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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.

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.

The New York Times unveiled the online side of its local news initiative today with a new blog called The Bay Area.

The Times actually began its Bay Area-aimed publishing effort last Friday, with extra pages in the print edition highlighting local news. If you’re like me, however, you don’t get much news from print papers anymore, so the blog (which is supposed to “complement,” not replicate, the print edition) is our first real peek at what The Times has in mind. The idea is to reach local readers and advertisers without spending the money to build out a full news organization, by carrying stories from other publications. (Here in the Bay Area, the articles are currently being written by New York Times staffers, but The Times is reportedly in talks to shift the work to the in-development nonprofit news group involving public radio station KQED and the University of California, Berkeley.)

The Times is also preparing to launch a similar section in Chicago, with more cities to follow, presumably, if the experiment goes well.

So what is The Bay Area actually going to blog about? In the introductory post, Michelle Quinn writes, “Think of The Bay Area as a café with good coffee (or tea), comfortable armchairs and permission to talk to one’s neighbors, who are generally interesting and informed. Here, you’ll find conversations on the region’s politics, entertainment, crime, education and, of course, food.”

The top stories include a financial earnings roundup, a story about San Francisco’s new recycling laws, and a discussion of how marijuana laws affect a Walnut Creek cannabis club. There’s some original reporting, but also generous links to other sites, including small neighborhood blogs like Mission Local.

There’s also a widget showing the latest tweets from The Bay Area blog’s writers. Technologically, that’s not particularly novel, but it’s interesting to see it on this section of The Times, since it’s not included in Bits, The Times’ tech blog.

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.”

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.

Bing’s Twitter search just went live this morning. Here’s a side-by-side comparison against some of the more prominent start-ups in the real-time space.

A few notes – Bing’s results seem about two to six minutes behind other search engines. Like Tweetmeme and OneRiot, they put a bit more emphasis on the content being shared rather than the tweets themselves.

1) Trending Topics — Most major Twitter search engines incorporate “trending topics,” showing the top ten new things people are talking about. Computationally, it usually involves comparing the word composition of tweets from the previous hour to the current hour and then pulling out what terms have changed or risen in volume. Bing shows trends in a tag cloud and makes Michael Jackson a trending topic. It also pulls out Magic Mouse, which was big news yesterday.

Here’s Brizzly for comparison, which shows trending topics in a list. What’s nice about the client is that its users can contribute explanations for why these topics are trending in a wiki-style format. CEO Jason Shellen says Brizzly users are usually pretty vigilant and fix incorrect explanations quickly (similar to how Wikipedia can be corrected rapidly after vandalism.)

Last but not least, here’s Twitter’s trending topics. They haven’t changed a ton since Twitter acquired Summize last year.

2) The results: Let’s do Bing on Bing — you get tweets (which are a few minutes behind Twitter’s search results) on top. Then Bing scrapes out the links, showing the content that’s been most widely shared on Twitter’s network. Another nice plus is in the content links, where Bing shows reactions and thoughts through tweets about the content. It might be more helpful if Bing had a two-column result page, with content in the center and a live stream of relevant tweets in a right-hand bar.

Here’s OneRiot for comparison. They put a lot more emphasis on the content, showing the actual link front and center. Then they show who originated the link and then you can click through to get reactions.

Here’s Tweetmeme. Again, they put a big emphasis on the content contained in a tweet. Their user interface also focuses more on how many times a particular link has been shared through Twitter.

Last but not least here’s Twitter. There’s no fuss or frills here. Twitter’s search team is still pretty small and the company’s tried to stay laser-focused on simply making sure the system doesn’t fall apart instead of adding new features. The results are just ordered by time published.