Louis Cammarosano, General Manager of  Homegain engaged - don't dismiss Web 1.0 businesses like Homegain, they work because they are tried and true business models...

"Web 1.0 companies, like HomeGain and "bricks and mortar" franchises like ReMAX, will add web 2.0 features when and as it pays to do so. Adding heat maps, HVAL tools, blogs, user generated content is not all that difficult. The trick is making those features pay. Making real estate pay is something that companies like HomeGain and ReMAX have a long history of doing.
 
Have Web 2.0 companies like Zillow and Trulia figured that out yet?"

I see what Mr. Cammarosano means. Simply put, Web 1.0 upheld, even enhanced the status quo real estate business models like lead-generation and brokerage... Web 1.0 is perfect for efficiently making the one-way connection between the agent with the customer via an online contact form. Web 2.0 is disrupting these models because it empowers the consumer to interact directly with the agent. It's simplistic to say this, but the middlemen become less valuable (yes, it's disintermediation)... and that includes the lead generation companies and real estate agents, both of whom see their commission rates shrinking.

The current lead generation business model depends upon making sure the agent and the consumer do not communicate until the agent has contracted for the privilege. Homegain, by design, can't adopt Web 2.0 features that facilitate a direct connection between its revenue producing agents and the consumer without changing its existing business model.

Mr. Cammarosano is correct that Web 2.0 companies haven't empirically proven a profitable business model, but lead generation is growing on Trulia, ZillowActive Rain. These organic Web 2.0 lead gen models won't disappear, although the companies might. So, how does Homegain grow if it can't evolve beyond Web 1.0? It relies on providing a smorgasboard of services to the consumer - listings, mortgage information, a recently relaunched AVM - that funnel the consumer into eventually giving up their contact details. It's adding agent advertising on their AVM site. It can continue to develop traffic partnership relationships like the one it has with other Web 1.0 sites like Yahoo Real Estate. Any moneymaking feature that doesn't allow that dreaded Web 2.0 interactivity. This is a sound "here and now" strategy... but it relies on the assumption that a new Real Estate 2.0 lead-generation model won't be adopted quickly and change the game.