Since you are pursuing being published, I would recommend attending the Literary Breakthrough Conference that is being held in conjunction with the National Black Book Festival. At this conference, we'll have literary agents, publishers and book marketers who can help you take your book to the next level. Here's the link with more detailed information: http://www.nationalblackbookfestival.com/breakthrough.htm
I'm sure you can tell a story that wouldn't necessarily fit into that category. I think it would be left up to you the kind of feel you want your book to have.
Ethnic fiction, I don't know. I guess some would say that. But if nothing else, I think you should go for telling a unique and compelling story because it's kind of easy to fall into telling the same old story over and over but with different character names and in a different city. Tell a fresh story, put a spin on it. I think that if you can do that then you can get away from the urban stigma.
To Answer your question on urban fiction vs. mainstream:
Urban includes stories about the bad parts of the city, the underbelly. Any story could be set in a large city but an urban book would focus on the bad parts and would include tales featuring drugs, sex, and crime. A forefather of today's urban lit would be Donald Goines.
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