When it comes to virtual-world style social networks for young kids, there are two big players: Webkinz and Club Penguin, the latter of which was bought by Disney for $340-million earlier this year (interestingly enough, both of them are Canadian — Webkinz is an offshoot of a Toronto toy company called Ganz, and Club Penguin was started by a couple of years ago by a group of Web designers living in Kelowna, B.C.).

Both sites have made their reputations in part on how wholesome and family-oriented they are — historically, neither one of them accepted advertising, for example. Webkinz recently broke with that tradition, however, and started including advertising on its pages, and there has been an outcry about this that made it into the New York Times. Henry Blodget at Silicon Alley Insider says that a “greedy” Webkinz has “trashed its brand” and “infuriated” parents.

To me, however, the story seems a little more complicated than either the Times piece or Henry’s post are willing to admit. The always level-headed Anne Zelenka has a good roundup of the events at GigaOm, and from her description it’s clear that the reaction to the Webkinz move is considerably less black and white. In fact, the only ones who seem infuriated are a lobby group called the Campaign for a Commercial-Free Childhood.

It’s true that there are parents who responded negatively in the comments on a popular Webkinz-oriented blog, called Webkinzmom.com, many of whom made the point that they pay for the toys that give them access to the website, and so there shouldn’t be advertising. If you read through the comments there and elsewhere, however, you find just as many or more saying they don’t mind at all — and plenty of people wondering how they can get the Bee Movie costumes for their Webkinz pets.

Webkinz also responded to the criticisms on Webkinzmom in a letter, in which the company said that it plans to only accept a limited amount of advertising, that it will only run ads for family-friendly products such as toothpaste or family movies, and that it will not allow any links from the ads to outside websites, so that parents don’t have to worry about their kids wandering out onto the Internet unsupervised. Most of the responses on the blog seem okay with these limits.

It’s a lot of fun to slam Webkinz for creating a PR nightmare, but there seems to be a bit more to it than that.

Came across a great story at CNET, in a post that SEO (search engine optimization) blogger Stephen Spencer wrote about his 16-year-old daughter Chloe and her website. As she told a recent conference, Chloe loved Neopets so much that she wanted to set up a website about them, so with her dad’s help she looked up some popular keywords and built a blog on WordPress. He says she is now making close to $1,000 a month.

I didn’t get a chance to write about this yesterday when it broke, but I think it’s pretty amazing (if true) that ClubPenguin is talking with Sony about getting acquired for somewhere in the neighbourhood of $500-million or so (TechCrunch says $500-million, but PaidContent says that the price is closer to $450-million). Om Malik has some details here. Either way, those are pretty amazing sums of money for a company that has only really been around for a year or so. As my Globe and Mail colleague Barrie McKenna wrote in a story last fall, the company was started by a couple of guys in the relatively sleepy (at least when I was there last) resort town of Kelowna, B.C.

Parents with kids, the founders deliberately chose not to include advertising on the site, and in fact haven’t advertised the site either — growth has been entirely through word-of-mouth. Judging by the speed with which it spread through my family, from eight-year-old daughter to friends and cousins, it is the childhood equivalent of Facebook (as is its cousin Webkinz, also a Canadian success story aimed at kids, which Om says Disney has looked at).

Two big questions remain: Can ClubPenguin keep growing at a rate fast enough that it makes $500-million look like a good deal? And can the company find a partner that has the same philosophy about marketing to kids?

In this era of YouTube and Revver and video “mashups,” it seems like remixing media is the order of the day, and now there are half a dozen online video-editing tools like Jumpcut, Eyespot, MotionBox and VideoEgg that allow users to upload and edit video quickly and easily. It would be easy to dismiss this kind of thing as a goofy fad that appeals only to teenagers and people with a webcam and too much time on their hands, but I think things like this appeal to a real human desire to create and share, and the Zimmer Twins is a perfect example.

I’d never heard of the Zimmer Twins until this afternoon, but I happened to be watching my eight-year-old daughter Zoe playing on the computer next to mine, and she was doing something on a website, and laughing away to herself. Then she said: “Dad, do you want to watch my movie?” So I went over to her PC and she was at the Zimmer Twins website, where you can mix and match short clips from the animated show on the Teletoon network — using a storyboard strip with drag and drop features — and write captions right into the panel.

I have to say I was blown away. In just a few minutes, Zoe had created her own little animated short, complete with soundtrack and storyline (and some spelling mistakes too, of course, altough I pretended not to notice those). Pretty amazing. The YouTube of the future had better watch out.