To answer the question, no, it is not dying yet. It hasn’t been that annoying yet, and isn’t that pervasive yet.
It is continually evolving. Look at the impact DVR has had on the traditional 30-second spot. A large enough percentage of users of this medium were so annoyed by ads, that an industry has grown around (partially) the ability to skip these ads.
The future of SEM most likely will include a simple BHO that eliminates obvious paid advertising, similar to the BHOs that, for the most part, made pop-up advertising irrelevant.
If you annoy enough of the market through a select channel, your market will ignore the ad portion of that channel and tune it out, killing your effectiveness, or block/abandon the channel altogether.
