THE NIGHT AFTER Hollywood trotted out Warren Beatty as proof of the film industry's youth and virility, over two thousand hipster Web designers filled the plush Masonic Center on San Francisco's Nob Hill to ooh and aah at the animated Web shorts presented at the first Flash Film Festival. In Internet fashion, the picks came from a pool submitted to the Festival's Web site with the winners chosen by votes collected online. In S.F., unlike in L.A., not one tux, not one tie watched the short "films" running on a projected Mac screen. The crowd was filled with the young and dressed-down from SoMa to Romania, all sported styles Old Navy will no doubt appropriate next season. Yet possibly more art and more money were at stake in this earthbound colloquium than at the tinseltown Shrine, five hundred miles to the south.

The films were created in Flash, the interactive animation tool from the graphics software giant Macromedia. The software developed a cult following in 1997 when Flash-generated versions of South Park appeared on Macromedia's shockwave.com site. It's not too much to say that Flash saved the company's bacon; before buying the app's progenitor from a small developer a few years back, Macromedia was bombing with its drawing app FreeHand, hemorrhaging money and losing share to chief competitor Adobe Systems. Picking up Flash enabled Macromedia to go where Adobe wasn't -- the Web -- and, like Oracle and other software giants, recreate itself as a maker of tools for the "new economy." Now Macromedia is posting record profits and Flash is the shibboleth of the soul-patch creative crowd, who love both Flash's ability to create compact, scalable, user-controllable flicks and the fact that Macromedia was clever enough to make deals with Netscape and Microsoft to include a Flash player in every downloaded browser.

Flash has also bedazzled advertisers -- Hey look! Moving logos! -- so of the fifty nominees shown at the Festival, most were promotional: corporate store fronts (like the Blair Witch Store, or Converse All-Star's conversehelium.com) or functional portfolios for design studios. Unlike streaming video technologies like RealVideo or QuickTime, Flash lets users participate with the moving image -- i.e. play games, navigate through different narratives, or interrupt for purchasing. It's the ultimate engine for next-gen advertising. For example, www.torsodisplay.com lets users pick a physical profile and then models the company's clothes fitting to those measurements. These sorts of sell-through enticements have led companies scrambling for a Web presence to divert a good part of their mammoth TV and print ad budgets to the designers who can deliver such Flashed sites. Furthermore, companies like IBM are building multi-million dollar TV ad campaigns around animations built in Flash, and properties developed first on the Web, such as Stan Lee's new "7th Portal" comic, are finding lucrative TV, movie and product licensing deals.

All this money, flowing around a file format designed to give animators an outlet on what was once the great democratizer: The Web. No wonder it's sucking up independent artists -- the move of traditional media companies to the 24/7 void of cable and the Web has created an obsessive need for content. Even the gross-out (but funny) site joecartoon.com, which gives visitors the chance to adjust the speed of the "Frog Blender" or turn up the heat on a cranky gerbil in a microwave, announced that it will license its work to Macromedia's Web site. Though the awards handed out at the Festival (a T-shirt, hat, and a plaque) were nominal, recognition in the booming Flash market is true gold.

Joshua Davis, whose design resume includes the Web sites of Puff Daddy and Jennifer Lopez, sported leopard-print hair and a well-tattooed torso and won three of the evening's ten awards for his aggressively non-commercial sites, praystation.com and once-upon-a-forest.com. The latter drops visitors into colorful, abstract spaces filled with organic sounds, where lines can be drawn but never connect, where viewers can call up but not catch free-roaming sprites, where clicking on a subtle parody of a corporate day planner calls up a photo of Davis' back with the koan, "There is so much hidden beauty in the world." This beauty may remain hidden. But someday, when the Academy Awards are Webcast via Flash, we'll be able to interrupt the pageantry and bitch-slap Billy Crystal.