I suspect that the New York Times will go the way of the Betamax and the Lisp Machine. It becomes a quaint relic of a technically superior age, but nobody actually buys it anymore.
The good news is that once a disruptive innovation has taken over the market, it usually improves to eventually match the original incumbent. So after a few years of drek, we'll see the worst, most content-free blogs die off and be replaced by people who put more thought into it. I suspect this is what'll happen to the best reporters - after a few lean years, they'll start up blogs, people will realize that those blogs give much better information than the competition, and they'll end up making much more than they ever did while working for a newspaper. After all, they don't have to share all the ad revenue they generate with the print staff anymore.
Only the best reporters, though. It'll suck to be a mediocre reporter, just as it sucks to be a mediocre real estate agent now and it sucked to be a mediocre programmer in 2002. The field will probably shrink significantly, but that's the whole point of capitalism - freeing up labor to work in fields where they'll be more productive.
Consequently, I wouldn't expect the best reporters to be able to make more - I'd expect the worst reporters to make the most money. That is, those that are willing to dumb down/spice up the content so that it sells well. I call this the News Corp/Myspace effect and don't see any effective counter.
Do you?
In fact, some well known bloggers are reporters who just decided they didn't need the paper anymore, like Matt Marshall of VentureBeat.
The other is the issue of aggregation. It might just be that bloggers are the new journalists and Techmeme/GoogleNews are the new New York Times, so maybe it's not a huge problem, but overall, I think most people aren't interested in building up and filtering RSS feeds to find the news they care about.
http://www.powerlineblog.com/archives/2003/11/004953.php
Wherever there's something interesting happening, there's at least one person with a Blogger account and a little free time.
Most popular bloggers lean towards collect stories -- they don't write them.
Blogs are a distributed newsroom: reporters and editors don't even have to know each other to outwrite and outthink the New York Times, the Wall Street Journal, and the Washington Post.
If you haven't noticed, front-line, serious news gatherers have been diminishing for many years. Reducing the number of first hand source gatherers. Editors & sub-editors who read stories, check titles have greater responsibilities so last minute checks on stories with clanker titles, mistakes miss out. There has been a serious decline in the variety of sources (always bad). Younger readers are shunning traditional media (tv, radio, newspapers).
So what's happening? Is it all bad? Well yes and no. Joe public is now the news gathers with phone, sms and web in hand. Websites who specialise in particular topics gather & pick up these stories and traditional media lag behind.
The re-adjustment will occur when the new, "new media" sites are required to have greater technical, cost and professional standards. Markets will and have been re-adjusting the traditional news structure.
So does traditional media disappear?
No, they adjust, adapt or become irrelevant. At the moment - traditional journalism (reliable source gathering, questioning the status quo, looking beyond the hype, analysing ) has been the worse for wear and we are worse off for it.
But, what should we, as a society, do about it? While blogs and other citizen journalism have actually helped journalism, there is still significant value in dedicated professional journalism. A significant amount of the raw material that is discussed in the political and news blogs comes from the professional sites.
Reporting is expensive and good reporting is hard - we'll be at a serious loss if someone doesn't figure out a good way to pay for it.