-driven. (It is also brilliant and fully deserving of its award, you won't find many quibbles from me about the quality of the work voted as the best of 2007.) As long as there are stories as good as this to be written, the survival of science fiction doesn't seem to be at issue. But there is a question about the nature, the character, of science fiction; a question that is hard to answer in these days of fluid genre boundaries. The style of Chiang's story raises the issue, but it is highlighted even more forcefully by the very next story in this collection, the winner of the award for best short story, "Always" by Karen Joy Fowler.

"Always" is a story about immortality, which gives it a suggestion of science fiction; it is also a story about cults, which gives it a suggestion of fantasy. Yet, in truth, it is neither. In the 1930s our protagonist and her boyfriend join a cult. The cult, like so many of its kind, promises immortality, but actually fleeces the tourists and provides a ready stream of sexual partners for the cult leader. The boyfriend leaves, the cult leader is killed (so much for immortality), the cult falls apart, but our narrator remains, her perspective on the world changed by the simple promise of living forever. It is an excellent story, a worthy winner in every respect except that it is not genre. Yet it was written by an author associated with genre; it was first published in Asimov's; and it has now won one of the premiere genre awards. Where does science fiction, or fantasy, begin and end?

And that is a question that could equally well be asked of other contributions to this volume. Take, for example, one of Fowler's rivals for the short story crown, "Unique Chicken Goes in Reverse" by Andy Duncan. Another very good story by an established genre writer that first appeared in a genre publication, in this instance the anthology Eclipse 1; and it is mainstream. As a child, Flannery O'Connor did indeed train a chicken to walk backwards, a feat recorded in the newsreels and that she would boast about even after she had established her reputation as a writer. Duncan has her name the chicken "Jesus Christ," which brings on a crisis of faith for a local priest, but nothing in terms of character, plot or setting depends on anything fantastic or science-fictional.

Genre, in these instances, would seem to be a matter of the author's track record, or the place of original publication; or maybe it has something to do with tone or attitude. Which brings us back to Ted Chiang's story, and to one of his rivals for best novelette, "The Evolution of Trickster Stories among the Dogs of North Park after the Change" by Kij Johnson. Just as Chiang uses the tone of Arabian Nights stories to tell a strictly science-fictional time travel tale, so Johnson uses the tone of oral storytelling, particularly Native American Coyote myths, to tell a story that is... well, what is it? Clearly something fantastical has happened before the tale opens, since our pets have been given the power of speech. What follows, however, is a mixture of myth-making and polemic about human-animal relationships that doesn't fit comfortably into any genre format.

Nor does Lucius Shepard's novella, "Stars Seen Through Stone," in which the fantastical events, veering more towards horror than fantasy, seem almost incidental to the central story about rock musicians, a story that is, Shepard says, "rather more autobiographical than most of my stories" (230). Of the prize winners, only Nancy Kress's novella, "Fountain of Age", seems entirely comfortable sitting squarely within genre. Even so, a story about genetic engineering and a chemical way of avoiding death set over the coming century is inextricably tangled up with a story of organised crime and romance. It's a worthy tale, though the fact that it sticks as closely to sf traditions as it does perhaps makes it seem less immediately innovative and memorable as the other award winners.

Two of the other stories collected here, both nominees for the short story award, "Captive Girl" by Jennifer Pelland and "Titanium Mike Saves the Day" by David D. Levine, also adhere more closely to sf traditions. Indeed Pelland's tale of a girl deliberately crippled in order to be a vital part of a planet's early warning system, and the curious romance that therefore ensues, has something of an air of James Tiptree's "The Girl Who Was Plugged In" about it. In many ways this is the most straightforwardly science fictional story in the book. Levine's story also sticks to a somewhat old fashioned sf feel, an optimistic look forward over the next 150 years in space, but then subverts the tradition by tracing the development of the myths and tall stories of the spacers. Told backwards, from the distant to the near future, ending with the real-life original of "Titanium Mike," it is, in its way, another iteration of the evolution of trickster stories.

But maybe this eliding of genre boundaries is no bad thing. Kathleen Ann Goonan notes that her stories are "more than their confining labels. Marketing forces limit us, as writers" (54), Later, Michael Moorcock remarks, in the afterword to "The Pleasure Garden of Felipe Sagittarius," his 1966 story in which Otto Bismark is murdered by Adolf Hitler, included here to mark Moorcock's Grand Master Award, "I still hate pigeonholing fiction" (294). Maybe all we are seeing here is a necessary breaking down of artificial divisions in fiction, writers more freely exploring what the fantastic in its broadest terms allows them do. Whatever, this latest volume in a very long-running series, continues to mark not just the best of the genre at one particular moment, but also, perhaps, the direction in which the genre is moving.

Paul Kincaid is the recipient of the SFRA's Thomas D. Clareson Award for Distinguished Service for 2006. His collection of essays and reviews, What it is we do when we read science fiction is published by Beccon Publications.