The leading people at Fairfax Media are singing a new refrain in public appearances in recent months. It goes like this: don’t judge us by the standards of the past. Drop the nostalgia. Don’t carry on about how, in the past, there were no nasty advertising wraparounds, and no post-it note ads demeaning the mastheads.

These are different, leaner times. The 1970s and 1980s, when the classified advertising rivers of gold fell straight to the bottom line (as the mixed metaphor goes), are over. Judge us by the exigencies of our times. And they are right, of course.

But boy, it hurts, and never more so than yesterday with the release of profit results that CEO Greg Hywood described as disappointing. A more accurate word might have been shattering.

The optimistic take on the “Fairfax of the Future” spin is caught by slide No.20 in the presentation to investors by Fairfax, which shows the idea of “monetising audiences throughout the day” with the cross-media platforms all distributing journalism and quality content.

This is a similar slide to the one Hywood used at the A.N. Smith lecture late last year. It is the most credible pitch available to him, but the underlying reality, which is acknowledged between the lines, is that in the future this “quality content” will have to be created by much smaller newsrooms and many fewer journalists.

“Fairfax of the Future” is about cost cutting, and doing the best you can with much, much less. And that is assuming that the company can manage the transition from being a high-cost, high-revenue print business to a cheaper-to-run but also harder-to-monetise digital business. The signs are not good.

There is an alternative future, in which the journalism business is sold off (perhaps to Gina Rinehart) or declines, and the other tidy little businesses within Fairfax — its RSVP, its Trademe, its — continue. Hywood, a journalist at heart, is not likely to oversee or tolerate any such strategy. Others with harder noses might like the idea.

The problem is that the newspapers are declining faster than the digital side is picking up. We saw this in the poor circulation figures recently. The Sydney Morning Herald’s Monday-to-Friday sales were down 12% year on year.

To be fair, part of the reason for that is that Fairfax has pulled back from all the cut-price deals in which below-cost copies were distributed to gyms, airlines and hotels purely for the sake of circulation. But that doesn’t fully account for the slide. Take out the bulk copy sales, and the numbers still fell.

So Fairfax released readership figures for digital platforms, because part of the “Fairfax of the future” riff is about total readers across all platforms, and that hard-copy circulation no longer matters, or not as much. This, too, is true. But still not a great story for Fairfax.

Website ads are not big on revenue, and although the apps for the newspapers have high download numbers (apps being the new impulse purchase of our times), as Mumbrella worked out earlier this month, the figures suggest that only 5-10% of those who download the phone and tablet apps are using them every day.

That’s a pretty miserable figure if you are looking either at selling the ads, or at hoping to charge for digital subscriptions. If Fairfax ever does decide to charge subs for the digital editions, that 5-10% figure can be expected to drop by at least half, and that’s being optimistic.

And even if the apps  succeed in gaining many regular readers, it can only be at the cost of print circulation. So even the optimistic version of the future is for much leaner operation, including much smaller newsrooms.

Fairfax is already gearing up for this with the transfer of the local newsroom editorial talent to national positions. Mark Baker, formerly in The Age newsroom, is now managing editor (national) with responsibility for creating national investigative teams and, probably, combining the Sydney Morning Herald and Age Canberra bureaus.

Those who have hopped between cities in recent times know all the Fairfax mastheads are increasingly looking like different editions of the same newspaper, while the online only National Times blurs the brands even more. Mostly the same content, sliced and diced in different ways.

The bright spot for Fairfax is regional and agricultural publishing, with this being the largest contributor to revenue, with only a small decline from last year. This is the old Rural Press empire, built largely on monopoly publications in country centres. There are some excellent newspapers, and some dreadful rags, in this stable.

There are many country towns in Australia where the Fairfax claim to being centrally preoccupied by quality journalism is a bad joke. How long can these publications expect to hold off the threat from the internet, including local communities deciding to start up their own rival publications online? It will come.

Also a bright spot is The Australian Financial Review, in the middle of reform, and a profitable business in its own right. A respectable view among insiders is that it is the AFR that is the real target of Gina Rinehart’s move on Fairfax. And, standing on its own, the AFR is good business for anyone.

Of course, Fairfax is not alone in all these challenges, and it should get some brownie points for relative transparency in telling the yarn. The Australian still has many cheap copies out there at airlines, universities, gyms and so forth. Insiders suggest that somewhere around 30,000 copies of The Australian are sold at below cost (it’s difficult to calculate, because the figure depends largely on where they are sold, and the cost of distribution) and that the paper will lose up to $20 million this year.

The Australian has not yet released data on the number of people reading the masthead in digital form since the paywall went up, and in particular since the three-month free trial period ended for most of those who signed up initially.

Meanwhile the Herald Sun is pressing ahead with plans for a digital paywall strategy – making it the first of the News Limited tabloids to take this step. The success or otherwise, and the reason this is being tried first in Melbourne, is about religion — that is, AFL. The bet is that Melburnians will care enough about quality sports coverage to pay for it. We will see.

The gloom is deeper, of course, because of the ratshit advertising market at present — something all media are suffering from.

But the structural problems underlie this, and will not go away with advertising recovery. Managing the transition from print to multiplatform is a very difficult trick, and those trying to pull it off deserve our sympathy. They are still responsible for the majority of our nation’s journalistic capacity.

But that should not hide the fact that already and in the medium term, a substantial slab of the future of journalism will lie outside today’s dominant media companies.