What's the difference between an email newsletter and a blog?
First of all, the differences between them have nothing to do with the actual content. It's not like there is "blog" content and "email" content -- at least, not in my opinion. You can (and I often do) use the same material in both formats -- I hope you do too, otherwise, you're missing out on content opportunities!
From a logistical perspective, however, there is a big difference: email is what they call "push" -- I push it to you -- and a blog is what they call "pull" -- I have to pull you to it or you have to find it on your own.
"Push" is more effective because you have more control over what you push and to whom. "Pull" can be effective with excellent search engine optimization and if people are actively looking for your content.
But the most important distinction between the two is about communication: blogging is general and public, while email is intimate and personal.
What I love about email is that I can send it to you. It shows up in your inbox (and hopefully you see it), which gives me a chance to speak directly to you in the first person, about you and something I know you'll recognize, whether it's a problem you have or a situation you face. That's why you give it a tiny bit of your precious attention.
Even when I send the same email message to many people, if I do it right, you will hear it as if I'm talking only to you. That's my goal and I consider it the highest of compliments when someone tells me it's as if I am whispering in their ear.
So which should you do?
If you can only do one, start with an email newsletter, because it gives you more control over who sees it. And don't worry if you don't have a big "list" to send it to. More is not better! Aim for quality prospects and build slowly. You don't need thousands, right? Just a handful of really good people to work with.