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Most bloggers are hobbyists. But there’s a minority of professional bloggers who are making more money than ever, according to a new installment of Technorati’s State of the Blogosphere report.

Bloggers can collect ad revenues related to their blogs. But they are also making money by parlaying the popularity of their blogs into speaking engagements, traditional media assignments, and running conferences.

Technorati said some bloggers are even reporting profits that place them squarely in the middle class. Among those who make money from blogging, 54 percent are part-timers, 32 percent are self-employed, and 14 percent work for corporations.

Part-timers and full-time bloggers say the main ways they generate revenue are through display and search ads, as well as through affiliate marketing links where they get a cut from a sale after a referral. About 15 percent say they are paid to gives speeches. Among the segment of full-time and part-time professional bloggers, about 17 percent get their main income from blogging.

For full-time bloggers, the average revenue in a year is $122,222. For part-timers, annual income is $14,777. The average for the full and part-timers combined is $42,548. About 89 percent believe that the ads on their sites must align with their own values. Most use self-serve ad platforms. But an increasing number are using ad networks or blog ad networks too.

About 51 percent of corporate bloggers said they received a salary for blogging. Bloggers who invest in their blog businesses face relatively low costs, but they’re not insubstantial. Site development for self-employed bloggers costs about $1,060 per year. Personal salary averages $5,992. Staff are paid $2,268, marketing and ad costs are $620, and hosting fees are $579. Hence, the overall costs per year, on average, are $10,519.

About 70 percent of bloggers talk about brands. Some 38 percent do brand or product reviews.

Windows users have been waiting for Microsoft’s Windows 7 operating system for a long time. Anybody who bought Windows Vista computers in the past three years has been itching to upgrade to something better. And Windows XP users who refused to use Vista have also been Waiting for Godot.

Well, Godot is finally here. I installed Windows 7 Ultimate ($219 version) on an Acer laptop that was new when Windows Vista came out. (See the Windows 7 versions here). I didn’t really feel like running this experiment on my newest machine. I’ll tell you what to expect from the upgrade process and my initial impressions. One of the good things about Windows 7 is that it can run on the same hardware that Vista ran on when it came out. In that respect, I didn’t have to buy a new machine to use Windows 7. Overall, the upgrade experience worked fine and it’s worth it to get a faster and cleaner operating system.

I was itching to get started when I got the disk from Microsoft. The first screen that comes up gives you two options: Check compatibility, or Install. I chose to install. The blue screen flashed messages saying “setup is copying temporary files” and then “setup is starting.” It asked me if I wanted to upgrade my old machine to Windows 7 and preserve all of my programs and files. Or it offered a custom upgrade option, where I could also wipe the disk clean and start afresh.

I chose the option to upgrade. Then the machine captured a snapshot of the system, in case I needed to roll back the install to its preinstalled state. It told me I didn’t have enough disk space on the laptop. So I had to clean off a bunch of files and make enough room for the 8-gigabyte Windows 7 Ultimate software. (You also need a gigahertz processor and a gigabyte of main memory as a minimum to run Windows 7).

Then it ran the compatibility check. It told me that I had to install the Windows Vista Service Pack 1. I thought that was a cheap shot. I knew I should have done this a long time ago. But I didn’t. So I had to exit the installation and beg the Vista machine to download SP1. It actually refused to do so at first. The sizable download stalled midway through and I had to start over several times. If I haven’t mentioned it yet, the Windows Update utility is stupid. It took me three tries to complete the full installation of SP1.

Once that was finally done, I proceeded with the installation. The installer told me that three programs on my machine had compatibility issues, including Acer’s laptop management software, Adobe Acrobat Reader 7, and a CD/DVD movie maker program. I didn’t really care about those ones so I went right ahead. Then it told me that, while it could get by with 8 gigabytes on my hard drive, it really recommended 16 gigabytes.

I proceeded anyway. Then began the long wait. The installer was kind enough to show me a progress bar on just how far into the installation I was at any given moment. It took its time copy Windows files, filter settings and other info. Then it expanded the Windows 7 files from the DVD to the hard drive. It installed the features, transferred all my old files and programs and settings to the new machine. I noticed that Windows 7 Ultimate has 2,224 files, because that’s what it showed me as I saw the number tick by from 1 up to 2,224. Then it transferred all of my data from Vista into the Windows 7 software. It took a couple of hours, though I didn’t time it precisely. It ended by asking for a registration code for the software and asked me if I wanted to activate the software. It also asked me for my home Wi-Fi password so that it could automatically detect my home network.

I rebooted the machine and it loaded pretty quickly. After all that was done, I finally got a good look at Windows 7 Ultimate. It kept the same whale fluke picture I had as my desktop image on my old machine. I fired up Internet Explorer and it upgraded immediately to IE version 8. I also ran the Firefox browser and it worked fine. Windows 7 even remembered what Firefox web pages I had open and restored all of them as the software ran.

One of the cool things, which really didn’t work well with Vista, is the icon bar at the bottom of the page. It’s now useful. If you hover over the Firefox icon, for instance, it will show you thumbnail pictures of all of the web pages you have open. It’s easy to select one, so switching from one web page to another is a breeze. With Vista, early on, these little icons were one of the big reasons for crashes. Microsoft lists a lot of improvements here.

Now others have taken a longer look at this than I have. David Pogue of the New York Times said he connected dozens of devices to Windows 7 machines and they worked for the most part. He praised Microsoft for creating a stable and secure operating system. The complaints he pointed to one that was caused by Microsoft’s antitrust troubles: Some free programs are no longer bundled with the operating system and users have to download them separately. It also doesn’t raise alarms about potential security breaches as much as Vista did.

There is one huge hassle for those waiting to upgrade from Windows XP. They have to back up their data and then do a clean install, meaning they load Windows 7 onto the machine and then they have to manually restore it. That’s where various utilities and external hard disks available from third parties will help. Those who upgrade Mac computers won’t have that kind of problem with Apple’s Snow Leopard operating system.

Walt Mossberg of the Wall Street Journal also praised how Windows 7 leaves Vista in the dust as early as January. And he has heaped more praise on it. It’s worth noting that those who upgrade an old machine won’t have the benefit of one of Windows 7’s best features: support for multitouch controls on a touchscreen interface. For those who prefer the ease of use, multitouch is a very cool feature. The new version of Bumptop, a 3-D user interface that sits on top of Windows 7, is also going to have support for Windows 7. The touchscreen feature is something the Mac doesn’t have yet.

For those who are wed to Windows, Microsoft’s new operating system is a must have. It takes time to get it up and running, but the benefits are worth it. The question is whether you’re better off switching to a Mac or moving up to Windows 7. For sure, if you can, it’s a better idea to buy a new Windows 7 machine than to upgrade an old one. But as long as you don’t might waiting, Windows 7 will do.

Is this good enough to fend off Apple? Is it good enough to revive the tech economy? We’ll have to wait and see.

Facebook is testing a new mobile homepage designed for touchscreen phones. You can try it here at http://touch.facebook.com. After launching apps for both the iPhone and Google’s Android platform, Facebook still has to work with a number of other systems, including the Palm OS. Clearly, apps have a better overall experience. But this is a welcome upgrade from Facebook’s standard mobile homepage.

Perhaps there’s hope for record labels yet. While album sales tumble,  virtual goods are on track to become a $1 billion industry.

Then what better way to solve the ailing music industry’s problems than by turning songs into virtual goods?

Well, there’s one initial problem, virtual goods in games can only be consumed in one place — inside the gaming environment. By contrast, songs can be copied at virtually zero cost and be consumed anywhere.

So Facebook and Lala’s solution is to make songs gifts, which can come in a specially designed environment with birthday graphics and e-cards. It’s 1 Facebook credit or 10 cents for a song that you can play inside Facebook and 90 cents (or 10 cents less than iTunes) to get a track you can download.

“It’s totally different and integrated,” said Lala’s co-founder Bill Nguyen. “There are cards around it and it’s really packaged. When someone knows that you’ve paid for it and it’s packaged properly, it has much more emotional value.”

Lala was coy on its revenue share but said that it was similar to other app-platform pricing models. I asked if it was 70-30 Lala-to-Facebook and Nguyen said that was close.

The deal actually took quite a long time — we reported that Lala was in talks about a potential partnership as far back as a year ago.

“I always joke that this has taken longer than the aging of some of my children,” Nguyen said. And the talks took on a more serious tone even before MySpace bought music sharing startup iLike for $20 million in August.

Nguyen said it took such a long time because “Facebook had a very ambitious vision for music — they never wanted to just sell music. They wanted to make it social and tie it into events and the Facebook platform.”

I asked Nguyen about what he thought of other music startups trying to move the paradigm away from ownership and toward all-you-can-eat streaming access like Spotify.

“Spotify is like Yahoo Music five years ago,” he said. “The economics of subscription are really weird — the more successful you are in getting people to use your service, the more expensive it becomes. And a lot more expensive. We’ve been there, done that, seen it before. We wish them the best of luck.”

Google to launch music service – It will be something like Google Finance for music, but with the addition of downloads. Reporter Brad Stone gathered an exceptionally insidery report for the New York Times:

“For example, if you search for Green Day’s song “21 Guns,” a Google page devoted to the song will offer lyrics, photos, tour dates and opportunities to sample the music from streaming services like Lala and iLike, a division of MySpace.

We have also learned that more online music services, including Imeem, may be added to the Google service in the next week.

No money is changing hands in these deals, a person with knowledge of the discussions said.”

Ning launches virtual gifts – The social network platform has created its own virtual currency, measured in “credits.” users can buy credits and give gifts at an introductory price of $1.50, or 75 Ning credits, per gift. As part of the launch, everyone on Ning gets 100 credits to their account, so they can test-gift a friend. Ning’s press release gets bonus points for using Lost Zombies (pictured) rather than, say, John Mayer to hawk the platform.

Internet users more likely to update their statuses than ever — Did you think the whole Facebook/Twitter thing was over? Au contraire. A new Pew study found that the number of Internet users who now use Twitter or another service to read and/or write status updates is up from 11% last December to 19 percent today.

Pew also found that the more gadgets someone owns — laptop(s), smartphone(s), game console(s) — the more likely they are to use Twitter or another service to update their personal status. This is an important stat, because it confirms our gut instinct that social networks are not gadgets, yet there’s a hard-to-describe connection between social networks and gadgets.

“No one has the right to exist in business. It’s that simple.” – New York Times digital operations chief Martin Nisenholtz at the Web 2.0 summit panel on the future of journalism. True, but bloggers waiting for the Times to lie down and die — I seem to attract them at parties — are going to be sorely disappointed.

MySpace, battling to maintain relevance as it loses market share to Facebook, is refocusing on the area that brought the company early success by launching a music video hub and rich analytics for artists.

The social network unveiled an artists dashboard that gives musicians better analytics to manage their relationship with fans at the Web 2.0 Summit in San Francisco today. Not only that, the company is building a hub for music videos incorporating content from several large record labels. It also includes music video recommendations based on what friends are watching and links to buy tracks you like.

“Nobody else is offering artists this type of insight,” said MySpace chief executive Owen Van Natta. Van Natta said he wanted the social network to be the place where content gets “socialized.”

Van Natta’s clearly deciding that if MySpace is going to be successful, it better focus on one thing, and execute it flawlessly. He told Reuters earlier today:

Candidly, when I looked at the product road map and plan, there was no better way to describe it than,… it was a mile wide and an inch deep. It was not focused to let the company execute well. We clearly defined the company mission and focused the product roadmap, and reduced the number of initiatives.

The big elephant in the worlds of social and real-time search certainly made itself heard today.

Google’s rolling out a social search product in Labs within the next few weeks that will show you results connected to your social circle. At the bottom of the page, you’ll see results, blog posts, photos or reviews created by friends. For example, a “New Zealand” search page will turn up travel reviews written or photos taken by friends who have recently visited the country.

“This is great from a precision and relevance standpoint,” said Marissa Mayer, Google’s vice president of search products and user experience.

To use social search, you have to be signed into Google and it will determine who you’re connected to in part by looking at your Gmail contacts. When you search different items, Google will show you how you’re connected to other people, whether it’s through e-mail, Twitter or FriendFeed.

Google has also incorporated social elements into image search. For example, if you look for photos of a celebrity like Cedric Hodgeman of Twilight, it might also show you pictures of real friends named Cedric. If you do local search, you might end up pulling up reviews that friends have written on Yelp.

The features are new, but Mayer has actually been talking about the potential for social search for a while — for example, in this interview with VentureBeat about social search from January 2008.

Facebook’s making a deeper foray into the world of virtual goods by adding songs and sports merchandise to its gift store. The company’s partnering with Lala.com to offer tracks for about 10 cents each. They’re free of digital rights management (DRM) and you can download them. Users have to pay for them with Facebook’s virtual currency called Credits, which can be purchased online with a credit card.

Facebook’s also launching a partnership with the NBA and Major League Soccer to sell branded virtual jerseys online. A few universities like Stanford University and Oklahoma state are joining in as well. Last but not least, there are charities like Kiva, Project Red and Charity Water that users can make donations to through the gift store. In return, a virtual gift will appear on your profile or on the profile you’re making the donation on behalf of.

The move isn’t surprising given the runaway success of social gaming companies like Zynga, which may be on track to make more than $200 million in revenue this year on the back of virtual goods. Facebook already made an estimated $40 million off its gift store last year and this is one revenue model it could stand to build out.

Bing got much of the glory this morning at the Web 2.0 Summit in San Francisco, when it announced that it was incorporating Twitter’s public stream into its results. But a few hours later, Google crept in with its own announcement.

Google, it turns out, is also pulling Twitter’s public data into its search engine. The company declined to release financial terms of the deal. Google had no prototypes to demo, but here’s what Marissa Mayer, vice president of search products and user experience had to say:

At Google, our goal is to create the most comprehensive, relevant and fast search in the world. In the past few years, an entirely new type of data has emerged — real-time updates like those on Twitter have appeared not only as a way for people to communicate their thoughts and feelings, but also as an interesting source of data about what is happening right now in regard to a particular topic.

Given this new type of information and its value to search, we are very excited to announce that we have reached an agreement with Twitter to include their updates in our search results. We believe that our search results and user experience will greatly benefit from the inclusion of this up-to-the-minute data, and we look forward to having a product that showcases how tweets can make search better in the coming months. That way, the next time you search for something that can be aided by a real-time observation, say, snow conditions at your favorite ski resort, you’ll find tweets from other users who are there and sharing the latest and greatest information.

Facebook’s COO Sheryl Sandberg is on-stage at the Web 2.0 Summit in San Francisco. The big news is that Facebook is giving Microsoft a feed of people’s public updates to be incorporated into search results. Sandberg said no money exchanged hands during the deal and that the company is “not trying to make money on data.”

(Sandberg said there’s nothing to announce with Google, which is her former employer.)

Here are notes from her talk:

John Battelle: How did you manage becoming profitable?

Sandberg: The short answer is revenue growth. We have a robust advertising business. We think we are — and the numbers are proving it — making real the promise for what the Internet is doing for advertising. It would no longer be a one-to-many medium where you’d blast your message out.

Brand advertising has been one-to-many, blasting out your message. Our ads are different. Facebook is where you are your authentic self, so advertisers are able to engage with you. You are able to engage with marketers the way you can with friends. We’re ready to announce that we’re not only profitable and cash-flow positive as well.

Battelle: I want to get back to the question of how that breaks out.

Sandberg: We sell through a direct sales force and we sell through an online ad platform that’s now available in 28 languages and 15 currencies. Both explain the increase in revenue.

Battelle: It seems that the referral ecosystem is shifting. We’ve had a stable system where search has been king, distributing the attention of people around the Internet ecosystem. But the referral logs are increasingly Facebook and Twitter and other sharing sites. You must have noticed that while you’re at Google. And now you’re at Facebook. Is there any connection?

Sandberg: There are a shift. How do you get the information that you want to get? Google is going to continue to be important, but its doing it in an anonymous web. The wisdom of the web. We believe in the wisdom of friends. (She gives the example of Where The Wild Things Are and how her son wanted to go. So she asked friends on the web whether it was appropriate to bring her child. And she got more than 18 responses and realized it wasn’t a good movie to take a young child to.)

I wanted that information from people I trusted, from people who knew me and my kids. I believed that I could trust that more than information from a publicly available source.

Battelle: We just saw a company called Aardvark that leverages the Facebook platform to answer questions. How do you manage the tension between developers outside what you want to create in-house?

Sandberg: The platform strategy is really important. We have an open platform, We don’t try to build everything our users want to use. We focus on building the core technology and people develop on top. We have over 1 million developers. People are engaged in Facebook doing things developers build out. We are focused on the core platform. We are indifferent if it’s in a status update or in an outside app. What matters to us is that our technology is at the core of connecting with your friends and that activity.

Battelle: You’re not alone in that ambition. There’s also Google and Twitter. What’s Facebook’s unique proposition compared to what Google or Microsoft might do in terms of competing for being that social graph?

Sandberg: We have to be vigilant and make sure that we’re continuing to iterate and provide the best product. We start from a place where Facebook is where you’re yourself on the web. Facebook’s the only place where you can share something with a few close friends or the whole world. We do this at scale. 300 million people come to Facebook and get an individual news feed. I think in terms of do we, are we the leaders of providing that service? I think there’s no question.

Battelle: Let’s talk about Facebook Connect. I think this crowd understands what it is. Maybe you can give a quick overview. Is Facebook Connect now what it was when it launched? Are their plans to make it more robust?

Sandberg: Facebook Connect is an extension of our platform. You can log-in to that site with Facebook and you can bring your friends to that site. You can log-in to the Huffington Post for example and see what stories your friends have read and comments they’ve made. We’re able to take your social network and bring it to any site.

I would have these meetings. People would tell me they wanted to build a community around a site. They do want to share activity with friends, but they’re not going to go and set up a community on every site. But you can do this with Facebook. That’s what we’re enabling.

Battelle: Are you going to be enabling a lot of the core functionality inside the domain of Facebook, outside?

Sandberg: We want to give people enough technology to enable them to share both on and off Facebook. We continue to iterate and build out that functionality.

Battelle: It looks to the untrained eye like a potential Trojan horse for a monetization service that might also roll out alongside Facebook Connect — it might become an AdSense-like product for the rest of the world.

Sandberg: Not now. We’re focused on building products for users and we look at monetization later. We are focused on monetization. We have a robust ad business that is funding Facebook and Facebook Connect. We want the APIs to be easy to integrate and we want it to be easy for very cool integrations and applications.

Battelle: Are developers asking you for this? How do you ensure there’s a system where developers can get paid?

Sandberg: People who start with Facebook Connect usually have their own business like ABC News or Huffington Post. They’re looking to socially engage. They want more users and less anonymity. When Michael Jackson died, ABC streamed the memorial and what they found was that people were engaging.

Battelle: I’m glad you talked about Zynga. And they’re working with PayPal. Are you looking at building your own payments system?

Sandberg: We do a few things on payments. We have a large ad system. Facebook’s growing internationally and domestically and we needed a way for people to buy ads very efficiently. The second thing we’re doing right now is we have a virtual goods and gift store. You can pay with Facebook credits. We are doing testing with developers where people can use credits to pay for items in apps.

Battelle: When I talked with Ev yesterday, he said he was flattered by some of the Facebook updates that felt a little “Twittery”? Was that a response to Twitter?

Sandberg: Anyone who has worked at Facebook knows that change is in the DNA. It comes from Mark. We think Twitter’s impressive. They’ve built something very important. The world’s moving toward more sharing and more real-time connections. The world now accepts that 140 characters is an acceptable size of information to share. That’s important step in how people are sharing and connecting. There’s room for more than one player in that.

Battelle: The scale is very different in terms of the amount of status updates.

Sandberg: We do 45 million status updates a day from 30 million unique individuals. People want to share. Our challenge and lots of people are working on that is how to do more of that.

Battelle: Has the vision of what Facebook was changed either since before you came and sort of looked at the company and became Mark’s partner?

Sandberg: I don’t think the vision’s changed. I don’t think the vision’s changed since Mark was in his dorm room. The vision is to help people connect. Certainly what we build to enable that changes all the time. We’re committed to continuing that process of change. We want our products to keep evolving. Even as we get to be a bigger company, it’s important for us to iterate and build products rapidly.

Battelle: You don’t have a very Valley background. You were in the Treasury. We’ve had several government-related speakers. Let me ask you this — how do you think about having a conversation with Washington D.C.?

Sandberg: I think and I thought this then that Silicon Valley is an amazing force for our economy. We’re changing the world and we’re building products that are changing people’s lives. Our impact on policy is not as profound. There are industries that understand how important those ties are. The core things that this industry and the core political platform that this place needs to believe in is globalization. Free trade. We as an industry have more to do. We are probably the strongest, best voice for those things. They’re important for Facebook, for HP, Cisco — for all of these businesses, that rely on the free movement of labor and capital.

I think we can do better.

Audience: Asks about the shift to sharing with everyone…

Sandberg: Privacy has always been really important to us. You can share information with some people or with everyone. Making it more open and public isn’t a philosophical shift. We want to make these choices more granular. We’re offering them more and more in different parts of the site. Do I want this to be for everyone? Or just for friends? It’s just a continuation of helping people to share more in different ways.

Battelle: It’s very clear that a lot of the companies in your Internet peer set — Yahoo, AOL, MySpace — are all organizing themselves around a strategy of content. Facebook has never really had that as a center of gravity. Is that going to change? Because there’s a lot of sharing of content.

Sandberg: It’s not going to change. We’re busy enough trying to build technology that helps people share, across mobile devices and the rest of the world. We’re a platform for people to share whatever content they want to, and we’re becoming important referrers.

Audience: What’s your advice to a marketer for connecting with individuals?

Sandberg: We offer a number of products. The biggest advice we offer is do it quickly and iterate. Traditionally, it’s been about planning. Facebook is much more iterative because it’s about two-way marketing. Keep changing your messages. Put a little bit of content once a day is much better than a big push. People are spending time online in a fast, iterative way. Our most successful marketers, whether it’s mom and pop, or large companies. That’s exactly what they do.

Audience: The deals this morning were non-exclusive, so if you partnered with Google, what sort of mash-ups would you imagine?

Sandberg: I have a very big imagination. We have an open platform and we want to work with lots of people across the web. The agreement with Bing is giving them the “everyone” data. No money exchanged hands. We are not trying to make money on data.

Audience: The perception was that older people weren’t on Facebook, now everyone’s on there. Did you consciously set out to do that?

Sandberg: We want everyone to use Facebook. As the site started in a certain age demographic, but we’ve grown and spread across many age demographics. In other countries where we started later, the site grew across broader demographics from the very beginning. The nice thing about Facebook is it’s personal.