Newspapers are still in a relatively strong position if they can act, but the local initiatives by the search engines are a threat. Everybody understands what's at stake and even the strategy. It's just a question of execution.
I don't think it's a fad. The general Web search market is pretty much locked up, so vertical search is where the opportunity to create something competitive is.
Over the long-term, competition in search should increase. Growth is still impressive but it's moderating.