except the 2001 tech generation didn't quite understand how to monetize narcissism.

I'm not sure the 2012 generation does either. It seems like the most vibrant discussion communities have relatively minimal advertising and a real community feel (see Reddit, Fark, SomethingAwful, maybe we could still include Slashdot and Metafilter in that list). I don't think any of those sites are really raking in the dough though, at least not in the way that Gawker or HuffPo do / aspire to. The main problem is that "high quality posters" are a minority of people, and they mostly want to talk to other high quality posters. They also generally don't click links and they're probably more advertising resistant than your average Yahoo News comments section poster. Gawker wants to get those people to make lots of posts, but still have the participation and eyeballs of all the idiots that can be effectively advertised to. The problem is, if all those people are posting their drivel, it tends to drive the high quality posters away - or the opposite happens, and the high quality posters band together and harangue and mock and set standards so high that low quality posters feel too intimidated to post or participate and pretty soon you have a barren desert of a website (what happened to Plastic, basically).

I'm not really sure why Gawker thinks their new model will fix that Catch 22 - if I understand correctly, they're trying to give people who comment at the top level control over replies to their comments. That will probably just lead to a lot of petty censorship and sniping, followed by angry users picking up and leaving. They also intend to sell top level comment spots to advertisers, I gather...maybe that works, but if it begins to impact credibility, again, you lose users. Let's say Nokia buys a comment on a story about the Lumia 9000 or whatever and they try to talk it up - and another high value commenter starts a different thread about how it's a crappy, lousy phone. Does Gawker censor that guy in favor of their advertiser? If they do, they lose credibility and people migrate to more neutral sites. If they don't, advertiser is pissed. Lose-lose. To advertise really effectively (high value) you need to control the content, and no truly vibrant discussion community is going to tolerate the level of censorship required for very long. I don't think curated blogs will ever be replaced by mostly user generate content - it's just going to be too hard to make money at it. I do think that user generated content will increasingly hurt sites like HuffPo and Gawker, but there's nothing they can do to coopt or fix that - they're just crap sites and eventually people are going to catch on that they can get basically the same stuff for free just by following the right people on Twitter / Facebook / Google Plus / whatever and engaging in discussions on those sites.

Allons-y!