When Mahalo first launched, my instinctive reaction (which I recorded on my personal Blog) was that this was "old wine in new bottles". Traditional publishers have been doing "human powered search" even BI (Before Internet) but these went by boring names like Directory. Human editors work great in well defined niches, always have done and always will. Human editors produce the expert content that Google finds for you. This is long tail publishing. This is Business Media and Enthusiast Media, large but slow growth traditional publishing segments of the media industry.

But an Internet scale venture powered by humans rather than software? We look at three reasons why this might work and two reasons why it won't work.

Three Pros And Two Cons

Most ventures in this space highlight three things that a human editor can always do better than a software program. These are the three Pros:

1. Spam control. Humans can easily spot even the most ingenious spam .

2. Duplicate control. 10 articles that all say virtually the same thing are just a waste of time.

3. Disambiguation. Computers need an awful lot of expensive programming to always spot the difference between "apple" as a fruit, a consumer electronics company or a record label. Humans can do it in a flash.

The two Cons:

1. You cannot persuade people to break their Google habit until your searches are better than Google for most cases (not just the few cases where you specialize). This massive hurdle is true for all search engines.

2. You cannot win as a destination site if you are general purpose. You go to the sites that specialize in the areas that interest you. If you don't know what sites to go to, Google will find those sites for you.

So, do three Pros beat two Cons? Not in this case. The Pros are three relatively minor irritants that human powered search fixes. The Cons are total showstoppers.

Pay People To Write Content?

Mahalo pays people to create content. That means they can predict the quality of the results. Paying people requires lots of funding. Mahalo has plenty of funding and it is unlikely anybody else will get funded with the same model. So Mahalo has a fairly long and clear runway before take-off. Mahalo is private company so we don't know how long it will take them to get to profitability or even if the basic economics make profitability feasible at all. In today's climate, nobody will buy Mahalo without a clear path to profitability.

Are you Bullish or Bearish on Mahalo? Cast your vote in our Company Index (powered by TradeVibes). My vote was Bearish and I was in the majority at the time I cast my vote (80% Bullish vs 20% Bearish). The sample size on that vote was too low to be meaningful (40), so the more votes the better.

The Elephant In The Community Generated Content Room

Most other ventures get "the community" to create the content. The elephant in this room is of course Wikipedia. How on earth do you get general knowledge content that is better at scale than Wikipedia? How do you motivate people to create content if, unlike Mahalo, you are not paying their salaries? Google's answer with Knol was to pay them indirectly via Adsense revenue. The market jury on Knol is still out. If Google cannot win, how can any other start-up without their brand power? If the Knol competitor also monetizes through Adsense, their margin is even less.

About The Players

The other well funded venture that wears the human powered search label is Wikia. Founded by Jimmy Wales of Wikipedia fame, this looks like the largest pure Wiki style venture. Content is community generated, but it appears that they have editors/moderators/curators on payroll.

Squidoo looks like a bootstrapped venture. It is hard to tell if it has traction. Looking at Squidoo's page on TradeVibes will point to many other inexpensive Wiki style ventures. The basic technology of Wikis is now a total commodity.

One of the earliest ventures, About.com, is now owned by the New York Times. On my survey of one, About is the one site other than Wikipedia that surfaces a lot in general knowledge type searches. At the scale they operate, it may well be profitable. So Mahalo, Wiki and other human powered search engines may have a bright future.

What do you think? Can general purpose human powered search engines scale and make money? Or will they either fail or move into small niches? What new ventures have a fundamentally differentiated approach to this market?

Mahalo pages are collections of the most useful links regarding a wide variety of timely topics in popular niches. I find the idea of curating a collection of content over time fascinating. On each page at Mahalo you can suggest links, grab the OPML file for all the feeds on a page and even get a Firefox plug-in to take Mahalo everywhere you go. I know it's not hip to like Mahalo in tech circles, but I do.

Critics say that Mahalo will never scale like an automated index can, to which the company argues that it's only serving the bulk of popular search queries, not the long tail of search. Link selection is also very arbitrary - but I find Mahalo a good place to start learning about many topics. Other things I look up in Wikipedia first, it just depends on the topic.

The graph above shows the percentage of US internet traffic Hitwise saw going through Mahalo. It's graphed against stillborn competitor Cha Cha. Likewise, Mahalo could go the way of Squidoo, another human curated reference site that seems to have devolved into spam and irrelevance.

The page about the DataPortability Workgroup, for example, is on the Mahalo front page under Technology right now. Aren't you curious what the most pertinent links about that much-discussed group might be? I looked it up out of interest more than to learn about the group, but I've used the site to learn the basics about many non-tech topics in the news. I didn't know there was a conflict between Iranian and US Navy ships this week, but I found all kinds of articles and videos about the topic on the Mahalo page.

While tech and news are my topics of choice, Hitwise reports that most outbound traffic from Mahalo is destined for Entertainment (37%) and News and Media (19%) sites. I wouldn't be surprised if Mahalo's success continues.