Scrapbook Max has scrapbooking software that makes it very easy to use. They have a new version out which allows you to extract images but it's also useful for doing blending like in the below layout. Here is what I did.
The paper and the photo used is very similar in colour - so it made it easy to blend the two together so you can't tell where one starts and the other ends. This makes for a very smooth blend in colours. Place the paper on your page that you want to use and then place photo in postition. Once there click on your photo so it's active and then click the erasor tool in the menu bar at top (version 2 software only). Now using a soft round brush - settings as seen above. Start erasing along the edge of the photo - it gives it a soft erase so it will blend in well. You can adjust the opacity (transparency) and slowly keep going over it until you get the desired result. Click OK and check how it is going as you go - if it's not right - then click erasor again and adjust further as required. My page was set at 12 inch and 300 dpi so I used the largest sizes but if you are using a smaller page size, you may require something smaller. Here is my page after erasing the side of the photo. Once you are happy with the result - then continue adding other elements and word art as you please. Below is my final result. I only used 3 elements from the kit: My Beach and word art by Suddenly Artist. Really simple layout to do and very effective.
You also can do this - it's really not that hard to do as you can see. The main key to the success to this layout I think is the closeness of the paper with the colours of the photo.
Certainly this can be done in many other programs also - such as: Adobe Photoshop and Elements as well as many others - so long as it has an erasor - then I'm sure it's possible and a similar process - so easy to adapt.