Long Eaton, a tough little former railway town in Derbyshire, is still coming to terms with the closure of its local paper, the Long Eaton Advertiser, which owner Trinity Mirror pulled the plug on last October, blaming "difficult trading conditions". Brian Keen, who I catch at an emotional moment in the Lockstone pub in the centre of town, becomes almost tearful at the loss. The paper was there for him to place the notice of his mother's death last year; it is no longer there for the in memoriam. "A lot of people are missing the Advertiser," says Keen. "This used to be a beautiful town. But it's not the town it was: it's got scruffy, it's got rough, and now we even lose the paper."

For the older generation, these things matter. "They want to know who's passed away," says the barman at the Corner Pin down the road, "and to check it's not them." But the younger generation don't much care. Carl and Katrina Smith, a married couple in their mid-30s, not only didn't know the paper had closed; they didn't even know its name - and they were born nearby and have lived in the town most of their lives. They did, though, occasionally buy the Nottingham Evening Post - mainly for the jobs. For this generation, Long Eaton as a place has almost ceased to exist, lost in a more amorphous Nottingham-Derby conurbation.

"It's only the older people who think of communities now," says Carl. "For us it's more a place to live than a community." He was an electrician's mate and worked all over the country (until he was laid off two months ago - people are as vulnerable as papers in the slump); Katrina works in Leicester. Long Eaton is a dormitory for them; they rent a house and say they have no idea who their neighbours are.

"It used to be a proper community, with the railway, the canals and the upholstery industry," says Carl, "but look round at the shops now. You've got Tesco and Asda, and everything else is in decline." There is one new shop in Long Eaton - selling Polish, Russian and Lithuanian food, to cater for migrants from eastern Europe. The shop even has free papers in those three languages, as well as Ukrainian. But they are UK-wide and won't record deaths in Long Eaton, in any language.

Philip White, who runs a newsagent in Long Eaton, says the Advertiser began to lose its way a couple of years ago, when Trinity Mirror cut back on local reporting and started printing in distant Tamworth. "It started to lose its identity when they moved it out of town," he says. "Before that, it had more of a local slant on things. It had its finger on the pulse. They had an office in the town, and you could go in and give them a story. People would come out and take local pictures."

It's a terrible cliche, but local and regional papers are caught in a perfect storm (national titles are having a hard time, too, but that's for another day). The local readership is ageing; high streets are losing their shops; the three key regional advertising markets - property, cars and jobs - have dropped dramatically. The Newspaper Society, which represents the local press, estimates the year-on-year ad slump at between 10% and 20%, but in those three key sectors all the big groups put the fall at more like 40%, with the bubble-deflating south-east the worst affected. Sixty-plus papers, mostly "frees", have already been closed - the Long Eaton Advertiser is unusual in being a paid-for casualty; 1,000 or so UK journalists have lost their jobs. This is an assignment in which I take a particular interest.

Michael Pelosi is well placed to describe what it's like out there for the 90-plus city-based and regional dailies and 1,200-plus weeklies struggling to survive in this new, net-driven world. Pelosi is managing director of Northcliffe Media - one of the big four regional press groups - and president of the Newspaper Society. On the day we meet he has just announced that Northcliffe will cut 1,000 staff - more than 20% of its workforce. The majority will be compulsory redundancies.

"This is a very difficult time for everyone in our industry," he tells me in his office at the Daily Mail HQ in Kensington, London (the Daily Mail and General Trust owns Northcliffe). "It's not easy for managers having to make people redundant; it's not easy for me. If you like doing this, then it's time to hang up your pen and stop coming in to work." Pelosi is an engaging Scot who, I suspect, means what he says. He insists this is the only way the group can stay in profit. Northcliffe made £80m three years ago; even with all the staff cuts, it will make a fraction of that this year. These big corporations don't believe in recording losses, even in unprecedentedly bad times; what happened to the £80m is not immediately clear.

Everywhere, papers are under pressure, staff are being sacked, and there is talk of a crisis in local democracy if the local press is further eroded. The situation is not yet as perilous as in the US, where some famous big-city papers have gone to the wall and plenty of others are hanging by a thread, but even here there are mutterings about the Scotsman and the Yorkshire Post, two famous titles that the debt-laden Johnston Press bought at the top of the market, and which now are worth a fraction of what they paid for them.

I visited Birmingham and had a tour of Trinity Mirror's impressive Fort Dunlop facility, which now houses the Birmingham Mail, Birmingham Post and Sunday Mercury. Trinity claims a circulation of 65,000 for the Mail, a traditional evening paper that has three editions a day (these days many other evening papers are printed overnight). It is robust, in touch with its predominantly white, working-class audience, and will be around for a good while yet. The more upmarket Birmingham Post, with a circulation of just 12,000, looks more vulnerable: another of our famous regional morning titles that no one seems to want any more. The Sunday Mercury (that Birmingham has its own Sunday reflects how strongly the Midlands is committed to its own press) will be secured by the fact that reading behaviour is different on Sundays, and that it offers no fewer than 40 pages of local sport. If you support Villa or the Blues, the name by which Birmingham City FC are universally known here, this is truly heaven.

Trinity Mirror reorganised its journalistic resources in the Midlands when it moved to Fort Dunlop last year, losing 70 of its 295 journalists (all through voluntary redundancy) and integrating the staffs of the three papers so that, apart from a few "brand champions", everyone now works on everything. Whereas previously, Mail and Mercury journalists would virtually have killed each other to protect a scoop, now an overall "head of content" decides what goes where. It is a model being adopted by papers all over the country, on national titles too.

Birmingham Mail editor Steve Dyson, who oversaw the reorganisation, says it was a case of adapt or die. "When we announced the changes [in August 2008] and how many roles we had, we effectively made everyone redundant and said we wanted people to apply for these new roles," he says. "There was some anger and we faced that down. It was brutal, but it was a case of survival. If we hadn't done that, we'd be making compulsory redundancies now."

In Bath, the response to falling circulation was to switch the Chronicle from daily to weekly publication, backed up by a rolling news service online. It seems to have worked: sales have risen from around 11,000 for the daily version to 19,000 for the weekly, even though at 70p the latter retails at double the price. The Chronicle is a Northcliffe title, and Pelosi says that, had the switch not been made in 2007, this famous old paper (it will celebrate its 250th birthday in 2010) might now be dead. "If it was a daily newspaper today, it would be losing very considerable sums of money and it might just go - we might just put the key in the door," he says. "Obviously, advertising markets are extremely challenging and the Bath Chronicle is not making much money, but I believe we've given it a chance to be on a sound economic footing by coming out once a week rather than six days a week."

The switch was overseen by editor Sam Holliday, who joined the Chronicle in 2005. He says he met initial resistance from locals who felt Bath merited a daily. "A local newspaper in a community is a bit like a local church in a village," Holliday says. "Very few people go to it, but everyone feels part-ownership of it, and if the vicar comes in and says, 'Right, we're going to throw away the pews and have a new, modern church,' a load of people who don't even go to the church object. When we first announced the change, I met people who said: 'Oh you can't go weekly, it's terrible, it deserves to be a daily paper.' And I'd say: 'Well if only more people like you were buying it every day, it would be great ... ' And they'd say: 'I don't buy it every day ... ' They regarded it as an institution."

My visit to Bath is instructive. Metro (another DMGT title) - free, generic, rootless and thus emblematic of our deracinated age - is in a dumpbin by the lift in the Chronicle's offices; an unusual example of inviting an accomplice to your murder into your house. The centre of Bath itself is devoid of newsagents; they have been squeezed out by food shops and a Sainsbury's. "That hasn't helped us," says Holliday. "The newsagents have been very loyal in the past, but they're struggling." The signage on a former newsagent, called The Editor, in Westgate Street still gleams, but it is - for one week only - a charity shop raising money for guide dogs.

The weekly Bath Chronicle will soldier on: it will celebrate its 250th birthday, and will almost certainly still be there in a decade. But it will never be the force it was. When I'm searching in vain for a newsagent, I meet a local school caretaker, Dave Stephens, and ask if he knows of any nearby. He starts describing where I might find one, but I never could follow directions, so ask him instead what he thinks of the paper. "I rarely buy it now," he says. "I just find the news is a week old by the time you're getting it, which to me seems a bit of a waste of time. I look at the website occasionally, but I rarely buy the print version unless my kids are in it because of something their school's done."

If Stephens wants information on local planning issues, he says he looks at the council website. The paper alerted him to a new park-and-ride scheme proposed for the town - thanks for that, now he'll follow it up online. "If there's something going on," he says, "there's always a website run by a support group or people who are against something." But they'll be biased, I protest, echoing what every local newspaper editor says. "Every paper has an agenda, too," he counters. He is happy to work it out for himself.

Back in Birmingham, I talk to some bloggers who have taken this a stage further: they have set up websites to cover local issues, discuss the plan to regenerate the town centre, and post documentaries about the lives of "active citizens" in the city. OK, they can't begin to do the legwork of the Birmingham Mail's 42 reporters - "You don't meet many internet reporters down at the courthouse," as The Wire creator David Simon said last week. But what they have achieved is impressive, and anything but frothy.

Former BBC political reporter Nick Booth is a key figure in what I fear I must call the "blogging community" in Birmingham, and has the apostate's disregard for conventional media. "What got me back into making media [after briefly running a quango] was realising that you don't have to use the tone of the conventional mainstream media, which is attempting to be impartial and slightly aloof," he says. "You can decide, 'I'm just going to tell the stories of active citizens. I'm not going to control the editorial process as much as I might in my old job. I'll just give them access to the medium and access to the audience.' And that suddenly felt more honest."

Booth also believes this new media can change things. "It rarely occurs to mainstream media to use its resources to make things better," he says. "It reflects them or carps about them, but doesn't do anything about them. That's an awful lot of energy going into what?" He also likes the idea that you only publish when you have something to say. It's a light news day, all quiet on the Birmingham front - go out for a walk.

Booth is about to launch a Channel 4-backed website in Birmingham called Help Me Investigate, a sort of investigative Wikipedia, where local people will raise issues - "What happened to the money that was supposed to be spent regenerating X?", "Why do the local hospital's NHS contracts have gagging clauses, and is that legal?" - and everyone else in the community will pool their knowledge and efforts to find out. If successful, it will be rolled out nationally, part of the social-networking revolution which - if the internet zealots are to be believed - will transform information gathering and civic life over the next couple of decades.

Booth's partner in the enterprise is Paul Bradshaw, senior lecturer in online journalism at Birmingham City University and someone much in demand as established media organisations thrash around to find a new model for their businesses. For a man who likens the digital revolution to the Renaissance, he is surprisingly sanguine about the future of papers; he reckons that many will survive for at least 20 years - although it will be 20 years of perpetual revolution as old and new media coexist.

Bradshaw puts the dilemma for newspaper groups, local and national, succinctly: "I think some people in most newspapers know where they're going," he says. "The problem is they're having to persuade everyone else in those organisations. They also have enormous legacy systems of printing presses and distribution networks, and the majority of their profits still come from those legacy systems. The next 20 years will be about that transition, and I don't envy them. If I was starting up a news organisation today - as in a way I am [with Help Me Investigate] - I wouldn't want those enormous costs of printing presses."

Pundits on the future of the press range from the optimistic - former Guardian editor Peter Preston, for instance, who in his Observer media column this week attacked "self-feeding hysteria" - to investigative reporter Nick Davies, who, at the start of our interview, tells me it can be a short one. How so? "As far as anyone with any sense knows," he says, "there isn't a future for local media. There isn't actually much of a future for national media."

Both are right. The newspaper industry is not going to disappear overnight. It won't be like Woolworths: there one minute, boarded up the next. In a way, it will be more painful than that: death by a thousand mutilations as reporters are cut, subeditors are centralised (or just eliminnated), dailies go weekly or - as the Guardian Media Group plans for the Reading Evening Post - bi-weekly, proud paid-fors go free, while copies of the Metro and thelondonpaper litter the streets and train carriages. Because the old business model - lots of readers attracting lots of advertising, two fast-flowing revenue streams - is, indeed, bust.

For local papers, the next 20 years will be about managing decline. They are of course developing ancillary websites, buying specialist jobs and car websites, to try to capture the digital market. But they can never exercise the same power as their control of infrastructure gave them in print, and the advertising model online - search-engine dominated and dependent on cash by results - means the ad revenue will never return in the same quantities.

Even if big media organisations survive this revolution, the switch from mediation of information by a professional elite to a more dispersed and, if we are being optimistic, egalitarian and organic model will have a profound effect on journalism. What the bloggers like to call the "priesthood" (us lot) have to give way, with active citizens (you lot) doing it for yourselves. Here Comes Everybody, as US internet guru Clay Shirky so prophetically put it. The New York Times has recognised that the news-gathering of the future is likely to be a partnership between professional and citizen journalists, and the paper is mentoring community websites in the city. This is not just a philanthropic exercise; it knows it has to catch the new wave to reach shore.

There are, however, potential class and age issues here: the blogging community is young and middle-class, readers of local papers older and more working-class. If the transition is out of synch and tracts of the country are deprived of their papers before this more organic network of news-gathering, information-sharing and social action is properly developed, the great unplugged will be left in limbo, sitting in pubs fretting about their declining communities and lost relatives.

Mark Dodson, head of regional media at the Guardian Media Group, is exercised by the possible disenfranchisement of the most vulnerable section of society. "A whole swath of the population will not be catered for by this so-called revolution," he says. "The people who can least afford to be connected to the new world are also those keenest on being involved in their local communities. Everybody has a right to be informed locally. Local news should not be means-tested." He conjures up a vision of a group of middle-class bloggers, obsessed by a series of single issues, pursuing them to the exclusion of what really matters to the wider community.

A valid point, perhaps, but one weakened by the fact that, in order to stay in profit, he recently announced that the group (which also owns this paper) was cutting 245 jobs in the north-west and south-east of England, shedding 113 journalists (including 39 on the Manchester Evening News), shutting 22 local offices serving its weekly titles in and around Manchester, and closing the Esher News & Mail and the Aldershot Mail, as well as reducing the Reading Evening Post from daily to bi-weekly publication from the summer. That announcement led GMG journalists in Manchester to take out an advertisement in this paper on Tuesday complaining of "the decimation of a great regional newspaper in the city which was the birthplace of the Guardian" and appealing to the Scott Trust, which oversees GMG, to reconsider the redundancies.

Dodson is sure the Manchester Evening News will still exist in 10 years, but says it will have changed character. "It will look fundamentally different from the way it does now," he says. "It'll be a different kind of product: it could be totally free, or part-paid and part-free; it could be two days a week, or three days a week, or weekly. There'll be a product that serves Manchester, serves it properly and is of high quality, but what it will look like ... " The sentence trails away. "It'll be a mixture of products that serve the community, and I expect to see the same in Birmingham, Glasgow and other places as well. You have to be totally open-minded, because three years ago no one would have believed we would be in this position."

This is not yet a requiem for papers, and anyone who tells you they know when they will die is fibbing. Even at what we have to assume is the bottom (or close to the bottom) of the deepest recession since the 1930s, most local papers are still making a profit, admittedly because they have shed many good journalists and other staff. The Tindle Group, run by the redoubtable 82-year-old Sir Ray Tindle, has lost virtually no one from its widely distributed 900 staff, yet he insists his network of 230 "hyper-local" titles (which includes such glories as the Barry Gem, the Ceredigion Business News, the Faringdon Folly and Diary, the Forest of Dean Prime of Life, the Hay-on-Wye Express and the Wiveliscombe Messenger) is holding its own. On the day we meet at his office in Farnham, Surrey, where I get a tour of the Farnham Herald and lunch in the boardroom, he has just bought four troubled papers in Devon.

Times are tough: the Herald's advertising in key sectors has halved. But Tindle - who, after surviving throat cancer in the 1990s, has to keep his thumb pressed against his voice box to speak - is undaunted. Churchill is his hero, and his words are couched in the same cadences: "We've been though quite a few recessions and two world wars. Our oldest papers were there before Napoleon!" He says he has never - and will never - close a paper, and loves to tell the story of the way he saved the Tenby Observer in 1978.

"I told the staff I would buy it, provided they could bring it out by Friday morning so there was no gap," he tells me, chortling. "They said, 'We'll do it.' I said, 'But I want no news from outside Tenby. Cut out Haverfordwest, cut out Milford Haven, cut out Pembroke Dock. I don't want to know. Every line must be about Tenby. The circulation went up from 3,700 to 6,000-odd; the paper went from a loss of £50,000 to a profit of £140,000." Tindle looks through the printout on his desk. "The Tenby Observer has made £108,605 in this financial year, and that's in a recession!" he proclaims. "Yet the paper had been dead for three days when I resuscitated it."

The debt-laden corporations could learn a thing or two from Tindle, who says he has never borrowed a penny. The plaque on the wall of his reception in Farnham reads: "The Tindle Group of 200 newspapers and radio stations was built by launch and purchase from absolutely nothing apart from the £300 given to a soldier at the end of the second world war, and by the dedication of loyal staff."

Personal mythologising it may be, but the staff tend to stay with him for a lifetime - Corina Larby, chief reporter at the Farnham Herald, has been with the paper "since God was a boy", or 1973 to be precise - even though the salaries are very low. That loyalty is now being repaid, though job cuts are not completely ruled out. The group has just announced a pay freeze but, before that announcement, he showed me a letter from the NUJ chapel at one of his home counties papers saying it had agreed to ask for no pay rise this year, so grateful were its members to hold on to their jobs.

Tindle's papers, serving small communities and with, for the most part, low overheads, are likely to be around for a generation or more, though it is far from clear what happens when this Churchillian figure dies. The great morning dailies, with resounding names and pathetic sales, could be gone in a few years, unless some rich businessman fancies them as a trophy. Meanwhile, the new decentralised, decorporatised media models will be emerging. The revolution may not be televised, but it will be analysed, mocked, videoed and remorselessly blogged about on a wide variety of local news and crowd-sourcing websites.

Even Long Eaton now has a web replacement for the Advertiser. Former railwayman Tony Fountain, who is 57, has added news to his existing What's On in Long Eaton site, and trails round the streets looking for stories. His site is not yet the New York Times, but I like the fact he publishes poems by local people - newspapers have always despised unsolicited poems - and there is no denying his passion. He plans to start a births, marriages and deaths column, which may bring some comfort to Brian Keen. In 20 years' time, perhaps this site will be magnificent, with local people using it to work together to smarten up their town. There will also be sections in Polish, Russian, Lithuanian and Ukrainian, and thirtysomethings might have heard of it.

At the Birmingham Mail, I meet a thoughtful young reporter called Paul Bradley, a 26-year-old who joined the paper as a trainee two years ago on £10,000 a year. Last week he came back from Basra, where he had been tracking the Queen's Royal Hussars, which draws many of its recruits from the Midlands. During his time in Iraq, he had written three differently angled stories for the Mail, Post and Mercury. On another visit to Basra last autumn, he wrote stories, blogged, took photographs and made a video. Or at least tried to: in a war zone, Trinity Mirror's expectations of what the modern, multi-platformed, multimedia journalist can achieve seem a little optimistic.

I find Bradley interesting because he has opted to enter this profession at a time of such uncertainty, when all the media rules are being rewritten. "I think it will take 20 years for things to settle down enough for people to be able to breathe easily again," says Paul Bradshaw at Birmingham City University. How does young, mustard-keen but far from misty-eyed Bradley feel about being in on the start of a revolution?

"I suppose you see the brave new world, but brave new world that's going where exactly?" he says. "I can do all the skills, I can do the videoing, I can take the not-very-good photos, I can file for three different papers. But are those papers going to be around in five years' time for me to continue working for them, or am I going to have to look for a job abroad because they can't work out how to get the advertising?"

Does that panic him? "You've just got to have some kind of faith that someone, somewhere knows what's going on and has some kind of plan. There's still a thirst for news; there's still a demand for good journalism."

The bad news is that, despite online guru Bradshaw's optimism about newspaper visionaries, no one does seem to have a plan. Barry Fitzpatrick, head of publishing at the National Union of Journalists and a man currently trying to put sandbags around organisations that are leaking jobs all over the place, puts it well: "At the moment, regional managing directors are like corks bobbing around in a stormy sea. They're not actually steering anything; they have no business plan other than cuts, and inevitably if that's the only strategy you have, quality suffers. They try to make out there's been no damage done, or it's a better product, but we all know it's a lot worse."

The good news is that the Birmingham Mail and Sunday Mercury, Bradley's current employer, surely will still be around in five years' time, though it would be sensible if they started reaching out beyond their white working-class heartlands given the nature of the Midlands demographic.

And, in the longer term, if someone like Bradley could only join forces with railwayman-turned-web enthusiast Tony Fountain in Long Eaton - which shouldn't be much more dangerous than Basra, except perhaps on a Saturday night - I'm convinced the town would have a journalistic vehicle far more powerful than the old stripped-down, clapped-out Long Eaton Advertiser. Local advertisers and well-wishers would flock to it; maybe the government could start an Arts Council-type fund to facilitate local news-gathering. And then Long Eaton could say it was in at the rebirth not just of local journalism, but of a revitalised civic life.

• Additional research by Sarah Phillips

• This article was amended on Saturday 4 April 2009. The editor of the Bath Chronicle is Sam Holliday, not Holloway. This has been amended.