The way I see it, blogs, websites and free apps will continue to thrive with:
- Affiliates (already popular)
- Selling collateral products, such as books, merchandise or premium memberships (already popular)
- Native advertisement (on the rise)
- Sponsorship (on the rise)
- Crowdfunding (on the rise)
- Micropayments (in it's early days)
Those monetization strategies can be used singularly or all together, which will also give a good revenue diversification.
The more natural substitute to traditional advertisement is obviously native advertisement and sponsorship. Those two alternatives require a more direct connection between publishers and advertisers/sponsors, leading to a completely different - less scalable, less optimized, but more effective and user friendly - approach to marketing and monetization.
So in conclusion, blogs/sites won't die with the decline of advertisement.