Here's an interesting article on the changing media landscape. It's not the case that blogs are replacing the MSM; rather, they are augmenting it and changing it (much like TV augmented and changed rasio - you don't see many radio dramas anymore, but radio is far from dead).
Blogs have created an innovator's dilemma for the media business. They (and other technologies such as RSS, podcasting etc.) have emerged because first and foremost they have lowered the barriers to entry. Secondly mainstream media have for the most part, become staid and homogenous, reporting broadly the same news and events. Blogs on the other hand tackle far more diverse issues and topics and of course provide a wider spectrum of opinion - though this may or may not be good depending on your point of view.
The major challenge for the media business is that as blogs become widely adopted there will be a change in the media mix. If a consumer reads blogs then they are likely to still read newspapers and magazines, watch TV and listen to the radio - but it's also likely that the proportionate mix will change. Perhaps the consumer will reduce TV time or read a smaller number of magazines. That's the challenge.
For Public Relations practitioners the challenge is about understanding that mix. You need to understand where your audience is and how they are finding information. Once you have that valuable information, you need to use it wisely and communicate using the tools your audience prefer. This is why it is so important that this profession steps up and embraces the changes taking place online.
Reaching your audience may be harder than you think though. I'll give you an example based on conversations I had with some of the engineers I was meeting with yesterday at our planning meeting. For me, blogs have made it possible to hear more opinions - I read far more about MS oriented and Java oriented development than I ever did before. I also read tons more political opinion with which I disagree. That's not the norm for everyone though. A number of the people I spoke to yesterday use the proliferation of sources to further isolate themselves - they live in an echo chamber filled only with agreeable opinions. It's far easier to do this now than it used to be.
Back when your only sources of technical opinions were written journals, you were confronted with technology that you might not work with regularly, or even know much about. Back before blogs and 500+ cable channels, political junkies only had things like "CrossFire" (or going furher back, "Point/CounterPoint"). Now, you can immediately locate favored content and ignore all else. There are obvious issues with this, but let's look at one in particular - reaching an audience with your marketing message:
How do you intend to get your point delivered, much less listened to?
If increasing numbers of your target audience live in self imposed echo chambers, how do you deliver an alternative point of view? That audience will get encouragement and reinforcement from other members of the "tribe", and will become increasingly ill disposed towards your alternative message. It's a real problem, and it's growing.