The literary 'novel' was named for being the 'new' form — prose fiction as the upstart genre.
(noun) A long fictional prose narrative; (adjective) new and original, not previously experienced.
From Italian 'novella' (a short story, a piece of news), from Latin 'novella' (new things), neuter plural of 'novellus' (new, young, fresh), diminutive of 'novus' (new), from PIE *néwos (new). The adjective 'novel' came directly from Old French 'novel' (new). The literary sense arose because these were 'new stories' — prose fiction was
The word 'news' is not, as folk etymology claims, an acronym for 'North, East, West, South.' It comes from the plural of 'new' — 'newes' in Middle English — meaning 'new things,' a direct calque of Latin 'nova' (new things) or Old French 'nouvelles.' The word 'novel' and the word 'news' are thus etymological