The dizzying decline of Britain’s local newspapers: do you want the bad news, or the good news?

The latest print circulation figures for Britain’s regional newspapers appear to show an industry driven to the precipice and staring at imminent extinction.

Sales are in freefall – down by an average of 13.5 per cent year-on-year in the first half of 2014. The poor South Wales Argus fell by an eye-watering 33.2 per cent and the Doncaster Star sold barely 1,000 copies a day.

The only exceptions to this trend are Scotland’s Sunday Herald, which added 1 per cent to circulation and has 10,000 online subscribers thanks to a policy of charging for its website, and the freely-distributed London Evening Standard (owned by the same company as The Independent and i), which grew by a hefty 27.2 per cent to 890,457 copies a day.

Yet this image of the local press as cornered and facing destruction is misleading. Nor is it the case that internet paywalls and free distribution offer the only escape route from an abyss.

Each weekday morning at 10.30am in the so-called “transformation room”, on the fourth floor of Northcliffe House in Kensington, west London, David Montgomery convenes a meeting of around 70 editors, managing directors and commercial executives from all outposts of the regional publisher Local World.

Those present discuss the previous days’ performances of their websites and how the rapidly-growing audiences have responded to individual stories.

“Monty” is an industry maverick who has made plenty of enemies for ruthlessly chasing margins while deriding traditional journalistic skills, such as sub-editing and news editing. But barely 18 months after Local World was set up to oversee a portfolio of more than 100 titles (including the Leicester Mercury and the Bristol Post), its chief executive can point to plenty of positives. Most impressively, the papers’ websites have built a collective audience of 16.4 million users a month.

Lisa Gordon, Local World’s corporate development director, notes that – while many national news sites draw a large portion of their audiences from overseas – 90 per cent of readers on local sites are based in the UK.

National advertiser brands such as Halifax, Vodafone and Ford have recently been drawn to Local World by the scale and targeting it can now offer.

Away from the obsessions of the national press, local news sites offer rich content on sports teams, exam results and modern phenomena such as school proms, generating a depth of user engagement which would be the envy of Fleet Street.

Increasingly, it’s users themselves who are supplying the content.

In a sleepy Lincolnshire market town, regional news publisher Johnston Press is conducting the “Bourne Experiment”. The Local in Bourne aims to source 75 per cent of its content from amateur contributors. According to Jeff Moriarty, chief digital and product officer at Johnston Press, the initiative has galvanised the paper and Yorkshire’s Pocklington Post, which was also ailing.

“Print circulation has improved and the website has received traffic growth,” he says. Johnston Press had more than 1,000 pieces of user-generated content submitted to its portfolio (which includes The Scotsman and the Yorkshire Post) in June alone.

Mr Moriarty deserves to be heard. He worked for The New York Times and was head of digital at The Boston Globe before choosing to immerse himself in the delights of the British regional press.

“The number of newspapers in this country is just remarkable,” he says, noting that Johnston Press (15.5 million monthly unique users), Newsquest (16 million) and Local World, have a combined reach of more than 45 million a month. “That’s most of the country.”

He could add in Trinity Mirror Regional which, though not officially audited, claims a 17.3 million monthly audience across its stable of big-city titles, including the Manchester Evening News and the Liverpool Echo. The Echo grew its web traffic to 2,159,267 in the first half of 2014, a rise of 78 per cent on the previous six months. It is also Britain’s best-performing local paper on Twitter, with 158,000 followers.

The social site is derided by inky-fingered old hands for not generating revenue, but it’s a vital marketing tool which keeps historic brands relevant to young readers.

The “Right to Tweet” campaign by the North Wales Daily Post helped persuade Local Government Secretary Eric Pickles to announce last month that the press and public would be allowed to blog and tweet from council meetings.

Earlier this summer, Newsquest’s Oxford Mail claimed to be the first British newspaper to introduce a news alert service on WhatsApp.

Meanwhile, some 70 per cent of Local World’s weekend audience is coming to its content on mobiles and Johnston Press has used its new, online expertise to build Digital Kitbag, offering marketing services to 1,000 clients. These are not the actions of media dinosaurs.

Even so, many people working in the local newspaper sector remain worried for their jobs. Newsquest has seen strikes this year in protest at “subbing hubs” that see copy intended for readers in Bradford and York being edited in Newport, south Wales.

Online audiences and digital revenues are growing but – for all their fine words about the importance of quality content – regional publishers continue to show reluctance to invest in writers, reporters, photographers and video journalists.

Next week at the TUC Congress in Liverpool, the National Union of Journalists will put forward a motion calling for a “government-commissioned inquiry” into the “crisis” in local newspapers, noting that a quarter of local-government areas are no longer covered by a daily title.

The future of Britain’s local papers still gives real cause for concern – but at least now there is also some reason for optimism too.