Monday, October 27, 2008

Producers angered over tax rebate changes


Oct 22, 2008


Producers are up in arms over a move by the Canada Revenue Agency that could shrink their tax-rebate cheques.

Canadian producers who have had their tax-credit applications randomly audited by the country's tax man in recent months complain that they are now allowed a maximum 10% cap on claims for producer fees, with a further 10% write-off for corporate overhead.

That's alarmed producers, as many have long recorded a 15% or even a 20% write-down for producer labor costs, against corporate overhead, when filing tax returns in search of tax-credit rebates.

Canadian producers privately insist tax-credit applications have typically started out with a loose 10% producer-fee claim to secure acceptance from analysts at the Canadian Audio-Visual Certification Office, which greenlights tax credits on behalf of the Canadian Heritage department, and the CRA, which reviews federal and provincial tax-credit claims before it issues refund cheques.

At the same time, producers insist their costs often surpass 10% of a project budget, and allowance was often made for that in tax-credit applications.

But, in its latest audit rulings, the CRA appears to be saying it will only allow producers to breach the 10% cap in "exceptional circumstances," according to sources close to the negotiations with the CRA.

A CRA spokesman says the agency has no direct comment on its current talks with indie producers to resolve the fee dispute.

"However, I can tell you that the CRA works closely with the affected stakeholders and is always exploring opportunities to improve the delivery of its programs and services," the spokesman adds.

But Donna Leon, a producer with Ottawa's Genuine Pictures (A World of Wonders), sees the CRA as the villain in this saga for springing the change on producers only after they underwent random audits.

"Until you get audited, you wouldn't know about it. How would I have known you have a different rule," says Leon, who wants the tax man to spell out the new producer-fee policy.

Etan Vlessing reports on the apparent tax changes at CRA, and what they mean for producers big and small, in the Oct. 27 issue of Playback.

Sunday, September 28, 2008

GDC Canada Announced

Think Services will partner with Reboot Communications to produce a Canadian Game Developers Conference in May 2009, in association with New Media BC's Vancouver Digital Week. GDC Canada will examine the breadth of the gaming industry and how it works with Canada's ever growing game development community.

Saturday, September 27, 2008

David S. Rose: 10 things to know before you pitch a VC for money

Thursday, September 11, 2008

Other Oceans to open studio in St. John's NL

Other Ocean Group Inc. announced plans to create a 62 person studio in St. John's. The studio will focus on design work, art work, production and coding of games for Xbox 360, Apple iPhone, Nintendo DS and Wii.

Friday, August 29, 2008

Breaking News from The Globe and Mail

Harper defends cuts to arts programs

Tuesday, August 26, 2008

Prime Minister Stephen Harper defended $44.8-million in planned cuts to arts-and-culture programs for the first time yesterday. At the same time, the Conference Board of Canada released a report attesting to the economic benefits of investing in Canadian culture.

Harper said the government's “changes” to more than a dozen programs is the only responsible path, and echoed recent assertions by his communications director, Kory Teneycke, and Canadian Heritage Minister Josée Verner that the government has managed to walk a tightrope, trimming the fat from its culture portfolio while simultaneously increasing overall spending.

“What this government has also done in that area, as it's done across the government, is we've instituted an expenditure-management system, where over a period of five years we comprehensively review every program and we make sure that we're spending on priorities and spending on those programs that are most effective,” said Harper. “Some programs in arts and culture have increased in funding, others have gone down – in total it's gone up.” Federal investment in culture for the 2007-08 fiscal year was $3.4-billion, up from $3.2-billion in 2006-07.

Harper also painted promises from Liberal Heritage critic Denis Coderre to reinstate the eliminated programs, should the Liberals be elected, as irresponsible. “The opposition has a view that you can never cut any single program, ever. If that's how they want to run the country, you'll have two consequences. You'll either have out-of-control spending or you will have a flat amount of program funding that is increasingly less effective over time,” he said.

Tom McSorley, executive director of the Canadian Film Institute, is frustrated with the Conservatives' stance. He believes the driving force behind the cuts is the “ideological adamant rock” that funding the arts is not the federal government's domain, something the Conservatives have repeatedly denied.

“I don't think they listen with any degree of interest to the fact that the economic impact of the arts is demonstrably positive,” says McSorley. “To fall into the fallacy that it's really about moving money around – well it isn't.”

The Prime Minister's comments come in the wake of a recently released report from the Conference Board of Canada, in collaboration with the federal government, that confirms high economic returns on cultural investment. The report, entitled Valuing Culture: Measuring and Understanding Canada's Creative Economy, calls the cultural sector's role “as a magnet for talent, an enhancer of economic performance, and a catalyst for prosperity” a universal phenomenon.

The Conference Board estimates Canada's cultural sector generated $46-billion, or 3.8 per cent of Canada's GDP, in 2007. The sector's total impact including “indirect and induced effects” on other sectors leaves an economic footprint of $84.6-billion, or 7.4 per cent of GDP, the report states. Those revelations paint a picture of industry stability: Statistics Canada reported culture accounting for an identical 3.8 per cent of GDP in 2006.

The report put 2003 employment in the cultural sector at 616,000 jobs.

Including direct and indirect contributions to employment, the report estimates that culture accounted for 1.1 million jobs in 2007.

Canada's culture sector is being driven by growth in digital technology and expanding Internet use, the report states.

© The Globe and Mail

Wednesday, August 27, 2008

Ontario 2012: Stimulating Growth in Ontario's Game Industry

A 37-page report summarizing the opinions of the Ontario game industry on growing the industry. The cheat sheet is page 6.

Tuesday, August 12, 2008

Monday, June 9, 2008

BlackBerry Partners Fund

On 12 May 2008, RIM, RBC and Thomson Reuters announced plans to launch the BlackBerry Partners Fund. The Fund is a $150 million venture capital fund being formed to focus on applications and services for the BlackBerry platform and other mobile platforms including mobile commerce (payments, advertising, retailing and banking), vertical and horizontal enterprise applications, communications, social networking, location-based applications and services (navigation and mapping), media and entertainment, and lifestyle and personal productivity applications. The Fund will consider all stages of development. The Fund is to be co-managed by JLA Ventures and RBC Venture Partners.

Wednesday, May 28, 2008

So how do you Jalloo?

June 11 - 12, Miramichi

Jalloo is the Festival of Animation and Gaming that celebrates the industry and its members with networking events, panels, workshops, keynote speakers, and showcases of professional and student work.

Jalloo is bringing in guest speakers - from the Atlantic region as well as folks from the United States, Germany, and Iceland. Guests include animator Willy Ashworth (Babar, Ewoks, CareBears, Tiny Toon Adventures), 3D artist Chaz Sutherland (The Matrix: Path of Neo, Medal of Honor: Rising Sun, The Golden Compass), animator Ron Doucet (Johnny Test, Oliver's Adventures, Speed Racer), game designer Ryan Shwayder (EverQuest II, Fighting Legends), and game artist Ben Mathis (Tony Hawk Project 8, Elder Scrolls IV: Oblivion, Ghost Recon 2).

Don’t forget to register by May 30th to guarantee a seat at our main networking event: Boat Ride on the Miramichi and Lobster Dinner.

Registration is FREE! At

For a complete list of events and guests visit or contact John O'Shea, Events Coordinator, NBCC Miramichi at (506) 778-6997 or 1 (877) 773-6222.

Tuesday, May 6, 2008

The WB Returns As

INSERT DESCRIPTION“Gilmore Girls,” starring and Lauren Graham as Lorela (left) and Alexis Bledel as Rory (right), ended its run on the CW last year, but the archived episodes will be available online on a new Warner Brothers Web site later this year. (Warner Bros.)
INSERT DESCRIPTIONThe beta site is online now at

The WB brand, born as a broadcast network in 1995 and closed in 2006, will return as an online video Web site combining short original series with classic shows, the Warner Brothers Television Group announced Monday., and a complementary site for children called, are part of a “digital destination” strategy by Warner Brothers, a subsidiary of Time Warner, to tailor Web sites to specific audiences.

In trying to compete for consumers’ time, Warner Brothers and other media companies have sought new outlets for content, sometimes bypassing the traditional network structure and creating broadband Internet channels.

“My 20-year-old daughter and her friends are watching ‘One Tree Hill’ and ‘Pushing Daisies,’ but not on television,” Bruce Rosenblum, the president of the Warner television group, said. “They’re watching on laptops and cellphones. Here’s the interesting part — to them, that is television.”

Tuesday, April 29, 2008

How do you Jalloo?

NBCC Miramichi
June 11 and 12, 2008

An industry event you won't want to miss!

Wednesday, April 16, 2008

Manitoba raises bar on Canada tax credits

April 11, 2008 TORONTO -- The province of Manitoba on Thursday raised its domestic film production tax credit to 65%, the country's highest.

Manitoba also doubled its frequent filming bonus for foreign, mostly U.S. producers, to 10%.

Other changes introduced include a new 5% Manitoba producer bonus for movies where a local resident receives a producer credit.

The changes in the tax credits, which allow domestic and foreign producers to offset labor costs on movies and TV shows when they are shot locally, will apply to projects that began principal photography after Dec. 31.

The provincial government said that the tax credit changes aim to increase training of Manitoba talent and technical crews by foreign producers or Canadian producers from rival provinces that shoot their projects locally.

Manitoba, like other Canadian provinces, has seen the number of U.S. location shoots fall in recent years due to a surging Canadian dollar and competition from rival locales, which includes U.S. southern states and Eastern Europe.

By Etan Vlessing

Monday, April 14, 2008

2008 Canadian New Media Awards

In case you haven't heard... Canadian New Media Awards CALL FOR SUBMISSIONS. Fifteen award categories: 8 product categories and 7 individual and company categories. The "Excellence in the Use of Social Media" award has been replaced with two new categories: "Excellence in Social Media Websites" and "Excellence in Social Media Applications".

Go to for a submission form and full explanation of each of the award categories. Submissons close 5 May 2008, 5:00 PM EST.

Wednesday, April 9, 2008

Intel Capital Launches Second China Investment Fund

Intel introduced its second China investment fund on Tuesday, 8 April. The China Technology Fund II has $500 million to invest in wireless broadband, media, telecommunications and "clean tech" in China. It will be used for ventures that complement the chipmaker's corporate initiatives and help expand technology market segments in China. The new fund is more than double the size of the original China Technology Fund, which invested in more than 28 companies. Over the last 10 years, Intel as invested in more than 70 companies across China and Hong Kong.

The new fund has already invested in two Chinese companies:
  • Holdfast Online Technology - provides a platform for hosting third-party computer games. The platform enables gamers to play against each other over a wide area network.
  • Newauto Video Technology - manufactures and sells video equipment, network solutions and system integrations for TV stations across China. Newauto, a service provider for the 2008 Beijing Olympics, also provides digital content editing and sports program live-broadcasting services.

Tuesday, April 8, 2008

Nokia Launches New N-Gage Mobile Games Service

Nokia launched its re-tooled N-Gage mobile games service. N-Gage allows consumers to browse, demo and buy mobile games directly from their Nokia devices. The N-Gage platform is a downloadable application that currently supports devices including the Nokia N81, Nokia N81 8GB, Nokia N82, Nokia N95, and Nokia N95 8GB. Users can also join the N-Gage Arena, a community where they can find others to play multiplayer games, discuss topics on the message boards and via live chat, and participate in tournaments and hosted events.

The first set of mobile games available through N-Gage includes titles from EA Mobile ("FIFA 08"); Gameloft ("Brain Challenge," "Asphalt 3"); and Glu Mobile ("World Series of Poker Pro Challenge"). Upcoming titles from EA include "Tetris" and "The Sims 2 Pets." Games are expected to cost between six and ten euros ($9.40 - $15.70).

Friday, April 4, 2008

16 Ways to Expand Your Blog’s Reach in 2008

expand blog reachIt’s 2008 and you’re looking forward to growing your blog even more this year. You are eager to build a large readership and maybe even make a full-time income from blogging. You want greater influence and a stronger reputation. What you need is an expansion plan.

Yesterday, I spent some time planning growth strategies for my blogs and noticed that all of these tactics had something in common.

They all involved the idea of expanding the blog from a basic content publishing/opinion sharing platform to a full fledged media business.

This includes the development of different publication mediums, interactive on-site communities and social media integration in order to transform the blog from a simple diary-like content stream to something more multi-faceted. With this in mind, I did some research on popular blogs and found that some shared certain similarities.

While content remains the main draw for each of these blogs, they were doing much more than just providing articles for visitors to read. The value of each blog is increased through the inclusion of user-contributions, alternative content types as well as other factors like increased visitor interactivity/resources.

Some of these blogs also collaborated with each other to create related projects to improve their blog brand and reputation. The biggest buzz came not through the publication of excellent articles but rather the development of off-site initiatives which funneled attention and traffic to their blogs.

16 Ways to Expand Your Blog’s Reach in 2008

blog expansion
Image Credit: toyz mosaic

And so I decided to make a list of some of the strategies you can use to expand your blog in 2008. None of them have anything to do with content quality, but keep in mind that should always be your no.1 focus when it comes to growing your site.

Hopefully these ideas will be useful to you. I’ll be implementing some of them on Dosh Dosh soon so you’ll be able to see them in action. ^_^

  1. Create Multiple Channels. Pick several topics you are interested in and set up mini-blogs on subdomains or subfolders on your site. This topical division will allow you to reach out to greater audiences and is especially necessary if you feel that you are outgrowing your blog’s initial focus.

I liked how Boing Boing set up a subdoman for video posts and gadgets. Wired’s blog network and Wendy’s Emoms at Home are good examples of how different niche topics are each given equal emphasis on the same domain. This is an option to consider if you don’t want to set up more blogs.

  1. User Generated Content. Getting others to create content for your site is a good way to expand your blog’s reach. You can open up submissions of articles to the general public and publish the ones you feel most worthy. Alternatively, you can set up an account-based system whereby users will be able to register and publish content which will be moderated by editors.

I like how most of I Can Have Cheezburger’s content is created and rated by users. SEOMoz’s Youmoz is an example of an entire blog powered by user generated content.

  1. Localize Your Blog. One surefire way to reach a larger audience is to target a local market and correspondingly reach out to the local audience in its original language. This means translating your blog and making it geo-specific. Gizmodo is a good example. Check out the little country flags under the logo. Localization allows you to cover topics which major industry blogs will inevitably fail to cover. This allows you to be comprehensive as a brand.
  2. Build a Blog Network. If you already have one or two blogs, create a few more and form a mini blog network. Buy a new domain and set up a corporate HQ for media related and advertising enquiries.

An example of an independent ad network build around a few blogs is Collis Ta’eed’s Miiingle. Sell network ads and use each blog to drive traffic to the other. This is an effective way to improve the readership of all your blogs. Gawker Media is an example of an excellent blog network.

  1. Set up a Forum/Social Network. Increased interactivity is one the main reasons why you should set up a forum for your blog. You want your readers to be one of the reasons why people visit and revisit your site.

By providing a corner for readers to discuss issues, you are automatically creating a magnet (apart from your content) which encourages visitors to return to your website. Mashable is a blog with a social network and TechCrunch has a forum that’s well populated as well.

  1. Establish an Email Newsletter. Newsletters are terrific ways to reach an audience away from your blog and are important when you need to sendout specific narrowcast messages without using your main communication channel (your blog content). Create a weekly or bi-weekly newsletter and connect with your audience.

Newsletters are great for monetization and are an easy way to keep certain readers (those not familiar with RSS) close to your weblog. When combined with landing pages, they work better alongside PPC advertising when it comes to capturing leads.

  1. Clone Your Blog. Have a successful blog and want to try other niches? Clone your blog’s general look/approach/strategy and set it up for another niche. This is an easy and fast way for you to develop multiple blogs which may bring in more income. Blogs can be interlinked in articles or blogrolls to share traffic.

If your blog has been relatively well received in one niche, the same approach may bring you success in another. For instance, Daniel cloned his successful Daily Blog Tips venture into Daily Writing Tips and Daily Bits, both of which are blogs in the same format while covering different niches/topics.

  1. Participate in a Social Community. Niche social communities like forums or social networking/news websites are not only a good way to get targeted traffic but an efficient to brand yourself. Pick a couple of social communities and when you are not blogging, spend time on them to network and establish connections.

Build a reputation for yourself and your blog will grow alongside it. For example, I’ve invested a good amount of time on Sphinn and it has earned me friends, new readers and a great deal of new knowledge on topics related to Dosh Dosh.

  1. Optimize For Social Media. Social Media optimization can work in two ways for your blog. The first way focuses on allowing your readers to communicate and interact with each other and yourself away from your blog through channels like Twitter or Facebook.

Open up accounts in social websites which your audience might frequent and connect them to your blog. The other method involves marketing your blog through social media communities. To do this, pick a community that is relevant to your site, befriend the influencers and disseminate your content.

  1. Bring in New Writers. New writers = new voices and more opportunities for you to do more backend work (marketing/management). I recommend handpicking and hiring quality writers and paying them on a per-post or pageview basis. You want the best people for the job since their content will make or break your blog’s growth.
  2. Sell a Product or Service. Putting ads on your blog is an easy way to make money but you’re leaving money off the table by not having a paid product or service you can promote as an add-on. Think about it. Every new visitor that streams in daily to your site is a potential customer or client.

They aren’t only subscribers or pageviews to be counted. Create a product (ebook, software) or office a service (consultation/design) on top of what your blog. Freelance Switch’s book on freelancing is a good example of how to sell a product alongside your blog.

  1. Create Premium content. Premium content refers to exclusive content not made available to the public. They can be given for free or on a paid subscription basis. Create a members only private blog or subsection on your site and promote paid subscriptions alongside your free content.

Detailed tutorials, tools, free members-only products (ebooks), user generated content and efficient customer support on your end will make premium content attractive. SEOmoz’s premium content section is an good example of something that would work.

  1. Create an Industry Event. Start an annual competition or award ceremony to showcase and celebrate personalities, websites and companies in your respective industry. This is an incredibly powerful way to get not only links but buzz surrounding your site.

Examples of a successful award initiative are Mashable’s Open Web Awards and Crunchies, a collaborative tech awards ceremony set up by Techcrunch and other blogs like GigaOM and Read/Write Web.

  1. Partner with Other Blogs. Working together with other blogs is an incredibly easy way to expand your site’s reach. Work together with a few other bloggers for an initiative such as a social network, collaborative writing project, awards ceremony or application.

Co-brand this product and use to get attention. This builds your blog/personal brand and drives targeted traffic to your site.

  1. Make Your Blog Mobile. Some readers like to access blogs through mobile devices like PDAs or cellphones so making your blog mobile may help you to reach more people. It’s not too far fetched to imagine someone reading your blog article on a PDA and then showing it or sending it to a couple of friends. Here’s an excellent guide on how to make your blog mobile-friendly.
  2. Start Doing Video/Podcasts. Video blogging is an easy way to get some extra traffic, because you’ll allow your blog content to reach a whole new audience. Social video websites like Youtube, Dailymotion and Metacafe are high traffic venues which can bring you not only sales conversions but new readers.

Some marketers/bloggers who have been doing video for a while include Mark Wielgus, Shawn Collins and Darren Rowse. Viral marketing for videos is sometimes easier than written content and this is something you definitely should exploit.

Be adventurous and try something new for your blog. It doesn’t just have to be a simple platform for your thoughts alone. Remember that the secret to building a popular blog and getting tons of readers involves not only content quality but the development of a supportive core audience and broad distribution channels.

Seek to expand your blog laterally through social media, increased user participation, alternative content delivery channels and other relevant projects which will increase your influence and reputation. This is a surefire way to increase your blog’s readership and overall reach in 2008.

If you found this article useful, you might want to subscribe to Dosh Dosh.

Tuesday, April 1, 2008

Does Your Talent Performance =Your Brand Promise?


Promise Companies are looking for talent at the same time people are being intentional about identifying their own talents.

It doesn't seem like much of a stretch to match the two. But there's a subliminal factor that influences all of this and on which corporate and individual success rely: It's. . .

The Promise

I was on the phone this weekend with branding guru Mike Wagner of Own Your Brand. Mike specializes inMwagner_web_sm working with organizations who want to do just that--but with an added element. He's intense when it comes to emphasizing the importance of living the brand in every nook and cranny of a business: keeping the "Brand Promise."

We were talking about the fact that that HR groups are high-profile representatives of "the brand." They're often the first point of contact for recruits. If there is a war for talent, "living out the promise of the brand" can determine victory or defeat.

Doesn't the same hold true for "the talent?" It's one thing to be talented, passionate, and purposeful; it's another to consistently live out the promise of your personal brand.

Alltop: Living the Promise

No sooner had Mike and I finished our conversation than I had a chance to experience a promise lived.

I mentioned our new placement on Alltop in the last post. Here's why it was notable:

1. There's a certain etiquette--and mutual relationship--in most web publisher/aggregator link-ups. Alltop was short and sweet about what to do and how to do it.

2. I did what they asked in the way that they suggested.

3. I think All Things Workplace showed up on the site in a matter of minutes, not even hours or days.

4. The kicker: An email exchange initiated by Alltop principal Guy Kawasaki. I'm not tossing Guy around for name-dropping purposes. I'm mentioning it because he totally "lived the promise" of the Alltop brand, and then some. Honestly, I sort of figured that this was a start-up that Guy was involved with and excited about, but just one of many businesses with which he's involved. That he took time to connect tells me he is involved and excited. And, that I probably made a good move with Alltop.

Two thoughts for today:

  • Is your company scoring top-notch talent because everyone lives out the promise of its brand?
Is your personal brand intact because you are delivering on the promise of your talent?

Friday, February 8, 2008


Jason Guidry with Business New Brunswick's Investment Attraction branch is in discussion with a US-based, international game company that is looking for technology companies that meet the following criteria:

1. A developer excluding PC games and Wii
2. Develops RPGS and or strategy RPGS
3. Self-funded
4. Original IP
5. Must have completed a demo, or at least some indication of character work

The company is known for localization work as well as publishing tactical role playing products. It has not previously worked with CDN developers but may be interested in meeting Canadian companies that meet its criteria.

For details, contact Jason Guidry:
(506) 457-7828 or (506) 470-7737

Thursday, January 3, 2008

Internet's next big wave

David George-Cosh, Financial Post Published: Monday, December 31, 2007

Microsoft chief executive Steve Ballmer says online advertising will become 25% of the company's business within a few years.Christian Hartmann/ReutersMicrosoft chief executive Steve Ballmer says online advertising will become 25% of the company's business within a few years.

TORONTO - Inside a cramped conference room at Toronto's MaRS Discovery Centre, angel investors listened closely as Nussar Ahmad pitched the future of the Internet.

Equipped with just a cellphone and a laptop connected to the Web, Mr. Ahmad, director of Addictive Mobility, demonstrates how his company's latest software application has the ability to cash in on the world of social networking - the Web's latest gold mine.

Using code supplied by Facebook, Mr. Ahmad's software can take pictures snapped on a camera phone and instantly send them to a Facebook profile page.

While the software is in its early stages, Mr. Ahmad plans to launch the program to the public free and introduce pay structures after enough early adopters make it "go viral."

Although the PowerPoint presentation was technical, Mr. Ahmad's audience was sold long before the pitch was complete.

"They didn't ask many questions; they were already sold," Mr. Ahmad said. "They all want to help me out and introduce me to potential investors."

Addictive Mobility is seeing clients from Mazda and Brisk Iced Tea knocking on his door. "I couldn't have done this six months ago," he said. "Social networking has given me an opportunity I could only dream of."

Today, there are hundreds of thousands of new application developers and content generators being created for sites like Facebook, MySpace and a slew of other social networking sites fueled by money being poured into the industry by the demand to advertise as much as possible online.

According to online market research firm eMarketer Inc., worldwide advertising spending at social networking sites jumped from US$480-million in 2006 to US$1.2-billion this year. By 2011, that number is expected to grow to US$4-billion.

Those numbers are backed up by British online advertising trade group, the Internet Advertising Bureau. In October, the IAB reported Internet marketing had grown 41.3% in the first half of 2007 and now accounts for 14.7% of the British ad market.

No other Web site has taken advantage of the online advertising cash windfall more than MySpace. After Rupert Murdoch's News Corp, purchased MySpace for US$580-million in July 2005, analysts questioned the hefty price tag for what was then a crowded online hangout for kids. But as the Web site boasts more than 220 million registered users and is finally turning a profit, that price seems a bargain now.

According to News Corp. officials, MySpace exceeded US$500-million in revenues in the 2007 fiscal year. While News Corp. doesn't release specific numbers on its subsidiaries, its Fox Interactive Media unit, which largely consists of MySpace, turned a profit of US$10-million. And with last year's US$900-million contract with Google to provide the back-end for the search engine's online advertising network, those profits should continue to grow.

Facebook, MySpace's closest competitor, grew from a Harvard University dormitory experiment to the darling of Silicon Valley in only two years. With 47 million users around the world and growing at a rate of 200% per year, Facebook made headlines last month after Microsoft Corp. purchased a 1.6% stake in the company worth US$240-million, thus indcating Facebook had a value of US$15-billion.

The temptation to target Facebook users with specifically tailored ads using information the users reveal is in line with Microsoft's long-term plan to be a heavyweight in the online ad world. Chief executive Steve Ballmer told a consortium of European ad agencies in October that online advertising would become 25% of the company's business within a few years.

But perhaps the surest sign that social networking has become the Web's next big profit centre was Google's announcement last month that it plans to dive headlong into this sector by uniting the fractious world of social networking Web sites with one standardized set of programming code.

It's a dramatic change in direction for the Internet's 600-pound gorilla, which currently receives 99% of its revenues from online advertising. The "OpenSocial" application platform exists in a pre-beta format with selected developers and is expected to be released early next year.

"We want to help build the fundamental social infrastructure for the Web," David Glazer, an engineering director at Google responsible for OpenSocial, says. More to the point: "More people spending more time on the Web is good for Google's core business."

Indeed, there hasn't been this much optimism in the tech world since before the dot-com bubble burst several years ago.

"You're finally seeing an industry mature. In 2000, it was a very immature industry where dreams and candy were being sold and bought by the financial community," says Tera Capital president Howard Sutton, a Toronto-based hedge fund manager. "Now, we've got more stable platforms and sophisticated investors."

In the 1990s, any company with a .com suffix garnered hype and valuations in the millions. "[Today], bad companies aren't being financed; bad companies in 1999 were being finance," Mr. Sutton said.

One thing that hasn't changed much from the early dot-com days, however, is how quickly the latest Internet gold rush has formed.

"You've got these young companies coming up with ideas, and the pervasiveness of how quickly these companies can catch the wave," he said. "It's just a different business and moves at an entirely different speed."

Today's online communities rose from the ashes of the poorly designed, circa-1999 dot-com sites when users began offering up detailed information about their daily activities. The sites became sophisticated enough to translate that data into a marketer's dream scenario.

But it wasn't until recently, when broadband speeds became affordable for consumers, that the social Web phenomenon took off.

"When you have a big innovation, like electrical power or the telephone, you always get a similar set of activities," said Don Tapscott, author of Wikinomics: How Mass Collaboration Changes Everything. "First off, you get experimentation, then investment, excitement, speculation and a bubble," he added.

"The bubble always bursts, as it did with dot-com, but after that you get decades of long-term deployment where the real impact of the technology becomes understood on business models, economy and society," Mr. Tapscott said.

"Having the bubble burst in people's faces set people in the mindset to create businesses that provided something material for users," said Amit Kapur, MySpace's vice-president of business development. "[With MySpace], everything fell together at the right time and created this innovative product combining all these other user experiences from other sites on the Web that weren't making the most of their technology."

Matt Cohler, a Facebook vice-president and one of the site's first employees, says the online advertising business model is still a very narrow slice of a marketer's budget, and it's up to sites like Facebook to innovate and create new revenue streams.

Still, there is no sure bet on the Web, even for Facebook. The site's drive to appease marketers with its most recent advertising platform, dubbed Beacon, has failed. The site partnered with third-party Web sites that place unauthorized messages in users' news feeds. It infuriated the Facebook community, who said the practice was a blatant invasion of their privacy.

"We moved too quickly when it came to Beacon," Mr. Cohler admits.

Duncan Stewart, director at Deloitte Canada Research, agrees. "The lesson of Beacon is not that it can't be done or even if it was done wrong, but it must be done cautiously," Mr. Stewart said.

But try telling that to social networking phenoms like California-based software company RockYou, developers of Super Wall, which has more than 2.6 million subscribers, as well as about 400 other Facebook applications. A new advertising platform geared towards Facebook developers - with more than 10,000 already signed up - it will drive revenues into the "tens of millions or higher," said Lance Tokuda, RockYou's chief executive and founder.

"The space we're shooting for is bigger than Yahoo's presence on the Web," Mr. Tokuda said. "Four of the top 10 sites in the world are social networks and we're looking to expand into e-mail and instant messaging."

Financial Post