"The difference between Web 1.0 companies and Web 2.0 companies is that Web 2.0 companies are not hypothetical — they have real value," said Shawn Gold, MySpace.com's senior vice president of marketing and content, on a panel at the Web 2.0 NY & Madison Ave. 2.0 Summit in New York City on Thursday. Gold, who co-founded Weblogs Inc., said the blog network had monthly revenues of $300,000 when acquired by America Online in 2005 for $25 million. Today, he estimates Weblogs' monthly sales at $1.5 million.

Many Web 2.0 companies are profitable, the panelists said. Gold reported that MySpace was profitable when Fox Interactive Media Inc. paid $580 million for the social-networking pioneer in 2005. "Then, we spent money to build the infrastructure, and now we're back to being profitable."

Lesser-known Web 2.0 firms also are making money. Fellow panelist Shaival Shah, vice president of business development and strategy of Oddcast Inc., which lets users personalize talking avatars for social networks, said his company is profitable, explaining that Oddcast uses a wide range of business models, including licensing, subscriptions and advertising. In April, Oddcast invested an undisclosed sum in TargetSpot Inc., a provider of streaming media advertising technology that also received funding from Union Square Ventures and CBS Radio Inc. A year ago, Oddcast got $4 million in a Series D round, led by Union Square.

Panelist Andrew Boer, vice president of business development for Associated Content Inc., acknowledged the startup to "be cash-flow-negative for awhile, but our business model is profitable." The company curates and publishes a collection of original content from thousands of contributors it pays $3 to $20 per article up-front.

"We know that if we pay $7 for a home improvement article, it will earn itself back in three months. Other kinds of content take longer," Boer said. In 2005, the company secured $5.4 million of Series A equity capital, led by Softbank Capital. —Mary Kathleen Flynn

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