This report describes the plans of the National Library Service for the Blind and Physically Handicapped (NLS) to convert their talking books service to a digitally based audio system. The NLS program selects and produces full-length books and magazines in braille and on recorded disc and cassettes and distributes them to a cooperating network of regional and subregional libraries, where they are circulated to eligible borrowers. The NLS plans to convert the talking book system to a digital system. The report outlines key factors in the design of the NLS system, steps in planning for the transition to a digital system, and design-phase tasks. Timing of introduction of the NLS digital talking books and the development of a technical standard for digital talking books through the National Information Standards Organization are also discussed. Examples of activities to test the effectiveness of the digital system are summarized and 20 steps of next-generation NLS technology are provided. The report emphasizes the need to involve consumers to gain feedback and describes methods of obtaining feedback. Appendices highlight details to be considered in implementing the digital talking-book program and a flow chart of the contracting process. (Contains 34 references.) (CR)