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Since the internet was born, there has been a tug-of-war between aggregating information and finding ways to navigate through it. Two of the great navigation milestones were the Web browser and the search engine. Now, with the galloping growth of blogs (some 80,000 new blogs are created every day, according to blog search engine Technorati) and the proliferation of social-network sites, a growing group of companies is trying to figure out how to turn the cacophony of personalized information into usable form — and viable businesses. They call it the Shared, Trust or Referral Economy, and it is the current obsession of every Web company from Amazon to Yahoo!.

Consider: in July, Rupert Murdoch's News Corp. spent $580 million to acquire Intermix Media, a U.S.-based company whose prime asset is MySpace, a site that lets members share their blogs, photos and favorite music. In March, Yahoo! bought Flickr, a photo-sharing website, for an undisclosed sum. All that activity makes sense, given the rapid growth and expansion of both personal blogs and networking sites like Friendster, LinkedIn and MySpace. Harnessing the power of social networking is viewed as a key component of the soon-to-explode local advertising market, which will be worth $10.9 billion globally by 2009, according to analysts Kelsey Group. The individual pages contained on any of these sites or their blogging cousins may appear trivial: minutiae about cats' feeding habits, or the favorite break-up songs of teenage girls. But companies are banking on the notion that, in the aggregate, these pages represent a gold mine of credible consumer information. "Whether you are referring someone to either a great restaurant or a local hairstylist, since the lead came from a trusted source, there's a good chance that the person will be much more qualified to react not just to the content on the page, but also to the advertising," says Andrew Shotland, vice president of business development at Insider Pages, a Pasadena, California-based company that aims to use people's opinions to create detailed local directories of businesses and services. "We are seeing these referrals convert into business at a much greater rate than leads from other forms of advertising."

Of course, consumer recommendations on the Web aren't new. Amazon and others have deployed them with great success for years. What's changed is that blogs and other social networks have created a consumer conversation outside the control of any particular company or website. The key to this online Tower of Babel, many Web gurus now believe, will be "tagging," a personalized system of filing and describing online content (including Web pages and blogs) that can be done by anyone reading any site. Take, for example, del.icio.us, founded in 2003 by former Morgan Stanley analyst Joshua Schachter to keep track of the thousands of Web page bookmarks he accumulated. The site allows users to write descriptions, or tags, of favorite Web pages using terms they choose to create their own taxonomy of favorite pages (or "folksonomy" as its grassroots adaptation is being termed). Search for the word cheese on del.icio.us, and you'll find e-commerce websites like England's Teddington Cheese and Catalonia's Delinostrum, both of which have been tagged by online customers as part of their own personal folksonomy and then shared with the rest of the online world. No one is yet prepared to crown tagging as a successful business in itself. More likely, tagging will boost online advertising, and search in particular, to a dominant position in consumer retail and commerce. And social networking and the culture of tagging is not without its critics. Eddie Cheng, president of British online yellow pages directory Yell.com, argues that it's much easier to rate a restaurant, say, than a lawyer: "The danger is that 60% of people who record reviews have a negative opinion. That's not great from a service point of view."

Still, Yahoo! believes that social-network tools will help grow its search business. "You get better search through people," says Bradley Horowitz, director of technology development. "It's no longer a question of whether social networking is important, it's a question of how do we leverage this phenomenon." And, perhaps, of who will be the first to get there.

• MATTHEW YEOMANS
• The explosion of personal content has every big online firm buzzing. But can anyone make it pay?