The era of the destination website is over. The time of the participation site is about to arrive. Pity those companies unlucky enough to have successful, narrowband, destination websites that provide news and information - their owners are being presented with an increasingly painful dilemma.

These sites, often attracting many millions of hits a month, are unlikely to make money in the near future from advertising, or by persuading users to pay for content delivered over creaky narrowband modems. They threaten to become another overhead, which grows heavier with their popularity. Yet to close them down would be met with howls of complaint from disgruntled customers and possibly from perplexed investors. These text-based sites are unlikely to provide the next generation of interactive services, entertainment, games and tools that people will want with fast, always-on broadband internet access.

The applications that have really worked on the internet are tools that allow people to do something for themselves, often through peer-to-peer communication, networking and transactions: e-mail, file sharing programmes like Napster, bulletin boards, mass open auctions. Destination websites are generally still passive experiences, which allow people to search for and download content. The successful internet sites of the near future will be participation sites that provoke people and empower them with tools to do something with the material, often in collaboration with others.

The importance of these networks of learning, entertainment, political activism, barter and exchange, is the main story in Manuel Castells' latest book, The Internet Galaxy, which is a readable, articulate and persuasive account of why the internet's most powerful impacts on the shape of business, politics and society may be yet to come.

Castells, a California-based sociologist, is the nearest thing the internet has to a founding philosopher. In the early 1990s, Castells was already at work on his vast trilogy, The Rise of the Networked Society, charting the impact of computers and communications on modern society. The Internet Galaxy is more succinct and accessible, but is no less potent for that.

One of Castells' great strengths is his ability to combine academic rigour with an appetite to engage with current social and economic trends. He brings to this task an impressive array of knowledge about cities, labour markets, business history and technology. As a result his writing combines a sense of excitement and energy, with the sage judgment needed to resist glib simplifications and address the complex factors driving the internet.

We are, Castells says, living in an age of "informed bewilderment", in which the elasticity of the internet only intensifies the contradictions with which we have to live. The internet, to give one example, genuinely expands individual freedom and yet also enables corporations and governments to exercise more control and surveillance over what we do.

Castells' central argument is that the internet will continue to grow because it allows networks to flourish. For companies it allows global co-ordination of decentralised and complex activities. For individuals it allows new combinations of work and self-employment, individual expression and personalisation, but also more collaboration and sociability. For political activists it allows small organisations to combine and co-operate, achieving global reach and scale without requiring huge organisations.

What are the lessons of this for corporations trying to sort out what to do with their internet strategies? The key to all these networks, is that they have simple codes and values which bind people together, and which allow their members to do most of the co-ordination using the tools of the technology.

So, instead of operating destination sites stacked with content, companies should be aiming to run participation sites, which engage and provoke people in debate and argument, and provide them with tools to do something for themselves, even if that is as simple as creating a presentation or sharing ideas.

Publishing companies should be exploring not just how to sell books online but to promote the e-mail distribution, by word of mouth, of electronic versions of books, through book clubs. TV companies should be exploring how to turn their passive audiences into club members, who may create their own electronic programme guides and preference engines to scour for content from across hundreds of digital channels.

Participative networks could also play a vital role in health and education. It should become routine for children to study in part through self-help, homework collectives and clubs. When patients leave hospital they should be given not just a telephone number for NHS Direct and some addresses for websites, but a list of e-mails for people who have recently had a similar operation.

Participation websites will be part of the next stage of the internet's evolution. Destination websites are in danger of becoming the seaside piers of the information age: vast, beautiful and elaborate constructions, condemned to a brief life.

Charles Leadbeater is an independent author and adviser

charlie@malvernrd.demon.co.uk

The Internet Galaxy