Editing a newspaper at the start of the 21st century is a tough job. The concept of mediating world events to a select group of readers has been blown apart inside a decade. Reporters, writers, editors and printers are wandering round like victims of a bomb blast, enveloped in a cloud of digital dust. The profession of journalism staggers about, choking for air. Nobody knows quite what is happening.

Continued revelation of the reporting practices of the News of the World suggests the bomb was a suicide. Editors on a paper whose stock in trade is human anguish appeared to lose all respect for the law, let alone self-control. The hacking into Milly Dowler's phone was part of a culture of intrusion that seemed to know no bounds. It now appears to have extended to the Soham murder victims' families. This stretches any public interest defence beyond credibility and taunts politicians to react with scourges against press freedom, for which there will now be strong public pressure.

Even those familiar with the techniques of tabloid journalism have found what was happening at the News of the World and among the dark arts of its surveillance contractors amazing. Former executives profess themselves "appalled, shocked and sickened" at what happened. Like many accused, they cannot quite believe it is them in the dock.

Already in the 80s technology was taking "investigative journalism" beyond the humble phone-tap and telephoto lens. Early victims included the Prince and Princess of Wales and, it seems, anyone with half a claim to celebrity.

The flourishing of social networking rendered this intrusion near limitless, but also took it beyond the scope of well-heeled newspapers. It made personal privacy, government secrecy and general discretion so fragile that prurience once bought for the price of a paper could be satisfied free, at the click of a mouse. The public's appetite for personal trivia proved inexhaustible. The Daily Mail's celebrity website is a global phenomenon, if not a commercial one, but must itself be vulnerable to celebrity blogs, Facebook and Twitter, over which it is virtually impossible to exert legal control, let alone monitor taste or ethics.

Pressure on editors and newspaper owners not just to "dumb down" but to abandon all scruple and restraint has been intense. The handling by the press of the Joanna Yeates murder case, now subject to contempt of court proceedings, shows the degree to which the web has eroded newspaper discipline.

The same applied to the legal and media hounding of the distressed family in the Dowler case. On Monday morning Fox News found itself announcing to its Twitter readers that President Obama had been shot dead in Iowa. It was hackers at work, but initially who was to know? The scope for mischief is infinite.

Such indiscipline has been regarded as "an accident of freedom", just as phone hacking was initially seen as an accident of celebrity. It now contributes to a sense of growing anarchy and licence in the media generally. When trillions of signals are flooding the web, it is hard for any news provider to claim exclusivity or properly to restrict access to material to enforce payment. It is equally hard for serious journalists to protest some moral scruple when "the community of the web" declares on all sides that anything goes.

The spread of the web has plunged conventional media into panic. Yet, as with all innovation, it is hard to discern true dawns from false ones. As the science historian David Edgerton warned in The Shock of Old, invention outdazzles productive use so as to make fools of futurologists. What real benefit to humankind, he asked, came from putting a man on the moon, flying faster than sound or making a drip-dry shirt? The hi-tech drone bomber is allegedly sold as transforming the nature of war, but though it can kill anyone anywhere, it seems near useless in winning a war.

Newspapers must likewise decide if the threat of the internet – apparently so all-powerful as to obliterate everything in its path – is merely a repeat of the forecast that "all painting is dead" when photography appeared. Is it the same false dawn as when the cinema was to put live theatre out of business, when the hi-fi was to kill off the concert and the paperback to finish the hardback? As the press now panics and stampedes downmarket towards the "kingdom of the hits", will the survivors be those who kept their nerve or those who got out quick? At present it is impossible to say.

It would take a cool nerve to deny that the electronic newspaper is here to stay, but all innovation is eventually judged by money. The collapse of the dotcom bubble after the 1990s boom was caused by expectation outstripping revenue, though not before it gave the retail trade a shock. Today's explosion of web news and comment is jeopardising media revenue streams as dotcoms did shops.

There are trends that suggest the web is settling down to a sort of equilibrium. Paywalls are struggling into life. Despite the hope-value attached to operators such as Facebook and Twitter, they find it hard to generate cash. And there are signs in the US that "Facebook fatigue" may reflect the view that personal exposure does not lead to happiness. In Britain the super-injunction affair, blown open by Twitter, left many wondering how soon it will be before "freedom to lie" runs up against severe legal constraint. This revolution is like the transport revolution of the 19th century, when wild investment and unregulated chaos were brought under statutory control, planned and taxed.

For all newspapers, the News of the World phone-hacking scandal has become a moment of truth. It has shown how far commercial pressure from the web and from within big corporations has distorted ethics. Journalism has always tested the bounds of investigatory intrusion, but it cannot break or interfere with legal process. A law on privacy would be cumbersome and hard to police, but as the Press Complaints Commission is a broken reed in this matter, each scandal makes it harder to stave off calls for legislation. Such legislation would be a bad idea.

The case for a continuing profession of journalism is that there is public value in the marshalling and editing of information by disciplined media institutions such as newspapers and broadcasters. Such journalism must be able to claim that it meets standards of public accuracy and taste not matched on the free-to-air web. It must believe in readers who will value, and ultimately pay for, quality reporting and comment. Tarnish that belief, and we really are out of a job.