Social Media
Who needs TV networks and film studios? Netizens are creating their own blogs, photos and videos, and that's translating into hundreds of promising new businesses.
By Erick Schonfeld, Om Malik and Michael V. Copeland

(Business 2.0) - The new culture on the Web is all about consumer creation; it's composed of things like the nearly 30 million blogs out there and the 70 million photos available on Flickr. With a click of the mouse, anyone can be a journalist, a photographer, or a DJ. The audience--that 1 billion-plus throng linked by the Web--itself is creating a new type of social media.

That's leading to the creation of hundreds of promising Next Net businesses, like YouTube, one of the fastest-growing sites on the Web. It shows millions of video clips daily, from homemade music videos to Saturday Night Live skits. Anyone can upload a clip to the site, where it becomes public and searchable. Anyone can then rate it, share it, and use it in a blog or website.

The Internet flattens the cost of economic coordination, and many more people can contribute to producing the same piece of content. On sites like Digg that aggregate news stories and blog posts from all over the Web, it's the audience itself that posts links to the stories and ranks them. (The stories with the most "Diggs" make it to the homepage.) Such voting will be the organizing principle of the soon-to-launch Newsvine as well. But readers will also be able to submit their own written stories or become editors by creating their own Newsvine pages on a specific topic. The best part: Participating contributors and editors will get to keep 90 percent of the ad revenues generated by their pages.

Just as open-source programmers did before them with code, people are putting pictures, videos, blog entries, or even simple Web bookmarks online to share with their friends. But once this content is posted, a surprising amount of it begins to attract a wider audience or form the basis for new services. Last.fm, for instance, monitors all the tunes you listen to on your computer and adds a social-networking twist by sharing your playlist with other Last.fm users with similar tastes and vice versa.

All these sites are free, and few make money. Their focus is on creating communities and collecting eyeballs; as with most Next Net ventures, the likely payoff would come through flipping themselves to established companies. "Most will be bought by the big guys," says VC Philippe Cases. Then, he says, many of the brains behind the upstarts will take advantage of the low cost of getting off the ground today to "come back with another startup."

SOCIAL MEDIA

Company: Digg (San Francisco)

What It Is: News aggregator

Next Net Bona Fides: The site's links are picked by the readership, which has been doubling every three months; news items with the most votes make the homepage.

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Company: Last.fm (London)

What It Is: Social radio

Next Net Bona Fides: Its software creates a personalized streaming radio station based on the digital music you already listen to, shares your playlist on the Web, and suggests music from other closely related playlists.

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Company: Newsvine (Seattle)

What It Is: Collaborative publisher

Next Net Bona Fides: Readers vote and comment on stories but can also organize their own pages and write their own stories, for which they collect 90 percent of associated ad revenues.

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Company: Tagworld (Santa Monica)

What It Is: Social networking

Next Net Bona Fides: With cutting-edge Web software enabling blogs, photo and music sharing, online dating, and more, members confront a rich smorgasbord of ways to interact, and everything can be tagged for easy searching.

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Company: YouTube (San Mateo, CA)

What It Is: Video sharing

Next Net Bona Fides: This site lets people upload, watch, and share millions of video clips. All videos are converted to Flash (a Web-tailored format for graphics and video), making them easy to import into blogs or webpages.

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INCUMBENT TO WATCH

Yahoo. Hoping to dominate social media, it's gobbling up promising startups (Del.icio.us, Flickr, Webjay) and experimenting with social search (My Web 2.0) that ranks results based on shared bookmarks and tags. Top of page

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Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer LIBOR Warning: Neither BBA Enterprises Limited, nor the BBA LIBOR Contributor Banks, nor Reuters, can be held liable for any irregularity or inaccuracy of BBA LIBOR. Disclaimer. Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.