A New York University professor calls it the “paradox of abundance.” I call it the Memoirs of a Geisha effect. It’s the phenomenon, documented in today’s Wall Street Journal, of ordering movies that you were never dying to watch from Netflix and then letting the DVDs sit there in their little red envelopes for weeks on end while you find new excuses not to play them. Finally, slightly ashamed of yourself, you seal them back up and return them to Netflix, unwatched. It’s happened to me many times, twice with Memoirs of a Geisha.

I think it may also make for a small but worthy footnote to Chris Anderson’s Long Tail book. How many long tail offerings do we order (because it’s so freaking easy) and then never end up reading or watching or listening to? My guess is that it might be a fairly high percentage. Among other things, the long tail gives us the illusion that our tastes are more catholic than they actually are. Which explains that small sense of shame that springs up every time we return a DVD unwatched: It’s an admission of failure, a confession that our cultural orbit is a bit more circumscribed than we had imagined it.

Yesterday, Microsoft completed its purchase of a little company named Softricity. It’s an interesting acquisition, one that sheds a little more light on the virtual future of information technology.

Softricity was born in Boston’s Computer Museum a decade ago. Three guys were putting together an exhibit on kids’ software and had to figure out a way to deliver a bunch of applications – mainly games – to a dozen or so PCs and let children fool around with them without screwing up the systems. They developed a way to, in effect, stream the applications over a network, downloading bits of code as required to the desktop machines and running them in a “virtual container” that shielded the underlying operating system. The technology became the basis for Softricity’s core product, SoftGrid, an application virtualization system that allows you to stream any Windows application to a bunch of PCs or thin-client terminals over a network.

Microsoft has had a partnership with Softricity for a while, but the acquisition points to something bigger. Most obviously, Softricity’s technology will help Microsoft better respond to companies’ growing desire to centralize the provisioning of desktop applications in order to reduce the burdens of maintenance, upgrading and troubleshooting (and in the process trim their IT staffs). When you stream an app, everybody gets the same version in the same configuration – and their core system remains untouched. Desktop maintenance issues go away, and upgrading becomes a snap.

Second, the technology may help Microsoft sell (or give away) a range of applications – or even entire desktops – as services that customers can subscribe to. That would be a different take on software-as-a-service, because the applications could be traditional ones – the same ones you used to have to install on your own PC. Also, because Softricity’s system caches code on the client machine, you’d have the ability to run the apps even when you weren’t connected to the Internet, an important advantage for mobile workers. You can already stream audio and video over the Net. Why not stream applications as well?

Of course, there’s also a defensive reason behind Microsoft’s acquisition, as well as its other recent virtualization initiatives (including its linkup, also announced yesterday, with XenSource, the supplier of open source virtualization software). If your products are going to be virtualized, it’s better if you’re doing the virtualizing rather than a competitor.

Business Week Online is running a column by me, Lessons in Corporate Blogging, aimed at helping companies sort through the pros and cons of launching a blog. It draws on Dell’s and Microsoft’s recent blogospheric experiences as well as on Apple’s modestly framed blog (yes, Apple has a blog).

Also, on my essay blog, Digital Renderings, I’ve posted “Great Product, Lousy Business,” an article that examines why great technological inventions – like the supersonic jet – sometimes go nowhere in the marketplace. This is a slightly revised version of a piece that appeared originally in Strategy & Business.

Our Resident Philistine, having taken a licking from Strumpette, ratchets his petulant populism up another notch: “Forget consumerism,” he tritely trills, Smith & Hawken pitchfork in hand. “We are customers with our money in our fists, spending it wisely and joining together to spend it more wisely.” That’s Marxism not as tragedy but as farce. “And we are producers who can compete with the companies that thought of us as mere consumers.” Hey, Mr. Producer, can you build me a computer for $399 and ship it over to my house? Throw in a self-fabricated printer for $49, too. And make it snappy.

I was looking forward to reading James Fallows’s long piece on “living a Web 2.0-only life” in the new issue of Technology Review. The concept’s intriguing. For a couple of weeks, Fallows “shifted as many of my activities as possible onto the Web, using new, hip technologies.” The article is his report on the experience. The title’s pretty good, too: “Homo Conexus.”

But the piece is a bit of a let-down. Fallows didn’t exactly find his Web 2.0 sojourn to be a life-changing or mind-bending experience. In fact, it doesn’t seem to have made much of an impression at all. Here are the key insights:

1. There are some nifty new tools on the web, like Google Calendar.

2. It really helps to have an internet connection and a keyboard.

3. Trust is critically important to web communication and commerce.

4. Middle-aged intellectuals are not the target audience of services like MySpace and Dodgeball.

Well, at least they’re points that are beyond debate.

As to the bigger picture, Fallows praises Web 2.0 as a democratic medium for creativity while also carefully distancing himself from the stuff that’s being produced:

All this outpouring of knowledge is inspiring. If you were more churlish than I am, you would end up mocking the vast tonnage of earnest self-expression, the narcissistic self-documentation (in the form of Flickr photos), the craving for contact, the blog-based disputation, and the effort invested in metatagging that characterize the interactive Web. But I am not that churlish. I find it admirable, and deeply human.

Fallows makes one observation that hits home with me. He describes how underwhelming he finds all the automated product recommendations that are always being thrown at you on the web. “In nearly a decade with Amazon,” he writes, “I’ve yet to experience the moment of perfect serendipity when it discovers a book I really like that I wouldn’t otherwise have known about.” I, too, have been waiting years to experience that moment – with Amazon, with Netflix, with iTunes, with all of ’em. Up to now, I’ve been embarrassed to admit the fact. It’s made me feel out of step – like some kind of consumer pariah, some lonely misfit prowling the shadowy outskirts of the marketplace. It’s nice, finally, to have a little company.

Yesterday, Amazon’s web services subsidiary issued a press release touting the number of web companies that have signed up for its Simple Storage Service (S3). S3 in essence allows companies to rent space on Amazon’s infrastructure, using it to store and serve data for their own sites. Because it’s the same infrastructure used by Amazon’s store, it’s exceedingly robust and reliable. And it’s cheap. You pay for what you use: fifteen cents per gigabyte of storage per month plus twenty cents per gigabyte of data transferred.

The service is proving particularly attractive to startups. That’s not surprising. For startups, building and maintaining – or simply expanding – an infrastructure can be onerous. Even if the components are cheap, it still requires a substantial capital investment – magnified by the fact that you have to build it to accommodate your site’s estimated peak future usage, which means most of what you buy will go unused most of the time. And then, of course, you have to hire people to maintain the gear, and you have to worry about all the associated headaches. With a utility service like S3, you get state-of-the-art technology that expands and contracts effortlessly to meet your needs, and you get it for a simple and predictable monthly fee. (Need I have to point out that that’s exactly the way you get electricity?) “Despite my early skepticism,” writes Om Malik today, “the growing number of early-stage start-ups signing up for Amazon S3 indicate[s] that something big is afoot.” He’s right – particularly when you take into account that the fees for these kinds of infrastructure services will go down steadily as the utilities achieve greater scale economies, the component costs continue to fall, and competition heats up.

There’s another story here, too – a strategic one. As I describe in my book Does IT Matter?, information technology, like earlier infrastructure technologies, becomes less strategic as it matures. Not long ago, it was hard and expensive to build an infrastructure like Amazon’s – but the fact that it was hard and expensive also made it strategic. It provided a competitive barrier, particularly against smaller, capital-constrained rivals. As IT costs fell and best practices spread, it became easier and cheaper to build the infrastructure, which lowered the competitive barrier it provided. When the infrastructure turns into a utility service, available to all comers for the same fee, the barrier collapses altogether. You no longer compete on the technology; you compete on something else.

Malik gets at this effect when he writes that “S3’s early success makes you think that [if] the on-demand infrastructure can be delivered at an affordable price, the cost of setting up an online business is going to decline even further … Maybe what we are seeing is the early signs of value moving into user experience and developer skillset.” Amazon also gets at it in its release: “small but fast-growing businesses … that depend on storage are using Amazon S3’s benefits of scale and cost-efficiency that were previously only available to large companies.” And Don MacAskill, CEO of S3 customer SmugMug, gets at it when he says, “Amazon S3 makes it possible for SmugMug to compete with huge, deep-pocketed companies without having to raise massive amounts of cash for hardware.”

Whether it’s compute cycles or storage space or even enterprise applications like CRM, once an IT function becomes a utility it becomes neutralized as a source of advantage. The technological playing field gets leveled, and the battle for advantage moves elsewhere.

The glorious abundance of the web may be an illusion, at least when it comes to advertising. The consultants at McKinsey & Company have done an interesting study of the supply and demand for online advertising. They conclude that what will constrain the market’s growth in the near term is not any weakness in demand but rather a shortage in supply. Attractive online ad space, it seems, is scarce and getting scarcer.

They look at the three most popular kinds of online advertising: video ads, search ads, and banner ads. The supply-demand imbalance appears to be most severe in video ads, which have become “highly attractive” to advertisers looking to build brand awareness: “According to many of the video suppliers we interviewed, very little unsold advertising capacity remains today. Assuming that marketers don’t increase the number of ads they place in each video stream, the maximum supply of video ads is currently about $600 million a year – far less than future demand, which we expect to reach $1.4 billion to $3.2 billion in 2007.”

The imbalance is almost as great, though, in search ads, as a result of a sharp decrease in the growth rate for searches: “Annual growth in the overall number of searches is slowing, from 30 percent in 2004 to 20 percent in 2005. Without significant changes in consumer click-through rates or in the prices advertisers are willing to pay, we estimate … that the maximum current value of paid-search advertising is about $7 billion [while] advertisers will want to spend $9 billion to $12 billion on paid search in 2007.”

By contrast, there’s plenty of supply available for banner ads. The problem here is that advertisers don’t much like the space that’s available, particularly the space that’s near user-generated content: “The complex task of spreading media spending across thousands of small Web sites, many with different ad formats, means that advertisers tend to return to heavily trafficked sites, where supply is at a premium. Even on the big portals, marketers are leery of having their ads placed near consumer-generated content that might be objectionable.”

The upshot? Expect higher prices and slower growth in online advertising until supply catches up with demand. As ever, good content is king, and the flood of amateur content doesn’t appear to meet advertisers’ definition of “good.” Maybe professionals aren’t so dispensable after all.