Britain is not doomed to repeat woes of US newspaper industry

So bad is the situation that the concept of innovation, which has historically been linked to expansion, has now been transformed into its opposite. As in, "here's an innovative way to save money".

Cost-cutting euphemisms are changing too. I have to hand it to the publisher of a small group of Washington papers who described last week's closure of a new bureau, with the loss of five staff, as "right-sizing" rather than downsizing. Elsewhere, outsourcing, an unpopular practice, has now become "streamlining" and job-cutting is referred to as "slimming" or the creation of "a leaner operation." But the facts of the matter, however they are dressed up or dressed down, are not in dispute. Some 72,000 media job cuts have been reported across the US since June 2000. From giant national chains to smaller, localised operations, the story is the same.

Just this week the Chicago Sun-Times announced plans to cut 35 newsroom jobs, a group of newspapers in West Virginia closed down altogether and an Iowa-based company that runs community papers, Lee Enterprises, felt compelled to buy back its own stock after its share price fell by 18% in a day despite strong cashflows and the belief of most commentators that its shares are dramatically undervalued.

Newspaper company stock prices have plunged in the past 12 months as Wall Street has continued to give the thumbs down on newsprint. The New York Times is down by 29% on a year ago, Gannett - publisher of 90 daily titles and nearly 1000 weeklies - has fallen by 35% and America's third largest newspaper conglomerate, McClatchy, has nosedived by 71%.

Only a few groups have stood out against the tide. Dow Jones's fortunes were unique. Rupert Murdoch was willing to pay a 70% premium on the share price for the publisher of The Wall Street Journal because it is a global financial brand with a successful web operation.

No-one else enjoyed such a stellar performance. The Washington Post did best with a 5% gain, mainly because of its lucrative TV division and the growth of an education subsidiary. A couple of other reasonable performers, such as Belo and EW Scripps, down by 3% and 10% respectively, have maintained investors' support because both have announced plans to split themselves into two, placing their ailing newspaper divisions into separate companies.

The implication is obvious: newspaper owners and investors agree that newsprint has only a limited future. In their view, it's so last century. As the digital age advances, everyone in the US has lost faith in ink on paper.

The reasons are not in dispute. Classified advertising, profit provider for more than a century, is vanishing to the net following the free ads revolution pioneered by the Craigslist website. Readers are gradually turning their backs on papers in favour of screenbased news sites.

But something else appears to be happening too. The growth in web traffic for the New York Times and the Washington Post suggests that people across the States who have never previously been able to read those papers are doing so online, at the expense of the papers published in their own cities and towns.

In other words, the big US news brands are putting the squeeze on the smaller papers because their websites can offer a greater quantity and quality of news, comment and analysis, plus video and audio material.

It doesn't mean that the American public is not interested in what happens locally - all news is local, is it not? - but I wonder if there is any point in US papers outside the major cities, which have traditionally carried international and national news, doing so any longer. US publishers need to rethink their agendas if they hope to go on selling papers.

The situation is very different in Britain, of course, where there has long been a division of content between national papers and the regional press. Our local papers already focus on what's happening in their areas. That's their raison d'etre. It is one of the key reasons why we need to avoid using the US newspaper industry's troubles as a guide to the future of British papers.

The circumstances are not synonymous, and worried investors in British newspaper companies should therefore beware of taking the lead from Wall Street. Our papers are in better shape than those the in US.