From the NYT:

While the networks tussled over which would land the first interview with Paris Hilton after her release from jail, the upstart Web site TMZ.com was breaking most of the news.

On June 3, TMZ.com was the only media outlet to capture on video Ms. Hilton’s surrender at the Los Angeles central jail for men, while other outlets waited outside the Lynwood women’s jail for her to arrive there. When Ms. Hilton was released early by the Los Angeles County Sheriff, Lee Baca, and when Judge Michael T. Sauer ordered the sheriff to take her back to court, TMZ.com was first to report that Sheriff Baca had initially refused to follow the judge’s order.

TMZ.com has so dominated the coverage on Ms. Hilton that Larry King, who is scheduled to interview her on CNN Wednesday night, will turn over tonight’s one-hour show to TMZ.com’s anchor and managing editor, Harvey Levin, the man who may represent the future of celebrity journalism.

In the past, media coverage of celebrities often hinged on the promotional agenda of studios, publicists and other handlers. Under the direction of Mr. Levin, a former lawyer and investigative reporter, and Jim Paratore, an executive consultant to the site, TMZ.com has quickly gained an audience by posting news articles garnered from documents, unofficial videotapes, exclusive paparazzi shots and other sources like law enforcement officials and courthouse clerks. (The name stands for “thirty mile zone,” referring to the area around Los Angeles populated by celebrities)

“We work as hard at breaking a Britney Spears story as NBC would work on breaking a President Bush piece,” Mr. Levin said.

As a result, TMZ.com has become the celebrity handler’s worst nightmare. The site has had a series of damaging celebrity scoops, including the police report detailing Mel Gibson’s drunken anti-Semitic tirade, Michael Richards’s racist rant in a comedy club, an audiotape of the angry phone message Alec Baldwin left for his daughter and a photograph of Anna Nicole Smith’s refrigerator filled with methadone and Slim-Fast.

But TMZ.com’s reach extends well beyond the approximately nine million people who visit the Web site each month. The site has become a reliable source for the mainstream media, which has become less self-conscious about reporting every detail of celebrity missteps, according to Hilary Estey McLoughlin, the president of Telepictures Productions, a division of Warner Brothers, which co-owns the TMZ site with AOL. Both Warner Brothers and AOL are divisions of Time Warner.

“There are times, like with the Paris Hilton story, where we’ve set the agenda for what local news and national news are covering,” Ms. Estey McLoughlin said. “Paris Hilton leads every newscast.”

As the above excerpt notes, TMZ.com is a division of a very, very big corporate media entity. Here's what the story had to say about that:

Mr. Paratore counters that the site’s relationship to Time Warner and questions that might arise from that relationship were dealt with before TMZ’s introduction.

“Everybody understands what it means to be in this business,” he said. “There have always been stories in Time magazine, People and Entertainment Weekly that have not always been flattering to other divisions within the company, and everybody understands that you can’t control it and they don’t try.”

Here's another part worth noting, dealing with why TMZ.com has resonated with the public:

“Five years ago there was so much reverence in the discussion,” said Janice Min, editor-in-chief of Us Weekly. “I’ve seen a shift in the tone. It’s now equal parts reverence and contempt, and TMZ has been able to capitalize on that contemptuous feeling. TMZ pokes fun at celebrity — sometimes gentle, sometimes quite harsh — and to millions of people, that’s more engaging than reading a canned interview.”

Actually, it's a pretty interesting article. Read the whole thing! :)