I bought a 200 gigabyte hard disk the other day. After a rebate and coupon discount, I paid $68, which just floored me. So I did some calculations.

In 1985, I bought a 20 megabyte hard disk for $225. That means that the disk drive I bought this week has 10,000 times the capacity at 30% of the price. In 1985, the disk drive cost $11.25/MB. In 2006 it cost $.00034/MB. That’s a 3,308,800% improvement in price/performance, or about 40% per year compounded over 20 years. There simply has never been a price deflation like that in history. It’s incredible.

An IBM research paper estimated that arial density of disk storage improved by a factor of 35 million from 1956 to 2003. It’s probably double that now. The paper further noted that the floor space required to store a terabyte of information shrank by 10,000,000 during the same period. That means that what can be stored in your desktop PC today would have required a disk farm more than a square mile across 50 years ago.

So, if disk storage has become effectively free, what are the implications of that? It means that a whole class of new applications have become economically viable. The photo sharing sites that proliferated beginning a few years ago, for example would not have been sustainable as businesses prior to this deflation. Similar, although less dramatic declines in processing costs contributed to the development of that market.

Photo sharing got people used to telling stories online, which directly influenced the growth of blogging. Blogging sites also grew and prospered because cheap processors, cheap storage, consumer broadband and open-source software made them economically viable. Podcasting joined the party because technological change made it cheap to create and share audio files. Now, video services are seeing the same kind of growth.

The result is that a sea change in technology – in this instance, declining storage costs – enabled a whole new medium to emerge. And that medium is going to reshape some institutions in society. We’re pretty far afield from arial density, but I hope you get my drift.

I call this technology leverage: seemingly minor changes in technology can kick off much bigger changes in markets and institutions because technology makes it possible for new kinds of applications to emerge. It’s a cycle that has played itself out repeatedly in the history of computing but which is happening very quickly today because of the rate of improvement in hardware price/performance.

These changes are usually unpredictable. Five years ago, the idea of mass community media wasn’t given much credence because there was no model for it. For social media to develop, you needed a technology infrastructure in place that lots of people could access at low cost. Until that existed, there was simply no way to predict what would happen. Now that we understand what occurred, we can make some new assumptions about the future. But those assumptions will almost certainly be wrong because the innovations and behaviors that emerge when new technology is introduced are almost always unpredictable.

MP3 players have been around for almost 10 years, but it took miniaturization and price /performance improvements to make the iPod a mainstream product. The Video iPod and similar products are just seeping out into the market. They’re kind of expensive right now, but you know that will change. In five years we’ll have random-access digital video players that squeeze the iPod’s screen into a space the size of a business card holder. What will happen once those products are widely available for less than $200? We don’t know, but it’s a safe bet that a whole new class of applications will emerge that we can’t even envision today.

This is what makes tech markets so exciting. It’s also what keeps the tech leaders on their toes, which stimulates more innovation. As long as core technology continues to improve at this rate, this will be a wild and unpredictable business to watch. I’m not expecting to run out of topics for this blog. 🙂

the Netherlands Board of Tourism and Conventions is sending a group of 25 bloggers on a free trip to Amsterdam, says Online Media Daily. I think this is further recognition of the influence of blogs in the travel world. Travel is one of the most popular blog topics because it’s all about hints and tips and personal observations, perfect for a community of personal publishers.

Boeing has an interesting experiment in this area called InflightHQ. It’s a blog for frequent travelers operated by Boeing. Earlier I wrote about J3tlag.com, a travel site operated by a shoe company and made up of blogger contributions. Travel may be the killer app for blog advertising.

BTW, note the comment from the Netherlands Tourism rep at the end of the Online Media Daily story: “We pretty much stopped with TV ads or radio ads or branded ads. It just wasn’t worth it anymore. Online, there are just many more possibilities.”

This is a pretty cool new product: www.stickam.com

Like it Matters has posted a brief survey asking marketers to talk about how they monitor the blogosphere and what they do when mentions of their companies show up. I’ll look forward to seeing the results.

A story in Sunday’s New York Times highlights how much today’s teens and young adults are influenced by the Internet. Factoid: nearly 80 percent of under-28 online users regularly visiting blogs, compared with just 30 percent of adults 29 to 40. Says one 24-year-old website editor, “It’s like, if you don’t check your e-mail and you turn off your phone, it’s almost like you don’t exist.” You gotta get with this program if you’re going to influence this next generation of consumers and business people.

I just met with the CEO of a company called iUpload which, despite its diminutive (25 people) size, has big ideas about applying blogs to customer relations.

iUpload is a content management company that has evolved its strategy into the blogosphere. The company is basically a blog hoster, but it has a rich administration system that enables customers to manage and consolidate blogs in creative ways.

For example, you can set up a branded blog under your own company’s name and give publishing access to employees and business partners. Each blogger can maintain his or her own blog on your site with complete control over their own content. But then – and this is where it gets interesting – you can set up mechanisms to grab content from individual sites and aggregate it into portals, front pages or metablogs.

For example, you could aggregate blog entries from the HR and payroll departments into an employee portal that tells people about promotions or benefits changes. A partner portal could be aggregated from blog entries by your product management and channel marketing people. And a public website could be assembled from contributions from all over the company: marketing, product development, sales, executive, press, etc.

Here’s what one iUpload customer, Northwest Voice, is doing. It’s basically a newspaper composed of blog entries. Anyone in the community is eligible to have a blog at Northwest Voice. A person can blog about the school board meeting and the editors can then choose to take all or part of that entry and integrate it into the Northwest Voice site. Teachers can routinely post homework assignments as blogs. But maybe once in a while they want to tell the town about a class project. That’s as simple as notifying the site editor of a new blog entry.

Multiple entries about the same event can be integrated. You could have a report on the city council meeting composed from entries by six bloggers who were there. Classrooms, town government offices and businesses can all have blogs and can all submit content for use on the Northwest Voice site. This is pure community journalism.

Advertisers can use the same mechanism to customize their ads. If you’re discounting haircuts by 10% this Thursday, you just post a blog entry and link to it from your ad. This is really powerful stuff.

Canadian Idol uses iUpload to maintain 40,000 fan blogs for the popular TV show. McDonald’s is a recent new customer. The restaurant chain is going to launch internal blogs worldwide and plans to recruit selected customers to blog about their McDonald’s experiences – both good and bad – for public consumption. Essentially, McDonald’s will recruit customers to be quality control watchdogs and give them a forum for rapidly sharing their experiences.

That’s scary stuff if you don’t have the corporate transparency gene. But if you’re bold enough to listen to unfiltered customer feedback, it’s very exciting. iUpload is on to something here. The concept of integrating customers and constituents into your internal and external communications is full of potential. We’ve barely even scratched the surface.

I haven’t been on hiatus, just incredibly busy. Restructured my web site, launched a newsletter and added a new page to my business site called The Marketer’s blog list. It’s a constantly updated compendium of interesting articles and resources for companies that are considering business blogging or podcasting. Please check it out and give me some feedback!

A lot of services have sprung up recently to help you organize your notes and favorite links. Among them are deli.cio.us, wink.com and RawSugar.com. They’re worth checking out because they let you see link lists from people with interests that are similar to yours and so facilitate a kind of social networking through lists.

But the coolest tool I’ve seen so far is eSnips from Net Snippets, Ltd. This services gives you a generous 1GB of server disk space and a browser toolbar that you can use to clip and organize anything you find on the Web. You can upload anything from simple links to entire Web pages with a couple of clicks. You can also upload files. Everything is stored in folders which can be kept private, shared with selected friends or published on the Web. Here’s a folder I’m putting together on fun and offbeat stuff. Visitors to your public folders can rate the content and add comments.

ESnips is still in beta, is buggy and has some user interface shortcomings but it has quickly become an indispensable research tool for me. As I read articles or find websites on topics that interest me, I drop them into the relevant eSnips folder for later retrieval. When I’m ready to put together an article or chapter, I can revisit everything I’ve found in one convenient place. And the generous disk allocation allows me to store photos, PowerPoint files and other items that I may need to retrieve when I’m not at my own computer.

It’s free. If you’re an information junkie, try it.

Former Lotus CEO Jim Manzi is a man I respect very much, so when he takes an investment stake in something, I think it’s worth listening. Manzi and ex-U.S. Senator Bill Bradley are both investing in Gather.com, a Boston-area startup that aims to build a blog community by paying the contributors. It also has an eBay-like ratings model that lets readers vote on their favorite bloggers. I guess the idea is that the top rated bloggers get more traffic and therefore more money. All the dollars come from advertising.

Manzi posts on Gather about how the company’s business model could challenge what he called the “literary industrial complex,” which is his sardonic term for the big media companies. Manzi has never much cared for the press, so it’s not surprising to see him investing in something that pokes a stick in their eye. It’s a literate, if somewhat wordy essay and you can see how a concept like Gather could work.

I don’t know if it will work, of course, but it’s good to see investment capital continuing to flow into companies that are trying to structure the blogosphere. Chaos is social media’s biggest enemy. These media will achieve its potential only if trusted voices emerge and selected bloggers begin to have an impact. Otherwise, it’s just a lot of people shouting.

I spent the morning at a Massachusetts Technology Leadership Council session called “Sales & Marketing Roundtable: New Online Strategies.” The focus was on social and community media and how it can be used in marketing. Bottom line: you should be at least paying attention to and probably participating in this world.

Here are some highlights from speakers Todd Van Hoosear, chief blogger at Topaz Partners and Julie Woods, VP of product strategy at Cymfony, a vendor of market insight services:

• Great stats from Van Hoosear:

• more people now belong to online special interest groups than to professional organizations or clubs;
• over 25 million Americans have sold something online;
• 10% of Internet users read blogs regularly (plenty of room for growth there!);
• in December alone, Wikipedia readers added more than 45,000 entries;
• 59% of CEOs say they find blogs useful for internal communications and 7% are bloggers;
• 83% of corporate execs who blog say their blogs are written or drafted by someone else (hey, give me a call!);
• you can now call an 800 number and create a podcaston Audioblog.com (Thanks for this referral, Todd. Awesome idea!)

• Interesting technologies and governance procedures are emerging to create structure in blogs. We’re moving toward a Personal Information construct, in which content packages are personalized for each user based on his or her interests, behavioral patterns, demographics and choices. For a somewhat chilling animation on where this is headed, see EPIC.

• One person can do a lot of damage online.

• The Internet shifts economics toward the “long tail.” Basically, those are the products, people and issues that are too specialized or small to be addressed by conventional media. Online communities can cost-effectively address the long tail because the economics of online publishing are different. This is why online is a better medium for targeting. Marketers should know this.

• One-to-one has long been held out as the marketer’s Holy Grail. But it should really be many-to-one, where individuals can receive many customized messages. Online communities are a step toward getting to that.

• Companies that don’t engage with the blogosphere because it’s too small are missing the point. While any one blogger may have limited reach, the links between blogs can create large special-interest audiences. And if a prominent blogger picks up a story, it can spread like kudzu.

• Your community media strategy should cover the entire buying cycle. Banner ads are good at creating awareness. Blogs and podcasts become more valuable as the buyer moves closer to a decision. That’s because peer advice is so important at that time. The community also plays an ongoing role in validating and complementing product support. In fact, one of a company’s greatest vulnerabilities to online criticism is in customer support.

• Many, but not all companies should support employee bloggers. You should only do it if transparency and customer engagement are part of your culture. If you start a corporate blog, use it to respond to issues, get ahead of the buzz in the market, dispel inaccuracies and promote your thought leaders.

• DO NOT be argumentative, sell, overreact or make unsupported claims. You’ll shoot yourself in the foot.

• Don’t ignore this stuff. If you type “Cisco” into Google, the fifth result is a user-generated FAQ and the 14th is a blog entry. If you type “Verizon customer service,” the ninth search result is headlined “Verizon Customer Service is a joke.” Not to single out Verizon. A lot of companies would have the same issue.

• Use automated tools to filter and navigate the blogosphere. Freebies include Bloglines, PubSub, BlogPulse, Technorati, Podscope and many others. Cymfony, Intelliseek, BuzzMetrics and others offer sophisticated paid services.

• The Teflon cancer scare of last year is a good example of how a company effectively responded to a problem through online media. “Important Facts about Teflon” helped counter rumors and calm a growing public outcry. Woods showed a nice chart of blog activity that dramatized how DuPont helped manage the reaction.