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A Web 2.0 Expo panel discussion focusing on location-based services—or LBS—for mobile phones narrowed down the one fundamental requirement for any service hoping to make it big in the space: It needs to be fun.

Steve Lee from Google, Elad Gil from Twitter, Martin May from Brightkite and Nicole DeMeo from SachManya discussed the topic in a Thursday afternoon session in a room on the second floor of Moscone West. For now, one major issue for location-based services is that there is no one place to get access to location data like landmarks, businesses, etc.

Martin May (pictured here, with Steve Lee on the left), co-founder of Brightkite (a location-based service that is one of the pioneers of the check-in feature later adopted by Foursquare and Gowalla) told the audience that his company would like to see an open database of locations.

“Everyone is building their own databases, like Foursquare and Gowalla, and they are very good,” May said. “But a single source for places would open the field for all. This is an enormous undertaking [for instance, think of the millions of businesses of the world which come and go] but it would be very interesting for all of us.”

He admitted that there are already companies like GeoNames that provide places, but they are not all-encompassing. Geonames is good for landmarks, countries and cities, but not businesses, for example.

Steve Lee chimed in, saying that there are tremendous technical challenges to building an open, uniform database for everyone to use. Not only that, there are major licensing issues to resolve before this kind of step could be taken.

“Google licenses a lot of its data from third-party providers, and we can’t give that data out for free,” Lee said. “It’s really difficult to figure out a win-win situation for all of the companies involved. What may be great for one company’s strategy may not work at all for someone else.”

Elad Gil pointed out the “fun factor,” which is really what users want. In Gil’s opinion, while there are considerable problems, they are not unsolvable with enough money and enough effort. “Building a really fun and compelling service is fundamentally where the magic is. It’s easy to say but very hard to do. But you can see that there are many, sort of semi-crappy services out there that have done well because they can provide users with a compelling service, regardless of the maturity of their technology.”

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