A web directory is defined as a repository of links that redirect to other web sites. The links in any web directory are categorized and sorted based on their niches.

Web directories are often compared with RSS directories (Really Simple Syndication) because of their similarities in operation. Web directories provide direct links to websites whereas RSS directories provide web feeds known as RSS feeds.

Categorization of links within a web directory

All web directories contain large lists of websites that are differentiated from each other based on their nature and operations. Directories are first divided into categories and individual websites are listed in them accordingly. A few of the large web repositories even have sub categories within them, which normalizes the search at the consumer end. Since the importance is given to the entire content of the websites rather than settling with a few keywords, the websites are not ranked within the web directories. Hence, web directories act as repositories of website information.

Many web directories are inclined to be open source or customizable. This allows the end users to update the information of their websites by themselves while the editors do a final check of the information. One such open source web directory is aboutus.org, which is a subsidiary of Wikipedia.

Modes of categorization

Websites are categorized using hundreds of modes. The most common of them all are location, language and specialization. These, along with other modes like age and gender, are explicit categorization criteria. With the growing importance to search engine rankings and traffic rankings, the focus has shifted towards keywords too. Few web directories have started categorizing the websites based on keywords and have started using tags to fetch website results based on keywords.

Most of the web directories, other than those that are open sourced operates on a paid basis. The fee charged may be a one-time fee for account creation or on an exchange basis where the directories demand posting of back-links within the website content, blogs or articles. These back links redirect back to the original web directory that in turn earns them more traffic and, hence, a growing page rank.

Paid Directories

Considering the huge amount of traffic that web directories garner, it has become a trend for third party websites to pay to the web directories for their inclusion in the listings. These paid inclusions are also known as bid for position web directories. Such bid for position inclusions rake in a lot of profit for the directories which are sometimes equivalent to the profits brought in by advertisements.

Well known web directories

VLIB or World Wide Web Virtual Library is the best known and the oldest web directory. VLIB has been overtaken by more attractive and highly managed directories like the Yahoo web directory and the Google web directory. AboutUs.org, wiki's web directory, is the best known user customized web directory. There are a few specialized web directories that list entries specific to some domains such as business, sports etc. Some well known specialized web directories are Business.com and Biographicon.