I think a way out of the crisis for paper media could be Amazon’s Kindle, only slightly improved. I don’t know for sure whether it can sync with a PC over Bluetooth right now, but that would be useful.
Say I want to read Wired on my Kindle. I subscribe to the sections I’m interested in, by RSS, for example. And Google, being a cutting-edge company, has by then improved Google Reader so that it can sync with the Kindle.
Now one more important detail. The drawback of paper media compared with electronic media is that they give the reader information in discrete portions (a new issue comes out on Mondays, say), while blogs publish within a few hours of the event that made the news, not to mention microblogs that broadcast information in real time. Everything is heading toward information moving faster and faster, and the printing press is too slow, a relic of the 1.0 era.
On the other hand, there’s the need for quality reflection on events, which blogs often (so far) can’t provide, and that’s what traditional media should hold on to. Nothing new, really :)