Edward Byrne, Editor of the Valparaiso Poetry Review, has an interesting discussion about online magazines at One Poet's Notes. He's referring to an article in the new Poets & Writers that I haven't yet seen--I'm at the end of their distribution list, it would seem--but I'm looking forward to reading it. (The article is by Sandra Beasley, the second time in a week I've mentioned her!)
There is no doubt that online literary journals have arrived. As with print magazines, there are many online journals that are awful, publish junk, provide little or no editorial oversight, and aren't worth reading. Serious writers and readers will recognize those magazines quickly. But it is beginning to be recognized that some online magazines do first-rate work, comparable to their prize-winning print-based siblings. There has been a stigma against online publishing, but that is beginning to fade.