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When the guy behind Wikipedia launches a search engine, the world is going to watch. And watch they did when Jimmy Wales unveiled Search Wikia in January — perhaps a little too closely. I say that because while some were expecting to see a “Google-killer“, the site we saw was a bare-bones engine in the very early alpha testing stage.

But now, it’s getting closer.

I got a chance to play with some of the upcoming changes coming to Search Wikia. Those hoping for a more Wikipedia-style approach to search results will not be disappointed. You can test some of these features out for yourself at this link, but be forewarned that this is a testing site that may experience performance delays and bugs.

The main page is still something you’d expect on any engine, a search box. It’s after the query however that things get interesting. On hover of each result returned you have the option to ‘Edit’, ‘Spotlight’, ‘Comment’ or ‘Delete’ the item. Lets run down these options:

Edit: As you’d expect, you click this and you can directly edit both the title of the result and the paragraph explanation that resides under it.

Spotlight: Allows you to highlight one result on a page, giving it a yellow background to make it stand out.

Comment: You can leave messages under every result to discuss that items/result. You can also leave comments about other comments.

Delete: You can remove any result you feel doesn’t fit the query.

All of these changes are saved and shown in the ‘Result History’ area on the site (which has it’s own RSS feed - nice). If you are not logged in, your IP address is the unique identifier to show who has changed what — just as with Wikipedia.

One of the main problems people had with the initial launch of Search Wikia is that the search results simply weren’t up to snuff. While they company is quick to note that that’s probably still the case in this testing phase, just how much results improve after users edit them will be a test of the entire concept.

Editing links is one thing, but users can also submit their own. Adding related searches is also as easy as clinking the link to do so and typing in a relevant word.

Mahalo is a people-powered search site that has been rising in popularity. Its results return static pages with multiple links on a topic. While anyone can submit a link to include on these pages, and Mahalo has been encouraging this and more with its newer social tools, the pages are still for the most part built by one person — a Mahalo employee. Mahalo also monitors each link submitted to make sure it is not spam. [Full disclosure: I have done some work for Mahalo]

Search Wikia is attempting to take a more community-centric approach — not surprising given Wikipedia’s nature. You have a page of search results just as you would see on Google, but anyone in the world can edit and manipulate those results on-the-fly.

The obvious concern here is spam, gaming and the simple inaccuracies of such a system. The same issues arise from time to time on Wikipedia, but a group of users committed to the cause always seem to sort these things out. The fact that anyone can just as easily delete an item as create one, and that all of this activity is recorded in logs, make this possible.

Search Wikia is still in its alpha testing phase, and as such things are still a bit rough around the edges. However, with this update we are finally getting a glimpse of Wales’ vision for the future of search. It is very promising. Test it out for yourselves.

Community wiki-building site Wikia, has announced that it’s allowing its social networking platform to become open source. This will allow anyone to easily create a social community complete with profiles, avatars, friending, etc… within their MediaWiki-based wiki sites.

For a good example of a social network built into a wiki-based site, check out ArmchairGM, the sports wiki database, which Wikia purchased in December of 2006 for more than $2 million (our coverage). This site prominently features aspects such as user profiles and comments as key parts of the experience.

When most people hear the word “wiki” they think of Wikipedia — and rightfully so — however sites like ArmchairGM and Mahalo, with their social components, show that wikis can be used to build sites far beyond the traditional text-heavy, encyclopedia-inspired sites.

ReadWriteWeb’s Marshall Kirkpatrick thinks the open source availability of these social tools could help bolster niche communities and has the potential to erode some of the popularity of the main social networking sites like Facebook and MySpace.

Certainly, creating a niche community is the idea behind a Hollywood-centric social site The Biz (our coverage). However, now with these open source social tools, you won’t need a big company like Variety backing you to create such a site.

Also check out our coverage on Wikia Search, the community-based search engine that Wikia co-founder Jimmy Wales launched last month.

We’ve been skeptical of Mahalo in the past, because it’s not clear how the “human-powered search engine” could be more accurate than — or gain market share from — algorithm-based search engines like Google.

Today, web analytics firm Hitwise has an interesting post showing traffic to Mahalo rising sharply over the past few months (see graph below). The site has gone from a zero percent market share of total US internet traffic earlier this year, to .0023 percent this past week. Hitwise’s graph, below, compares Mahalo with search startup rival ChaCha.

Mahalo has staffers who create sets of search results by hand, for popular search terms. These search results include links to other sites on the web; the company also recently started letting users suggest links to be added to results (our coverage).

The context for these numbers: Mahalo ranked 69th among search engines, last week, and received 0.02% of all US search engine traffic, compared with Google’s 55.52%.

Maholo’s users tend to be younger. The graph, left, divides Mahalo’s visitors by age group, and compares it to the average age distribution of US visitors to web sites — 18-24 year olds were 36.67 percent more likely to be on Mahalo.com than average. Hitwise says most people use Mahalo and then go to entertainment or news sites — especially gaming sites. I’m going to take a wild guess that most Mahalo users are young men, and they’re not just coming for human-powered search, they’re coming to check out the Mahalo Daily online geek television show, starring Veronica Belmont.

[Update: This story is confirmed]

Mahalo, the search engine that is powered by humans — furiously writing up results on those topics frequently asked by searchers — is seeking to raise a $20 million round of financing at very high valuation, we’re told.

We’re hearing Mahalo founder Jason Calacanis wants potential investors to value his company at $175 million, before they invest, which is lofty considering the company reportedly has less than 1.5 million monthly unique users.

Calacanis did not respond to a request for comment from VentureBeat.

Calacanis has been trying to promote the site with things like Mahalo Daily, a web show with a former CNET host named Veronica Belmont.

The financing round will be the company’s third. Calacanis told the WSJ (no link; subscription required) in May that he raised enough money from investors to last five years, so its not clear why he is raising more money now. [Update I: We've since confirmed the fund-raising plans with a second well-placed source. While Mahalo does have enough cash for five years, the company has decided to raise more money for opportunistic reasons; its a good time to raise money, and might consider an acquisition or partnership.] The investors include Sequoia Capital, News Corp., CBS Corp., PayPal Inc. founder Elon Musk, Dallas Mavericks owner Mark Cuban and others.

However, another human powered search engine, ChaCha, just raised $10 million more financing, so Mahalo may be seeking to hold its own.

See previous coverage here.

Daily Mahalo video is below.

[Update II: Calacanis has since gotten back to us, and said he wouldn't comment on corporate matters. However, he argues 1.5 million uniques is impressive when you compare it to the traffic of ChaCha, Hakia and others. He said he has 50 employees, but also has 50 volunteers signing up each day to write up search result pages -- so many, in fact, that Mahalo can't handle them all. Last week, the company produced 1,000 new search result pages, more than three times the daily number it had expected when launching earlier this year, he said.]

updated

Robert Scoble, the tech blogger, has drawn a lot of attention with a talk about why Google is beginning to fail as a search engine, and how upstarts may eat its lunch within a few years.

It is provocatively titled Why Mahalo, TechMeme, and Facebook are going to kick Google’s butt in four years, and here’s first video of a series (we’ve embedded it below, after the jump).

His argument is solid for the most part. Google’s search results have deteriorated because expert marketers are increasingly gaming the popular search engine. They pay for links to make their web sites more significant in Google’s eyes, and there’s no way for Google’s algorithm to determine whether a link is paid or not.

A bunch of start-ups are using human editing filters to do a better job of sorting through what Web pages are significant and which ones are not. The best ones (TechMeme, Facebook) are aggregating thousands, even millions of people whose choices can help point to relevant information. For example, if real people at Facebook talking about me tend to link to my site, VentureBeat, well, that site will show up first when you search for my name. At Google, it doesn’t. The idea is that if you can peer into, and access all the real links made by people within Facebook, and combine it with other trust-oriented sites, you’ll have a better engine.

The start-ups haven’t yet fully harnessed the power afforded them by the people that use their services, in part because they didn’t start by wanting to solve the problem of search. They’ve happened on to it. Each of them bring different advantages and disadvantages to the game. There may be more promising that the ones that the three Scoble mentions, including Wikia’s secretive project that is underway.

Scoble says Google’s algorithm is “stuck in cement,” so elaborate and so entrenched that the big company won’t be able to adapt as quickly as small companies with less to lose using a radically different approach. Google couldn’t simply buy a competitor to help it adapt, this argument goes. It would find it too complicated to incorporate the human-filtered approach into its algorithm. Google doesn’t understand social technology, Scoble continues. Google even owns social network, Orkut, but hasn’t been able to leverage lessons learned from that experience to make Google better, he argues.

The main problem with Scoble’s argument is that the upstart companies will have trouble scaling. It is difficult — perhaps impossible — to organize humans to reliably track millions of changes that are happening all over the place ever second on the web. That’s why the upstarts may be more successful organizing efficient results for only the most popular topics, which is what Mahalo is doing. The other challenge for the upstarts is that search marketers will increasingly look for ways to came their systems too, setting up spam link-laden groups at Facebook, for example.

Here’s the latest action:

Skype trying to buy back customer love — Skype is sending out notes to users saying they’ll get a week’s worth of free service. The San Jose Internet phone company says it has 196 million users and reported earlier this year that it was profitable for the first time. As Jeff Nolan points out, its users now number 3 percent of the world’s population, and only just now profitable?

Jason Calacanis, the scrappy entrepreneur — Fast Company has an entertaining profile of Calacanis, the entrepreneur who is trying again with Mahalo, a search engine with results made by humans. The piece provides Calacanis’ point of view on the Mahalo, but there are tougher questions asked in a blog post by Rich Skrenta. Skrenta suggests Mahalo really only wants to game search engines with so-called Search Engine Optimization, and argues it won’t work. Calacanis responds in comments that he isn’t focused on SEO, and a good discussion ensues. Fast Company also has more facts on Mahalo’s backing. We ran the account by Calacanis, and he confirmed the speed of the fund-raising, but isn’t commenting on the $20 million figure for total raised:

It took Calacanis all of 10 days to close his first round of financing with Sequoia, Musk, Cuban, Ted Leonsis of AOL, Fred Wilson of Union Square Ventures, and Matt Coffin, who founded LowerMyBills .com. “…By May, Calacanis closed a second round of financing, adding News Corp.; CBS; David Bradley, owner of The Atlantic Monthly ; and Burda Media, a German publisher. The total: $20 million, good for about five years of operations given his current expenses. Calacanis then laid out $11,000 for the domain name Mahalo.com, which, at one point, had been a nude-celebrity site.

Acoona, the third-rate search engine, sees underwriter pull IPO offering — We wrote about the shoddy-looking search engine here. The New York Times says the underwriter has now pulled the IPO. It looks at the strange relationship between the company and investor Marc Armand Rousso.

Zoho, the online Office suite, launches offline capability — You can now read documents in Zoho Writer offline, and in about a month or so, you’ll be able to edit them offline too. Other Zoho applications, for example spreadsheets and presentations, will carry similar technology shortly thereafter. Ironically, Zoho’s latest offering is built on Google’s open source project Google Gears, and beats even Google in offering this online-offline feature that everyone wants. Thinkfree has a similar offering. Joyent is moving in this direction, too. There’s a brief window for first-movers to scoop up users before Google arrives, but we’re not sure it will be enough. (Announcement here.) Zoho is based in Pleasanton, Calif.

BluBet lets you bet on anything — Except you can’t use money. On BluBet, players will be able to place bets on anything from Brittany’s sex life, to Facebook outgrowing MySpace. See Techcrunch review. The San Francisco company is backed with $225,000 from Jawed Karim (Co-Founder of YouTube), Kevin Hartz (Co-Founder of Xoom), Joe Greenstein (Co-Founder and CEO of Flixster) and Keith Rabois (Former PayPal & LinkedIn Executive and Current Slide Executive).

Microsoft’s experimental engine, Tafiti, to show off Starlight technology — The engine helps people share their search sessions.

WikiScanner, a new Web site, traces the source of changes to Wikipedia — Now you can see more easily where changes to the Wikipedia entries originate. Wikiscanner tracks the Internet protocol address of an editor’s network, and it has suddenly revealed some interesting edits by the CIA and self-interested editing by Anheuser-Busch (erasing negative comments), among others. Story in NYT.

U.S. intelligence agencies prepare to launch “A-Space” — The Director of National Intelligence will open the site to the U.S. intelligence community in December. It will feature an internal communications tool modeled on the popular social networking sites, Facebook and MySpace, according to the FT.

EBay releases its eBay Marketplace on Facebook — Now you can show your goods to your Facebook friends.

Brad Fitzpatrick wants to set your information free: New Google employee and open-source poster boy Brad Fitzpatrick blogged last Friday about his work to create an open “social graph.” He wants to help users more easily extract their own information from one site — say, Facebook — and add that information into another site as they wish. To do this, he and others are working on open-source software and standards to let developers build sites that help users port their data as easily as possible, leaving developers to focus on whatever core value they are trying to create on their own sites.

The uses are many. One example he gives is a “trust/reputation” application programming interface (or API) to help bloggers using Movable Type or Wordpress see which comments are coming from legitimate readers, and which are coming from spammers.

He points out developers’ concerns over Facebook’s tight-fisted control over much of its users’ data, but also says that early discussions with the company about this project are promising. After all, Facebook’s API launched last year to try to provide “social context” on other sites. Few interesting applications were built for it, because it didn’t let developers completely remove most user data. Its more recent platform for developing applications within Facebook has been a hit with developers so far, though.

Myspace, meanwhile, has only started talking about its own developer platform, although it has let third-party widgets in since its inception.

Fitzpatrick’s vision, as he notes, sounds similar to what other companies, such as Plaxo, have also been working on — and he got an overwhelmingly favorable response from other bloggers. The project has a site here for interested persons.

We wish him the best of luck, even if the goal is a touch utopian. We have to wonder how far the people who control much of this user data now — Facebook, Myspace, etc. — will go along (most users are lazy and so won’t pressure networks for this feature). We also wonder how this effort will tie into Google’s other social networking initiatives.

Google increasing market share -– Hitwise , a traffic measuring service, said Google accounts for 64.35 percent of all US searches in the four weeks ending July 28, up from 60 percent last year. Yahoo Search, MSN Search and Ask.com each received 22.131, 8.79 and 3.21 percent respectively.

Google responds to criticism on video shut-down — It is now allowing users to watch videos for another six months, and get credit for purchases via a credit card.

Mahalo, the search engine that relies on humans to organize results around popular search returns, has released a toolbar that gives you supplemental results to the ones you get from Google.

The new release by Mahalo, launched by scrappy entrepreneur Jason Calacanis, is called Mahalo Follow, and is a download to your desktop that lets you see Mahalo’s human-edited results alongside those of Google and other sites.

It does that by creating a sidebar on the left of search results. See example below. You’ll note that a search for an iPhone on Google provides predictable results, but that Mahalo offers many more practical links in the same amount of space on the left. The screenshot is truncated for space reasons, but Mahalo provides a whole column of spam free, human edited results.

We’ve been skeptical of Mahalo’s chances in the past, because people are habitually prone to use Google, Yahoo, Ask or any number of other popular big-brand sites. Becoming a destination site was a tough road. Now, through this download, it creeps onto your screen as a helpful companion while you search at any site. It works whether you’re on Google, or searching for news items on CNN. If you’re on CNN or some other content site, Mahalo scans the content in real time, and determines the subject matter – and provides tips on related sites and information in its bar.

The arrows in our screenshot below point to other elements of Mahalo Follow. It includes a search bar, a directory menu to let you easily find the subjects Mahalo has indexed and more

In an update, Calacanis said results pages have been created so far for 8,800 search topics, and that the site will easily exceed the 10,000 pages it had targeted for this year.

He said more than 800 people signed up for participation in Mahalo’s program to create and curate result pages. The company is drawing on these users to create about 100 search result pages a day. Users create the pages, submit them to “mentors,” who in turn submit them to Mahalo.

Google has provided a NYT reporter rare access to some secrets of Google’s search engine. Unfortunately, it’s like in the Wizard of Oz, when Dorothee’s dog Tito pulls away the curtain exposing something that is much less impressive than you’d hoped.

We’re so used to hearing about Google’s perfect algorithm, which has a 500 million variables (according to Google’s site).

But the New York Times’s Saul Hansell writes up a good description of what appears to be a rather rickety system — with band-aid solutions being slapped on to cover up problem search terms. See the NYT account here.

For instance, Google has trouble deciding how many fresh results to show, versus old ones, for various terms. At one point, Google’s front page stopped showing results about the historic “French Revolution,” instead returning only pages about the contemporary French presidential debate when people typed in that term. And Bill Brougher, a Google product manager, complained when the phrase “teak patio Palo Alto” didn’t return a local store called the Teak Patio. Google’s formulas were not giving enough importance to links from other sites about Palo Alto, so Google had to jimmy-rig that too. Finally, there’s a surprising amount of personalization already going into Google’s response to your searches — that is, if you have logged into one of Google’s other services so that it knows what sort of preferences you have. This piece is worth reading for those still mystified by Google’s ways.

Paradoxically, it explains why other sites, such as Mahalo likely won’t do very well. Jason Calacanis’ new search engine, reliant on humans, may make some advertising revenue, but the problem of freshness will keep it from being a big hit (see our coverage here). The humans won’t be able to keep up. Here’s more explanation about why, and still more from Danny Sullivan, the most thoughtful expert on search that we know.

Sproose is the latest project seeking to exploit input from humans, marrying a Digg-like system with traditional search. The Danville, Calif. company notified VentureBeat of its launch over the weekend.

And now Microsoft is reportedly secretely gathering a team of twenty or more developers tasked at building their next generation search engine. In this climate, of rapid change, it is prudent to keep coming at this problem with fresh eyes.