Read this to understand the cathedral and bazar metaphor. Raymond describes the cathedral as closed and proprietary, but I see it differently.
I think the cathedral is technorati and the bazar is the wild west of millions of competing tiny blogging websites. The only time I can think of when a cathedral lost was when the walled-in AOL lost to the sprawling web. (Their real failure was to try and milk their enclosure for far too much money.)
The cathedral always wins if it embraces the efforts and contributions of it's users. Centralization and grouping always occurs in society. Two political parties survive to compete. One or two software companies survive to compete. One Linux kernel survives as the core – if there were too many then Linux would be a bazar, but it's not, it's a cathedral. XBox Live (centralization of logins, subscription, notification – cathedral) is so successful that Playstation has decided against their "federation" approach (each software company does their own thing – bazar) and so there will be a centralized (cathedral) server for the PS too. (Pun intended).
I am 100% sure that the cathedral approach will always win – if they embrace their users. All the content may be created in millions of blogs, but it will be used (viewed) on the site that displays it in the most useful way. The users (viewers) always go to the place where all of their needs are met, this is why Yahoo (by buying del.ico.us, flikr and other social software) will win with their Yahoo 360 integration across so many useful systems. Google is also spreadng itself across many related topics. MS Office and BackOffice taught the world that the one who covers most of the needs of the users in an integrated package will win.
reBlogger does that well by covering so many content and SEO topics in one go. Take a look at my tongue-in-cheek post about how to make a free reBlogger to see the fairly long list of things we do well.Having greater revenue on one site means that site has more income to pay for innovations – which in turn encourages more users to come to them. This is the positive cycle that Technorati has going for them: reinvestment into more user-oriented and useful features. This centralization and reinvestment is one of the reasons why the cathedral always wins.
At the moment the competition between sites is focused on "coolness" (one word: Ajax) but as every site gradually gets the same coolness (voting etc.) there will be a shift to functional and useful and productive. Look and feel is low hanging fruit, everyone can get that relatively easily – but usefulness is fruit that is higher up the tree, it's harder to reach.