This is a video that I came across in my time as a library science grad student. It is basically a video that predicts what might happen to newspapers and "regular media" as social networking, Google, and Amazon become more and more popular. When I first saw it, which was just last semester, I thought that there was no way that this could happen. Now, on the other hand, its looking more and more likely.
http://www.albinoblacksheep.com/...
Its a little dated, since it was written before Facebook, but if you just replace Friendster with Facebook then it works even better. And I just read today (on Blue Virginia) that there are websites that provide news customized to your particular location, something like micro-local news.
What newspapers might be able to do, in order for some of the biggest ones to survive, is to become more like magazines. Concentrate on writing features and doing investigative journalism, something that is harder for the blogosphere to do. What may be missed, however, is things that local investigative journalists used to do, finding scandals and investigating things in their own local town or city. Can blogs and other alternative media step up and take this place? I guess we'll find out.