'Dream applications' start to come true on the Web

Technology is catching up to the grand ideas of the pre-dotcom bust. Result: a new 'gold rush'

Ever since it sprang up a decade ago, the Web has held out the promise of creating new ways for people to work and play together. E-mail was a step down that road, but thousands of entrepreneurs dreamed about doing much more. The Internet "bust" at the turn of the 21st century wiped out all but the hardiest innovators and put those dreams on hold.

Now the dreamers are back, and some say the Web is entering a new era when it will show what it can really do.

"For virtually every Web 2.0 success story, one can point back to a company in the Web 1.0 era [in the 1990s] that was essentially trying to do the same thing," says Kevin Werbach, a longtime e-commerce watcher.

"We finally realized we could now execute some of these great ideas we had in 1999," adds Alex Bard, the CEO of the start-up goowy.com, whose 100,000 users can send instant messages and e-mails, store and share videos or photos, and keep a calendar - all online. That means all these applications are available anywhere in the world, using a browser on any Web-connected computer.

Computer book publisher Tim O'Reilly dubbed the new era "Web 2.0," an allusion to the second version of a software program. Last September, he wrote an influential essay called "What is Web 2.0?" trying to describe it. While the venture capitalists who fund new Web businesses may already be tired of the term, Web 2.0 remains an elusive concept for most. Experts agree that something new and significant is stirring on the Web, changing the way we use it. But what is it? Try these definitions:

• The rebound of Web-based businesses after the dotcom bust, epitomized by perhaps thousands of start-ups.

• A social movement in which everyone on the Web is able to create and share content.

• A way to harness the collective intelligence of every Web user to create better products and services.

• An environment of swift, continuous innovation that taps ideas from anyone who wants to contribute.

All of these describe Web 2.0. In fact, any definition of Web 2.0 is "totally squishy," says Professor Werbach, who observes Internet commerce from Wharton Business School at the University of Pennsylvania in Philadelphia.

Web 2.0 is real, says Joe Wilcox, a senior analyst at JupiterResearch in New York. But "as real as it is, there's the question of what it is," he adds somewhat cryptically. "What we can say is we've moved into a new era of Web disruption" - enterprises shaking up the Web in innovative ways, Mr. Wilcox says. Web 2.0 has already produced some winning enterprises. Among them:

• MySpace.com has 65 million participants, mostly teens, who want to share interests, meet friends, join groups, and create their own online profiles.

• The 2.5 million members of Flickr.com post, describe, and share photos in a number of creative ways.

• Craigslist.org, the bane of newspaper advertising offices, offers online listings of jobs, goods, and more.

• At YouTube.com, anyone can post or view some 40 million video clips, with about 35,000 being added daily.

In some ways, observers say, the Internet is simply recovering from the dotcom bust, when overly enthusiastic investors got far ahead of what the Web could actually do. Now that feeling of unlimited potential is returning. "I'd say the gold rush is back on," Wilcox says.

The ideas may not be new, but the technical ability to carry them out is. And now, most Americans have a broadband Internet connection. It's always on and can display videos easily. The cost of storing files such as photos and video online has dropped dramatically.

Advertisers have become more comfortable paying for online ads (Web ads will surpass magazine ads in dollar value this year, says a new Merrill Lynch study), creating a stronger underpinning for Web-based businesses. Users have changed, too. The Web is populated more and more by "digital natives," young people who grew up using the Web and are comfortable with it, says John Palfrey, executive director of the Berkman Center for Internet & Society at Harvard Law School.

Online businesses are learning that sharing ideas with users and other businesses helps them grow faster. Weblogs, or blogs, and RSS (Really Simple Syndication) have made individual sharing easier. Users can also participate as "evaluators" leaving "tags" to bookmark what they've found useful and interesting to share with others. Amazon and eBay let users vote for what was helpful about a Web page.

New technologies, such as Application Program Interface, help programs communicate with each other. That allows Google, Amazon, and Yahoo to make their technologies more open, letting people create "mashups." Someone might combine Google Maps, for example, with real estate listings to show prices and locations of houses for sale, or combine it with the Flickr photo service to show where photos have been taken. One person has used Google Maps to plot every New York City location used in filming "Ghostbusters" and its sequel. (See: www.ironicsans.com/2006/04/the_ultimate_interactive_googl_1.html).

The new technologies are useful, but, "I don't think Web 2.0 is being driven by technological breakthroughs," says Dave Weinberger, a longtime Web observer and coauthor of "The Cluetrain Manifesto: The End of Business as Usual," a 1999 bestseller that argued that the Web was about making connections, not commerce. "This is a cultural change more than a technological change," he says.

Not that any change always goes smoothly. Two remarkable Web 2.0 successes have given the concept a bit of a black eye recently. Wikipedia, an online encyclopedia generated entirely by volunteers, has been caught in some troubling slip-ups and mistakes, though it fared well in a now-controversial test for accuracy versus the Encyclopedia Britannica. MySpace weathered a public relations challenge when registered sex offenders showed up among its list of users, most of whom are teens who adults worry may be naive about whom they contact.

But for Mr. Bard, user participation is the key to success for his San Diego-based goowy.com. It operates with fewer than 10 employees but has financial backing from billionaire Mark Cuban. "We get hundreds and hundreds of [user] comments sent to us every day, and we read and respond to everything that's sent in," he says. "There's so many great ideas that our members have."

Microsoft is spending years and untold millions developing the next version of its Windows operating system, called Vista, in secret - a very un-Web 2.0 thing to do. That's like "building the pyramids," Werbach says, in comparison with Web 2.0.

When finished, Vista will be slowly installed on millions of computers. Web 2.0 entrepreneurs can act swiftly, putting ideas online and letting users help them sort out what works and what doesn't.

"It's a culture of continuous innovation - release, improve, release, improve," Bard says. The downside: It's easy to release something that's not ready, Werbach adds. Most Web 2.0 start-ups fail when users don't find enough utility to deal with the early bugs.

In one sense, Web 2.0 is a way of thinking about business. "There's a really powerful fundamental shift in just how people create technologies and companies on the Internet," Bard says. But it's also a social movement, providing new ways for people to come together. "Hundreds of millions of us on the Web feel we're building a new world, and we want to contribute," Mr. Weinberger says. "Something truly remarkable is going on."

The idea of Web 2.0 as the community-driven Web reflects something fundamental and enduring about human nature, Werbach says. "People want to collaborate and share information and ideas with their friends and be part of communities," he says. Web 2.0 helps them do so.

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