Shannon, Claude E. "A Mathematical Theory of Communication." Bell System Technical Journal 27 (July and October 1948): 379-423 (Part I), 623-656 (Part II).
These seminal papers are available in several forms (see bibliographic notes):
PDF version of original papers (PDF)# (With corrections but without Shannon's 1949 modifications.)
Shannon, Claude E., and Warren Weaver. The Mathematical Theory of Communication. Urbana, IL: University of Illinois Press, 1998. ISBN: 9780252725463. (First edition published in 1949, incorporating a number of modifications and corrections by Shannon.)
Shannon, Claude E. "A Mathematical Theory of Communication." 50th Anniversary Edition, printed for the 1998 IEEE International Symposium on Information Theory, MIT. Cambridge, UK: Cambridge University Press, August 16-21, 1998. (Based on 1949 book, with corrections.)
Reprinted in Key Papers in the Development of Information Theory. Edited by D. Slepian. New York, NY: IEEE Press, 1974. ISBN: 9780879420284.
Reprinted in Claude Elwood Shannon: Collected Papers. Edited by N. J. A. Sloane, and A. D. Wyner. New York, NY: IEEE Press, 1993. ISBN: 9780780304345.
Because he treated a general case, Shannon was able to distinguish loss and noise, in the way done in 6.050J/2.110J. Many others treat only channels with similar inputs and outputs in which case often L = N so it may not be obvious why they are different concepts.
Claude E. Shannon (1916-2001); obituary, Tech Talk, February 28, 2001.
Wyner, Aaron D. The Significance of Shannon's Work.
Gallager, Robert G. "Claude E. Shannon: A Retrospective on His Life, Work, and Impact." IEEE Transactions on Information Theory 47 (November 2001): 2681-2695.
The process model is also known as Markov Processes or Markov Chains after Andrei A. Markov (1856-1922).
There are many excellent texts on communications, most of which assume a familiarity with mathematics beyond introductory calculus. Some have treatments of the discrete memoryless channel, but not with the same emphasis given here. Here are a few.
Gallager, Robert G. Information Theory and Reliable Communications. New York, NY: John Wiley & Sons, Inc., 1968. ISBN: 9780471290483.
One of the early textbooks, designed for first-year graduate students, by one of the pioneers in communications, an MIT faculty member. He was later awarded the IEEE Medal of Honor, its most prestigious award.
Hambley, Allan R. An Introduction to Communication Systems. New York, NY: W. H. Freeman, 1989. ISBN: 9780716781844.
Cover, Thomas M., and Joy A. Thomas. Elements of Information Theory. New York, NY: John Wiley & Sons, Inc., 2006. ISBN: 9780471241959.
Aimed at university seniors and first-year graduate students. One of several excellent books of that era. Professor Cover, at Stanford University, is one of the leaders in Information Theory.
Haykin, Simon. Communication Systems. 4th ed. New York, NY: John Wiley & Sons, Inc., 2000. ISBN: 9780471178699.