Read all about it...but not in your newspaper

LOS ANGELES (Fortune) -- We're a few days before an historic election set in a time of economic crisis that has implications from Kansas to Kabul. What a great time for newspapers!

Sorry. I was dreaming we were back in 1980.

Today, layoffs, cutbacks, reorganizations, and shuttered or scaled-back publications are all part of the news flow for a business trying to manage the double whammy of the upcoming advertising recession and the ongoing digital upheaval. A brief recap of recent headlines: Gannett (GCI, Fortune 500), the country's largest newspaper company, plans to lay off 10%, or 3,000, of its newspaper staffers; the century-year-old Christian Science Monitor will cease publishing in print; the Newark Star-Ledger will cut its newsroom by 40%; the Los Angeles Times and Orange County Register will proceed with their umpteenth rounds of layoffs. (Magazine companies aren't immune. Time Inc., the publisher of Fortune, and rival Conde Nast are making cuts. But the situation is worse for papers.)

So is the sky falling or is this just a necessary correction in an industry that is, after all, supposed to be a mirror on society? My bet is that it's not the end of print, but it might just be the end of print as we ink-stained hacks have known it.

As I and others have written, it's foolhardy to expect the glory days of newspapers to ever return in the digital age. There is a difference, though, between a contracting, fast-changing and over-crowded industry and a dying one. And there remains an argument to be made for the vitality and durability of newspapers (in all their print and non-print iterations). According to figures by PriceWaterhouse Coopers, between 2005 and 2010 the U.S. newspaper industry will go from a $60 billion to a $50 billion industry, as measured by revenue.

Obviously, a $50-billion industry is nothing to sneeze at. At the same time, though, it's clear that the publishing industry that emerges from the end of this tumult will be dramatically different from what existed a decade ago or probably even today.

The best analogy, to my mind, is not one of progress from one form of media to another (say, radio to TV), but rather the evolution from passenger liner and rail travel to commercial aviation in the jet age. Sure, you can still take the Queen Mary from New York to Southampton or enjoy the Orient Express. But the masses are opting for inexpensive and efficient modes of travel.

Similarly, in print, the newspapers (and magazines) that flourish will fall into two categories - premium products that cater to an increasingly limited audience, and cheaply-produced commodities aimed at the masses (think Web aggregators and giveaway papers).

The old maxim that bad news sells papers may still be true, but clearly it's not enough to generate much excitement for the already-rattled investors who are repeatedly surprised by revenue drops and compressing profit margins among publishers.

This week, Citi analyst Catriona Fallon intiatied coverage of the newspaper sector "with a deteriorating outlook" in an amazingly bleak 112-page report. Her only buy recommendation was Gannett, which she classified as "high risk." A couple of weeks back, Goldman Sachs publishing analyst Peter Appert downgraded several of the newspaper stocks he follows. None warranted a "buy" recommendation, despite a bloodbath in newspaper stocks generally this past year: A.H. Belo (AHC) is down 94%; McClatchy (MNI) is down 85%, Lee Enterprises (LEE) is down 82%, Gannett is down 76%, and the New York Times (NYT) is off 52% - and off nearly 80% over five years.

By the way, this is probably as good a time as any to offer an overdue mea culpa to Tony Ridder, the former CEO of Knight-Ridder and scion of one of its founding families. I criticized him in another publication at the time of his company's mid-2006 sale to McClatchy for $4.5 billion, believing at the time that he had caved to an unhappy minority shareholder without enough of a fight. Two years later, it looks like he fulfilled his fiduciary duty smartly by taking the money when he could. Today, after offloading some of the Knight-Ridder papers, McClatchy's market cap stands at a scrawny $222 million.

Clearly, America's publishing blowout is not yet over. Those who thought they knew where the bottom was - such as Tribune Co.'s "grave dancer" boss Sam Zell - are still sinking in the ink. Someone will call the bottom correctly, though putting a date on it isn't so easy.

A while back I was at an event in New York where Bob Iger, the CEO of Walt Disney (DIS, Fortune 500), was asked what he thought about the newspaper industry's future. In so many words, he basically said that if the newspaper didn't exist and someone tried to create it, you'd be hard-pressed to dispute the appeal of a product that delivered the world to your doorstep every morning in a smartly-produced package. He then noted, with some relief, that Disney briefly owned newspapers but unloaded them more than a decade ago-largely to Knight Ridder.