Web 2.0 and You What does Web 2.0 really mean and what can it do for your business?

By now, you've probably at least heard the term Web 2.0. But do you know what it means for entrepreneurs?

There are various arguments about what exactly Web 2.0 encompasses. In general, it refers to a maturing of the internet, the next version of the web. Some of the Web 2.0 trends, such as user participation, are occurring across many media channels. The increase in the number of reality TV shows is one major example of this. Hit shows like American Idol and Dancing with the Stars extend user participation to the audience by allowing them to vote for contestants at the end of the shows.

The term Web 2.0 originated in 2004 from O'Reilly Media. Since then, it has taken on a life of its own, as all great buzzwords do. Here are some of the main concepts that make up Web 2.0:

• Systems designed for user participation rather than top-down control
• Audience participation
• Service-oriented solutions
• Data owned by users
• User-generated content, data and intelligence
• Collaboration (wikis)
• Social networking
• Rich internet applications
• Web services
• Combining of different services (mash-ups)
• Emphasis on local

The entry points of the web have also contributed to these trends. The door to information is mostly managed through major search engines and portals, such as Yahoo!, Google and MSN. These three entry points now rank search results mostly on the popularity of a website, which is affected by the number of links to the website from other websites. When people post content, they also promote it; the links back to their content begin to increase search engine rankings for sites with such user-generated content.

The popularity of YouTube, MySpace and Wikipedia further validates the importance of user-generated content. These sites either didn't exist five years ago or were much smaller. All of these sites are predominantly tools for users to post content at no cost. These three sites in particular have come online and taken the internet by storm. YouTube, MySpace and Wikipedia currently rank fourth, fifth and 10th, respectively, in terms of traffic.

What Web 2.0 Can Do for Your Business
For entrepreneurs, Web 2.0 means more opportunities and better tools for running your business. No matter what type of business you own, you need to be using technology to your advantage. If you don't, your competition will most likely crush you. As the web audience continues to increase and the use of other traditional media and advertising vehicles such as TV, newspapers and yellow-page directories continue to decline, the web becomes increasingly important for even non-technology businesses. For those of you with businesses that target younger audiences, this becomes even more important. Advertising via Google AdWords, Yahoo! Search Marketing and Microsoft adCenter is becoming essential for most businesses.

If you're in any type of business where processes and procedures are important, you can use Web 2.0 technologies like wikis and service portals for collaboration. Web 2.0-based project and task management services can help make your employees much more efficient. Web 2.0 tools for collaboration also make it easier for smaller businesses to collaborate with customers and partners.

Customer relationship management tools are probably the best known Web 2.0 software that's used as a service. Salesforce.com was one of the earliest innovators in using CRM software as a service. Meanwhile, Google Docs and Spreadsheets provides word processor and spreadsheet applications at no cost as part of Google Apps. Web 2.0 entrepreneurs continue to build out software services for functionality that only existed as packaged software before.

Want to build the next Web 2.0 site? Go for it. Think about what internet service you can offer and differentiate from others. For consumer-based sites, it's about building the audience. For business-related software, it's about delivering a reliable business service at a reasonable price.

Frank Bell is Entrepreneur.com's "Web 2.0" columnist and a principal at IT Strategists, a leading business and technology consulting firm in Southern California. He has consulted with many internet startups, as well as companies such as Yahoo!, Vivendi Universal, Disney, Toyota, Nissan, Deluxe Digital Studios, AEG, Sony and Ticketmaster.