I’m not sure if that is the question. Both models can survive with one or two leaders in each vertical segment along with some large-scale “portal” (forgive me for using that word) netowrks like MySpace, Bebo, Cyworld and so on.

Why should this be an either-or situation? There is no reason to think that the two models cannot co-exist.

Fox understands aggregation, so MySpace was a natural fit. When Car and Driver, Kelly Blue Book or eBay Autos decides to “go social,” they’ll do something like (or aquire) Boompa.

One unresolved question regarding the niche sites is just how much funding they need (if any) to create enough traction to be legit networks, and the investment community must hate this.

As I’ve previously written and commented on Fred Wilson’s blog, it is easy to understand how VCs could get confused when 2 guys can build a cool network like Boompa on a shoestring budget in 2 months that could explode on viral alone.

How much is Boompa worth compared to a site like Gusto? Gusto just got $3M in VC and the founder tossed in $1M from his pocket. And between you and me, other than the old-school content and editoral ops on Gusto, they look pretty similar to Boompa. Did they need $4M for editorial? If so, ouch!

Or, was it because the sector is hot, the concept/vertical is strong, the guy who created it has a track record and has already built and sold a travel company, and VCs are just *dying* to invest?

Scott Karp looks at the emergence of digg-like sites and wonders if the difference between Media 2.0 and Media 1.0 will be competition among thinly sliced niches rather than the same old consolidation and conglomeration….