I take a similar view myself when it comes to a lot of ‘citizen journalism’, but I’m a bit more hopeful about its future. Yes, it’s easy to write anything you want without much fear of any serious consequence. And yes, it’s currently fairly simple to get pretty wide coverage for this. But the thing is, sites that publish lies will surely lose readers. What’s more, the commenting systems that are so integral to the blog experience allow anyone to correct you instantly and, talking to the authors of a couple of high-profile blogs, people do. And thus the exposure of your mistakes become a permanent part of the site, something most of us want to avoid. This is a good thing, of course, because once bitten, it makes blog authors more careful about what they write. With news voting sites, once you’ve discovered that you ‘dugg’ a story that turned out to be untrue, won’t that make you a little bit more cautious going forward? Similarly, while a lot of mistakes and bad writing appears in Wikipedia, it’s continually being corrected and refined, so that over time it gets better and better.

That’s very different to traditional media, where your editor and subeditor — and hopefully your training and professionalism — will stop you making as many mistakes in the first place. But, on the other hand, the mistakes that do slip through tend to take a long time to be corrected, if at all, and those corrections can quite easily be buried on page 32.

The madness of the masses

You see, the faster the news services the greater the chance of error. Social news sites can beat any traditional news site based on speed–but they are always going to suffer from the madness of the masses. The upside is that social news sites expose misinformation almost as quickly as they disseminate it–will people remember the correction or just the incorrect headline is the rub. Sometimes they will, sometimes they won’t. The masses, and managers, of these sites are going to need to focus on corrections as violently as they do misinformation, or the social news sites will turn into glorified message boards/chat rooms.

Users benefit in multiple ways. They are empowered, with an internet that they choose and have, in part, created. The content they read and write is about what interests them rather than what a publisher thinks might interest them. They get cheaper access to applications. They are able to participate in and create a social network with like-minded people that may not exist in their day-to-day lives.

Businesses can benefit in similar ways. Many Web 2.0 services have specific business purposes. Startup 37Signals sells online collaboration services specifically designed to allow geographically remote teams to manage projects and agendas. Business documents and handbooks are recreated as Wiki’s (the information structure program used by Wikipedia). BusinessWeek reports that “Dresdner Kleinwort Wasserstein uses a Socialtext wiki instead of e-mail to create meeting agendas and post training videos for new hires. Six months after launching it, traffic on the 2,000-page wiki, used by a quarter of the bank’s workforce, already has surpassed that of the company’s intranet”.

Maintaining and developing contacts can be achieved through services like LinkedIn (www.linkedin.com, a ‘grown-up’ version of MySpace). Businesses can also add to or replace some of their PR activity with corporate blogs. Erstwhile Microsoft blogger, the gracious and disingenuous Robert Scoble has arguably done more to soften its image than any of their PR activity over the last few years (http://scobleizer.wordpress.com).

For publishers, the Web 2.0 approach clearly makes for an attractive business model. Having created a platform like digg.com, ongoing costs are fairly minimal for a news site, with no reporters, no editors, and no production people. They have to pay for the bandwidth and some programmers to tinker with the platform to keep it working satisfactorily. Their revenue comes from targeted avdertising such as Google AdWords (more of which anon) and since we, the users, decide what appears on the front page, these advertisements will be very accurately targeted to what the digg community is interested in.

It is not surprising, then, that the promise of a successful Web 2.0 site has the business community excited and that VC funding and angel investment is coming back to the internet. News International’s acquisition of social networking site MySpace for $580mn in July 2005 has been the largest deal so far, but it is one of hundreds of deals.In most cases, the amounts aren’t astounding. Luckily for investors, with the low-cost business models these startups have adopted and users driven as much by word-of-mouth as traditional advertising, there isn’t actually a need for vast amounts of capital in many cases. There’s certainly no return to the frenzy of 2000 when, for example, pets.com, which sold pet food online, raised $82.5mn in an IPO before collapsing nine months later. But they are interesting nonetheless.

Communal video sharing site youtube attracted $5mn from Sequoia Capital in October 2005, while digg got $2.8mn. Online calendar service trumba attracted $8mn in November 2005 from three investment companies. Zimbra, an online equivalent to Microsoft Outlook, raised $16mn. Facebook, a college networking site, raised $12.2mn. The list goes on, most amounts are undisclosed, but a glance at the portfolio pages of VC companies like Union Square Ventures, the Omidyar Network and Selby Venture Partners confirms that confidence is high.