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A mashup is a technique by which a website or Web application uses data, presentation or functionality from two or more sources to create a new service. Mashups are made possible via Web services or public APIs that (generally) allow free access. Most mashups are visual and interactive in nature.
To a user, a mashup should provide a richer, more interactive experience. A mashup is also beneficial to developers because it requires less code, allowing for a quicker development cycle.
The term mashup is a bit of a buzzword. It's frequently mentioned in the same context as cloud computing and Web 2.0. This is because version 1.0 of the Web was more about simply getting online, which many companies did by posting brochureware. In other words, they took what they did offline and put it online. Web 2.0 implies greater collaboration between websites, and greater interaction with website users. In fact, website might be the wrong term; as more and more functionality is provided via the browser, Web application is becoming a better description.
Despite the marketing flavor of the term, there is much to be said for being able to access data and tools in the cloud. A great example of this is Google Maps, which has spawned hundreds, if not thousands, of mashup applications. These include applications that use Google Maps to rate areas in a city, delineate points of interest, or show roads that are undergoing construction. These applications take some of the functionality and data from Google Maps and combine it with their own programming to create a new application.