Some interesting thoughts here. Money quote:
The economy certainly has something to do with this a dirty little secret of blog reading is that most people read blogs at work. Less people are at work in front of a computer, and those who do have jobs where they can read blogs are being very careful about giving their employer a reason to can them, and are working harder, with less time to fritter away on blog reading. So there’s that. But I also think peer review in blogging has a role here, too; there is less curiosity factor among the wider online readership, and more filtering, i.e., blog readers are more discriminating. They now know precisely what they want, and they look for it.
The avalanches of traffic from bigger blogs have also apparently become less frequent. The Dish is way up over last year at this point, but we seem to be an outlier. I don't buy the idea that the blogosphere has been coopted by the MSM. In many ways, we've coopted them. But if the joy of amateur blogging is receding, that would be an enormous loss.