"And you know something is happening, but you don't know what it is, do you, Mister Jones?"

--Bob Dylan

When it comes to figuring out where the Web is going, Mister Jones has lots of company: pundits and reporters, bloggers and professional analysts, executives who have staked their livelihood on guessing right and entrepreneurial programmers trying to hitch their careers to the next big trend.

The short history of the Web has been a roller-coaster ride, breathless optimism and wild speculation followed by the dot.com bust. But if the Web had not quite broken free from the gravity of sound business practices, it was hardly as buried as the pessimists had thought. The evidence was right there in the browser bookmarks: Google, Yahoo, eBay, Amazon. These companies, most based in Northern California and all on America's West Coast, have not only survived, but have thrived on profit models that have turned bandwidth into gold. These companies are now following two classic Silicon Valley growth models: build clever things in-house while acquiring, Cisco-style, smaller companies that have done clever things on their own. Those acquisitions, in particular, have attracted another character from the boom days of the Web: the venture capitalist.

And so depending on how you look at it, the Web is now in a new stage of development. You could call it the "post dot.com boom/dot.com bust era," but that's a mouthful. A more succinct name: Web 2.0.h That has become the blanket term for whatever it is the Web is doing these days. Or perhaps youfd prefer the more exact Wikipedia definition: "Web 2.0 refers to a perceived transition of the World Wide Web (ethe Webf) from a collection of websites to a full-fledged computing platform serving web applications to end users. The proponents of this thinking expect that ultimately Web 2.0 services will replace desktop computing applications for many purposes."

Publisher Tim O'Reilly, who co-founded the Web 2.0 conference along with John Battelle, said in a telephone press conference that "Web 1.0 is the architecture of consumption;Web 2.0 the architecture of participation. The secret of success seemed to be harnessing the users, and sometimes in non-obvious ways." Google is a prime example of this in most-though not all-Web 2.0 criteria. The company didnft invent the search engine, but it did invent a better one. That operating philosophy still applies:Google takes existing Web services and makes them better-sometimes, way better: a mapping service that combines satellite images, a news site that gathers clippings from 4,500 updated sources, a shopping engine that searches the Web at large, a webmail site that reset the bar for available storage, a free, easy-to-use photo editor, the default blogger-the list continues to grow.

So what exactly is Web 2.0? In a recent extensive essay entitled "What Is Web 2.0: Design Patterns and Business Models for the Next Generation of Software," Tim O'Reilly gives an inexact, but provocative answer. (The essay in English is linked from his home page: tim.oreilly.com.) O'Reilly credits Dale Dougherty, an O'Reilly vice president, with coining the actual term, but admits that much argument remains over what it means. So as a starting point, he lists a set of old world services along with their Web 2.0 equivalent. Among them:

Admittedly, this is imprecise stuff. gMister Jonesh himself might argue that this is just fashion: that Web 1.0 amounts to whatever the cognoscenti thinks is "passe" while Web 2.0 is whatever they think is hip. But as you dig through O'Reilley's essay, you realize hefs getting at some fundamental changes, even if every criteria doesnft fit every Web 2.0 example.

Web applications come of age

O'Reilley's core defining principle of Web 2.0 is that the Web, not your hard drive, is the application platform of the future. gWeb 2.0 is the era when people are recognizing that leadership in the computer industry has passed from traditional software companies to a new kind of internet service company, O'Reilly wrote on his blog. gThe net has replaced the PC as the platform that matters, just as the PC replaced the mainframe and minicomputer.

The conventional example of the Web as platform is the hosted application. Salesforce.com, Microsoft and other vendors have argued that with reliable high-bandwidth access, the Internet, not the local disk, is the most sensible place for applications to reside. The hosted model eliminates installation problems and upgrade concerns, while giving users the ability to access their data from home and on the road, as well as to collaborate with colleagues. Vendors also like the hosted model because users subscribe to a yearly service rather than purchasing a license, resulting in a steady, more predictable cash flow.

With hosted applications, improvement is continual, not incremental. Says O'Reilly: "The open source dictum, 'release early and release often' in fact has morphed into an even more radical position, 'the perpetual beta,' in which the product is developed in the open, with new features slipstreamed in on a monthly, weekly, or even daily basis. It's no accident that services such as Gmail, Google Maps, Flickr, del.icio.us, and the like may be expected to bear a eBetaf logo for years at a time. He notes that Flickr, the photo sharing and archiving service now owned by Yahoo!, deploys new builds up to every half hour. As long as users don't have to download anything, let alone reboot, no one is the wiser.

But the gWeb-as-platformh idea encompasses not just office and customer relations management software, but a slew of useful services that people first find convenient, then decide they can't live without. Email was the first example of this sort of "killer" Internet application, and search engines have followed-for most of us, doing without either is like having a lobotomy. If Google has a visible business model, it is to create equally addicting services, each of which has, in some form, sponsored links. That revenue model-which avoids flashy banner ads while still accommodating advertisers-has been Googlefs biggest, but least known, triumph. It has made the company rich.

O'Reilly argues that Netscape and Microsoft got it wrong. They operated on the assumption that the company that controls the browser controlled the Web. But now we know that the browser is just a commodity-there are variations on a theme but even a group of volunteers can produce a credible version, as the Mozilla project has shown.

"Google, by contrast, began its life as a native web application, never sold or packaged, but delivered as a service, with customers paying, directly or indirectly, for the use of that service," O'Reilly wrote. "None of the trappings of the old software industry are present. No scheduled software releases, just continuous improvement. No licensing or sale, just usage. No porting to different platforms so that customers can run the software on their own equipment, just a massively scalable collection of commodity PCs running open source operating systems plus homegrown applications and utilities that no one outside the company ever gets to see."

O'Reilly argues that DoubleClick, which sells a suite of applications related primarily to Internet advertising, is limited in the same way. "DoubleClick was ultimately limited by its business model. It bought into the '90s notion that the web was about publishing, not participation; that advertisers, not consumers, ought to call the shots; that size mattered, and that the internet was increasingly being dominated by the top websitesc. As a result, DoubleClick proudly cites on its website 'over 2000 successful implementations' of its software. Yahoo! Search Marketing (formerly Overture) and Google AdSense, by contrast, already serve hundreds of thousands of advertisers apiece."

Harnessing collective intelligence, proprietary data

Another Web 2.0 trait is collective intelligence. This is the open source idea brought to arenas beyond software development. Blogs, for example, have become a kind of collective wisdom, with some bloggers achieving the kind of influence normally accruing to professional columnists. And then there's Wikipedia, the online encyclopedia written and edited by volunteers-meaning anyone. What Wikipedia may lack in absolute accuracy, it makes up in the span of ideas it covers-many of which receive scant if any attention in conventional reference work like the Britannica. (As a recursive example, consider this topic: Web 2.0. Enter the term into the Wikipedia, and you get an article on the subject; enter it into the Encyclopedia 2005 DVD, and you get a discussion of the Mediterranean Flour Moth.)

O'Reilly argues that data ownership is still important-but what you do with it may be more important, still. "Database management is a core competency of Web 2.0 companies, so much so that we have sometimes referred to these applications as einfowaref rather than merely software," he writes. He cites Amazon's adding publisher-supplied data to its original, licensed database, Google adding satellite images to street maps, and experimental developers mixing Google mapping data with other databases to create even more specialized mapping applications: all of them online. The whole idea of Web services comes into play here, with companies letting outsiders access data for mutual fun and profit.

Lightweight Programming Models: keep it simple

In Web 2.0 software design, simplicity trumps complexity. A prime example is RSS-real simple syndication-which is now found throughout the Web. Other examples: REST (representational state transfer), which employs XML and HTTP, as well as the Ajax technologies. "Simple web services, like RSS and REST-based web services, are about syndicating data outwards, not controlling what happens when it gets to the other end of the connection,h O'Reilly writes. The result, he says, is a highly modular approach. gWhen commodity components are abundant, you can create value simply by assembling them in novel or effective ways." He likens the business model to what Dell did in plugging together hardware components to create custom computers.

Other Web 2.0 traits: support for other platforms besides the PC. iTunes, which runs on everything from Macs to hand-helds, is a prime example. And O'Reilly singles out the Ajax technologies as "a key component" of Web 2.0 applications, providing a grich user experienceh that more resembles a conventional application.

Web 2.0: real or hype?

So at the end of the day, is the Web 2.0 phenomenon real, or just-as some have called it, gmarketing hype. Do these criteria add up to a true sea change for the Web, or is the Web just changing bit by bit-advancing but not becoming fundamentally different?

Sidebar: Other Voices

Where is the Web going? Where have we arrived? While nobody is quite sure, there are plenty of opinions:

What we all failed to see was how much of this new world would be manufactured by users, not corporate interests. Amazon.com customers rushed with surprising speed and intelligence to write the reviews that made the site's long-tail selection usable. Owners of Adobe, Apple, and most major software products offer help and advice on the developer's forum Web pages, serving as high-quality customer support for new buyers. And in the greatest leverage of the common user, Google turns traffic and link patterns generated by 2 billion searches a month into the organizing intelligence for a new economy. This bottom-up takeover was not in anyone's 10-year vision.

Kevin Kelly
Editor-at-large, Wired magazine

The promoters of Web 2.0 venerate the amateur and distrust the professional. We see it in their unalloyed praise of Wikipedia, and we see it in their worship of open-source software and myriad other examples of democratic creativity. Perhaps nowhere, though, is their love of amateurism so apparent as in their promotion of blogging as an alternative to what they call gthe mainstream media.

Nicholas Carr
Author and former executive editor of the Harvard Business Review

It's clear that there is an explosion of innovation around the web again, and this is a great trend. There is a lot of opportunity, and this time, it doesn't take millions of dollars to follow a good idea to fruition. That's why we are seeing so many new ideas get to market.

John Battelle
Journalist, entrepreneur and co-moderator of this yearfs Web 2.0 conference

I am starting to get extremely tired and frustrated about every pitch that I see now where a company claims they are a Web 2.0 company and lists their principal reasons for being Web 2.0. It reminds me of the mid-90s when everyone said they were an Internet company and sprinkled their pitch with wild growth expectations from Jupiter Communications. Or when everyone said they were a Java company when Java was the cool buzzword. Frankly I do not care if you are Web 2.0, Web 1.0, etc. All I care about is what your service or product does, why it is valuable to the end user, why it is uniquely different from the competition, what the barriers to entry are, and how you plan on reaching your customers and how you will ultimately make money.

Ed Sim
Founding member and managing director of Downtreader Ventures

Think of information as the energy of the Webfs ecosystem. Those Web 1.0 pages with their crude hyperlinks are like the sunfs rays falling on a desert. A few stragglers are lucky enough to stumble across them, and thus some of that information might get reused if one then decides to e-mail the URL to a friend or to quote from it on another page. But most of the information goes to waste. In the Web 2.0 model, we have thousands of services scrutinizing each new piece of information online, grabbing interesting bits, remixing them in new ways, and passing them along to other services.

Steven Johnson
gEmerging Technologyh columnist, Discover magazine

Those little ads - 12 word snippets of text, linked to topics that users are actually interested in - have turned Google into one of the biggest advertising vehicles the world has ever seen. This year, Google will sell $6.1 billion in ads, nearly double what it sold last year, according to Anthony Noto, an analyst at Goldman Sachs. That is more advertising than is sold by any newspaper chain, magazine publisher or television network. By next year, Mr. Noto said, he expects Google to have advertising revenue of $9.5 billion. That would place it fourth among American media companies in total ad sales after Viacom, the News Corporation and the Walt Disney Company, but ahead of giants including NBC Universal and Time Warner.

Saul Hansell
Reporter, New York Times

Microsoft Corp. today previewed two new Internet-based software services - Windows Live and Microsoft Office Live - designed to deliver rich and seamless experiences to individuals and small businesses. The new offerings combine the power of software plus services and are compelling enhancements to the Microsoft Windows and Microsoft Office products. In particular, Windows Live helps bring together all the elements of an individualfs digital world while Office Live helps small companies do business online.

Microsoft press release

I don't know where this all leads, but, but one thing is sure: The tech industry is shifting into overdrive again.

Steve Hamm
Senior Writer, BusinessWeek Online, reporting on Windows Live