Thoughts from the Shelf

As a regular post topic on The Shelf Facebook has again been hitting the headlines this week, this time with a detailed study of visitor statistics and user trends that I found interesting.

After August 2007 statistics were released Facebook was ranked third in terms of pageviews, and furthermore is claimed to be winning users from Myspace. In August Facebook logged 26 million visits and being that Facebook allows only restricted activity without a membership, 22 million of these visits were new applicants. I personally wonder whether this huge influx of new members is as a direct result of Facebook opening up member profiles to Google, meaning anyone can Google a friend and find their Facebook profile in Google search results.

User trends of Myspace and Facebook (as the two big social networking players) are already thought to be significantly different. Myspace users are thought to be more tech savvy being able to control basic elements of their web pages, whilst Facebook users are thought more professional, using the site much as an extended e mail. So can Facebook actually be attracting visitors form its competitor when they have such different needs.

Of the 22 million visits to Facebook, 21 million spend their time viewing their own profiles or profiles of friends. Beyond this 14 million interacted with Facebook applications which themselves are responsible for capturing more time per session than any other activity on the site. 16 million visitors browsed photos, of which 150 were viewed on average per user over the month. 80k poked other people, an action on each user’s profile.

Interestingly Facebook’s Marketplace was used by 1.3 million visitors with an average of 2.27 minutes per visit, whilst group activity and networks browsing accounted for 8 million and 5 million visits respectively.

Reading these statistics it does seem Facebook Applications and picture sharing account for the large majority of user’s time, and some reports state that applications alone account for 37% of Facebook’s growth. This will have direct competition from Google’s upcoming project involving the building applications for all social networking sites in the OpenSocial partnership, of which Facebook is the only big player no to be involved. It will be interesting to see if this move slows Facebook’s growth at all in the future.

Regardless of future developments and without all the hype of Facebook’s astonishing growth rate, it is however important to remember that currently Facebook is only where Myspace was two years ago in terms of total traffic. Since its launch it has come on leaps and bounds but still has a way to go to become top social networking dog.

Following on from Tuesday’s post exploring the sanctions currently imposed on Iran’s revolutionary Guards Corps and the message they are intended to send, The Shelf examines whether that message is correctly being conveyed and the stance the international community it taking on the matter. First we take a closer look at the IRGC.

Iran’s revolutionary Guards Corps were established in 1979 in order to protect the country’s Islamic system. An extremely loyal group, they were also seen to act as a counterweight for the regular armed forces, and currently the IRGC is a major military, political and economic force within Iran. By focusing on the IRGC it was hoped the US could single headedly strangle Iran’s economy, and isolate much of the countries economic infrastructure from the rest of the world.

The IRGC is in fact 125,000 strong, has its own naval and air force units, and is responsible for overseeing Iran’s strategic weapons. The IRGC also has a heavy political influence with dozens of ex-guards as MPs in Iran’s government, and president Ahmadinejad is himself a former member. Furthermore by adding the IRGC to the Americas list of terror, the IRGC have become the first part of a sovereign country’s military to be categorised as a supporter of terror.

At a first glance the IRGC looks a little more than a terror group? Washington however thinks differently, and some critics have suggested that by adding the IRGC to Americas list of terror the US is risking her international credibility. As a result is seems whilst American sanctions remian in place there are plenty other countries at this point willing to trade with Iran in place of the US. America has quickly come to realise that for a course of economic sanctions to have the desired effect on the IRGC, she needs the backing of the international community.

In the case of Iran and the IRGC, even if America got international backing through EU approval and China and Russia do not veto any UN sanctions resolution, no resolution will be effective unless Russia, China and the EU choose to enforce those sanctions fully as a collective force. For that to happen sanction objectives must be widely shared both by Iran’s neighbours and trading partners.

So where does the UN stand in regard to UN backed sanctions on Iran?

Although the UN atomic watchdog has recently stated that it was unable to confirm Iran’s nuclear intentions were entirely peaceful, it refuses to use the threat of sanctions deeming them as counterproductive at this point in time.

China too has already expressed its concerns about any UN backed sanctions on Iran and prefers the route of increased dialogue. Russia has taken a similar stance to china, even offering to act as a go between by enriching Iranian nuclear fuel for civilian use within Russia.

It seems that although the US is increasing pressure on the UN Security Council to impose sanctions on Iran, currently member states are not shifting from the view that increased dialogue is the preferred course of action.

In the past UN backed sanctions have been imposed upon governments that have violated international law with such actions as invading another countries territory. In this instance it seems claims regarding Iran’s nuclear ambitions alone may not be enough to get the UN’s backing, especially being that India and Pakistan got away with the same thing with apparent US blessing. It also comes at a time when the credibility of US intelligence agencies are still recovering from inaccurate reports in the run up to the Iraq II war.

If Iran were to test a nuclear bomb then the stakes may change, and although the common goal of preventing Iran going nuclear is shared, it seems the UN sees Iran’s increased cooperation with the International Atomic Energy Agency as enough for now (or until November 30th at least).

It seems very much a possibly that if America cannot achieve her goals through economic sanctions which would require UN support, that George Bush is not willing to leave office without a pre-emptive strike against Iran’s nuclear facilities. This opens the gate for a strike on Iran as early as 2008, in the event of which Iran has promised to retaliate, resulting in a new conflict zone in the Middle East.

Recently an increasing number of news articles have been focusing around the evolving stance of the US against Iran. With American sanctions already in place, the US is now increasingly seeking international backing against what she considers a growing threat. But what success are existing US sanctions on Iran having, and what impacts are additional internationally backed sanctions intended to have? The Shelf Investigates.

The sanctions imposed by the US on Iran are in response to the increasingly “threatening behaviour of the Iranians” in regard to a growing nuclear weapons programme. In October this year the US imposed further sanctions to include the IRGC (Iran’s Islamic Revolutionary Guards Corps), a group that is estimated to control around a third of the Iranian economy. By imposing sanctions on the IRGC America hopes to have significant enough impact on the countries economy in the hope of bringing Iran back into line.

As well as concerns over a growing nuclear program the US has raised concerns over Iranian influence in Iraq and Afghanistan, blaming the IRGC directly for training insurgents with the intentions of destabilising these countries and undermining American developments.

Economic sanctions on the Iranians by the Americans are not a new development, a variety of which have been in place since 1979. It was in 2003 however that the US took existing sanctions a step further by reporting Iran to the UN Security Council, subsequently seeking the backing of the international community.

To understand the intended impacts of sanctions we must first look at what different sanctions involve. In a world where dialogue is becoming increasing important in disputes sanctions have become a weapon in themselves, albeit on an economic scale. For the US particularly sanctions have become an important means in dealing with international disputes with nations she deems as rouge states. There are two different sanctions that are used to send varying political messages to opponents, trade sanctions and economic sanctions.

Trade sanctions are intended to eliminate basic privileges that the US grants to preferred trading partners. Trade sanctions are applied to countries who’s activities include closing off their markets or selling arms to hostile regimes. Such actions have in the past been applied by the US to both China and Pakistan, and are intended to bring a countries behaviour into line without alienating them form the international community.

Economic sanctions are a more drastic step and could be seen as the next course of action if the offending country did not pull into line once trade sanctions had been applied. Economic sanctions have the full intention of alienating the country they are imposed upon, and can include trade embargos, bans on cash transfers from US institutions, and additional measures that prevent access to US assets. Economic sanctions are intended to cripple a countries economy and are deemed a step shy of war.

With the clear intention of alienating Iran and strangling her economy economic sanction were placed on Iran by America. By reporting Iran to the UN American has however signalled that she also realises she needs the backing of the international community for any such action to be successful.

Tomorrow The Shelf will look more closely at the IRGC and the current stance of the international community on economic sanctions against them, as well and possible consequences that could lay ahead if American cannot achieve her goal of getting international backing.

Earlier this month the world saw yet another first, and although not as ground breaking as a moon landing or the first assent of Everest, the first arrest for a virtual theft still made headline news.

The case involved Dutch police arresting five teenagers in total for stealing furniture from the popular networking website Habbo Hotel, a site which is targeted towards youngsters. One of the teenagers, a 17 year old from Amsterdam, was charged with computer fraud and stealing as a result of the theft.

The teenager was charged with stealing £2,800 worth of virtual furniture, furniture that although only existing as images within the game was bought with real money. On the grounds that this furniture was said to hold a monetary value, its removal without permission constituted theft.

The group of teenagers that was involved in the case had got hold of the furniture by conning fellow uses out of login details and then moving the furniture to their own hotel rooms within the game.

Habbo Hotel was launched by Sulake, a company based in Finland seven years ago. It now has 80 million registered users spanning 31 countries boasting a turnover of £31 million.

In an example of other virtual theft mentioned on the BBC a Chinese gamer in 2005 was stabbed to death in a similar case involving a ‘dragon sabre’, a sword used within the game.

These cases certainly demonstrates how the internet is being subjected to increasing levels of crime on different levels, and certainly sends out a warning to people who spend money within hugely popular virtual environments such as Habbo. I think these arrests, and the charges brought against one of the individuals act as a clear warning to virtual thieves, and with increased methods of policing may boost the confidence of players within virtual environments in the future.

I read a nice post the other day that detailed the top 50 websites ranked by unique visitors in September 2007. Interesting enough five of the top ten gainers throughout September 2007 were content sharing sites Youtube, Flickr, Facebook, Wikipedia and Digg.

As it has been mentioned in a series of articles on The Shelf, a special note goes to Facebook whose traffic increased by 14.6 million visits placing it the 22nd most popular site on unique visits. In the same period Myspace traffic also increased by 10.2 million visits placing the social network site in sixth spot, but the growth of Facebook will certainly challenge its position as the most popular social networking site in the future. Interestingly Facebook visitors on average spend twice as long on the site as their Facebook counterparts as well.

AdultFriendFinder has also shown signs of continued growth with nearly 24 million unique visitors, an increase of 8.8M this year putting it in 22nd place. In a similar sector Fling has started to catch up quickly gaining a whopping 17.4 million visitors in the past 12 months to reach 18.7 million unique visitors in September and lying in 31st place.

Another mention should go to Digg, the social bookmarking site whose growth surpassed that of Facebook and recorded the fifth largest growth rate of unique visitors, ahead of Google.

Reduced unique visits were recorded to only eight of the existing top 50 domains with Amazon controlled IMDB and Amazon itself among the losers. These sites were the 40th and 12th most visited sites respectively. In a similar vein Microsoft recorded a reduction in unique visits to both passport.net and MSN.com, 39th and 4th, although this traffic can be reflected in the increased 10.2 million visitors to live.com which moved up to the 5th most visited site.

*graphs from blog.compete.com
For the complete list of top 50 sites see The Shelf Referrences

Following on from yesterdays post discussing the threat the Euro poses to the petro-dollar cycle, The Shelf questions what lengths the US would go or has gone, to keep this cycle in place that her economy is so dependant upon. In the last of a series of three posts we revisit the Iraq II conflict as well addressing growing tensions with Iran, and whether these events could be part of a far greater plan to protect the American economy.

For some more background on the relationship between the dollar and oil we should recap two significant time periods over the last century.

The first is the Second World War, after which the US escaped much of the economic destruction suffered across Europe and Japan and amassed 80% of the worlds Gold. Based on this fact when the World Bank was founded in 1945 a fixed exchange currency was established based on gold, the gold standard dollar. As a result of this move the dollar currency was now pegged to the price of Gold.

The second is the Vietnam War (1967-72) proved which proved a turning point for the Gold standard dollar. The War Cost the US over $500 million, during which the US established hundreds of military bases across the world costing hundreds of millions of dollars a year to run, paid for by US dollars at the time backed by Gold reserves. The price of these bases ran the US treasury low as more and more dollars were printed to cover their running costs. In 1971 Nixon suspended dollar conversion into gold and the US dollar was floated on the international market.

At this same period of time US energy reserves began to deplete and American was becoming reliant on oil as an import. Its own production had peaked and demand was growing, and by encouraging Saudi Arabia to price oil in dollars it protected its currencies strength. Nearly four decades later the dollar has become an oil backed currency as opposed to gold backed, and therefore the power of the dollar in the world market is depended on oil.

After the first gulf war, brought on by the invasion in Kuwait, economic sanctions were placed on Iraq for twelve years by members of the UN security council ending around 2002. Towards the end of these sanctions Iraq could have been seen to want to hit back at the UK and US for their single handed threat to veto any lifting of the sanctions whilst Hussein remained in power.

In 2000 Iraq then decided to sell its oil exports in Euros, and went on to sell drilling contracts to European firms deeming the dollar the currency of an “enemy state”.

The US invaded Iraq in 2003. Amongst the initial stages vast oil fields were secured as part of the initial invasion strategy. Post war, as America rebuilt Iraq the oil they exported was reverted back into dollars, despite the Euro being 17% stronger at the time meaning the new Iraqi was actually getting less revenue for its oil that it was pre-invasion. Not only that but drilling contracts were then re-sold to American firms. This left the two largest oil exporters proven reserves in Saudi Arabia and Iraq firmly tied to the dollar.

Some sceptics say the Iraq war was also intended to deter Middle Eastern states from altering the currency export of oil. BUT, Iran has now stated it is to start exporting oil in Euros, and has already converted much of its treasury into Euros after growing tensions with the US. These tensions have come at the same time as a growing debate over Iran nuclear weapons program.

Saudi Arabia has also recently said OPEC may switch the currency it exorts oil in some time in the future, a move which would seal the end of the dollar dominance and turn economic power.

Having seen momentum grow in recent months for at least a duel currency split, selling oil in Euros and Dollars, the US sees OPEC a too large a cartel to excert influence on is Saudi Arabia changes its stance. To this end the US is paying increasing attention to Nigeria, an exsisting OPEC member, in the hope that with generous aid packages she will withdraw from the cartel and commit to serving US supply in dollars. It is not coincidence that there is also increasing attention being paid to the rest of the African continent and countries with vast untapped oil reserves.

After yesterdays post exploring the petro-dollar cycle it is worth looking at the consequences that could arise in the event of its collapse. This doesn’t seem as far fetched as it perhaps was two years ago with the rise of another dominant world currency in the Euro, and its continued strength against the dollar only stands to undermine confidence in its American counterpart. The threat of the Euro is a big one, and any OPEC suggestion on altering the currency its oil is sold in must send shivers down the spine of America.

As a ball park America currently has about 5% of the world’s population and consumes around 25% of its oil, meaning that the US is reliant on oil as an import. As mentioned yesterday, for the petro-dollar cycle to work America is also reliant on oil being sold in US dollars ultimately making the dollar a global trading currency.

Now, enter the Euro and its growing strength against the dollar, and the possibility of a new currency replacing the dollar as the global trading currency. If oil was to be sold in Euros, America would have to sell goods to Europe in Euros to get the desired currency in order to purchase oil. As mentioned yesterday they can’t make their own as Brussels is the only place Euros can be printed. America could exchange them but this would then mean she is dependent on fluctuating currency exchange rates, which as demonstrated by the current price of the dollar would be costly. As the US imports more oil than it exports goods to Europe the effect would be devastating to the American economy. If this did happen and the Euro became the worlds trading currency the US economy could be crushed, having drastic social effects along with it.

America has sustained a huge national debt for too long and economists have been warned about the bubble bursting, and repercussions it would have on global markets. We are currently seeing the effects of the currency weakening against the Euro on consumers in the US, and this is whilst the US dollar remains the worlds trading currency. Now it seems OPEC members are looking at the possibility of converting their cash reserves into other currencies, a move which would end the petro-dollar cycle for good. If this happened estimates put the dollars value at crashing anything between 20-40% creating a true economic crisis for the Americans.

With the consequences of the petro-dollar cycle breaking severe, it is easy to understand why America would go to great lengths to keep it in place, protecting her economy and stopping an economic meltdown taking place.

With this thought is it unthinkable that such steps have been taken in the past. Tomorrow we will look into this further.

I read an article on the BBC today on the recent OPEC meeting and the closing statement of the Iranian president attacking the cartels ongoing policy to sell oil exports in US dollars, a currency that has steadily weakened over the last twelve months. This reminded me of some reading I started on the petro-dollar cycle, an economic cycle that is in place as a result of OPEC selling oil in dollars, and forms the basis of the US economy. I thought the consequences of such a statement could be profound, and so took to writing an article spread across two posts on The Shelf explaining the back ground of the petro-dollar cycle in order to better understand the effects its collapse would have.

In the 1940’s the US were somewhere near the largest exporter of world oil, which as such was exported in US dollars. As things changed with the development of extraction techniques the Middle Eastern became a key player in oil exports. Now Saudi Arabia is currently the largest producer and exporter of oil, and along with other countries who uncovered huge oil deposits at this time founded OPEC. The original intention was to limit production for consistent market so that overproduction didn’t devalue oil as an export product.

Upon the creation of OPEC the cartel first suggested selling OPEC oil globally in one of their domestic currencies, not the dollar. Around this time America’s support for Saudi Arabia in the Middle East began to grow. Saudi Arabia then agreed to sell OPEC oil in US dollars at the same time the Americans started to supply the countries arms. The economists will realise the significance of this move, as with Saudi support OPEC now decided to sell oil in US dollars. This decision was the foundation stone of America latter emerging as the world’s first superpower.

This is the case four decades latter today, and as the globes leading super power, America has been founded on two things; the dollar and its military.

It is important to point out that these two factors are inexplicably linked. Without the dominance of the dollar over other world currencies, Americans would have completely different spending trends, (unable to sustain huge credit deficits for one) and therefore the amount of money the US government had to invest in the military would have no doubt been reduced.

As a result of OPEC oil being sold in US dollars, Saudi Arabia stores all its export revenue from its oil in dollars in the federal reserve bank of New York. Around 70% of Saudi Arabia’s fortune is in that one American bank. As each country is responsible for printing its own currency the US Federal Reserve is the only place that the dollar can be printed. Any country therefore wishing to purchase oil as an import needs to store US dollars. As a result the likes of Japan will obtain US dollars buy selling Hondas to America, as one crude example. Those US dollars will then come back to America in the form of Saudi oil accounts. This fortune being held in US dollars therefore means America now in essence has an unlimited credit card at its disposal.

In terms of imports and other buying, it means the US can spend as much as it wants on the back of the Saudi Fortune, including military expenditure, and sustain a substantial national debt. This cycle has led to the US developing a distinct consumer culture. The birth of the ‘buy now pay later’ trend was all founded on this principle, know as the ‘petro-dollar cycle’.

The effects of this petro-dollar cycling collapsing will be contined in tomorrows post.

With so many different mobile phone contracts and pre-pay packages available how do you know you are getting the best deal? One new scheme from Blyk is challenging the traditional format and is now offering completely free phone services to its customers. Instead of a monetary fee, the price users pay in return for free minutes and texts is agreeing to receive a daily quota of targeted adverts.

As part of the deal customers must agree to receive personalised advertisements matched to information that is provided when the account is set up. Customers must provide information on spending habits, planned online purchases and either passport or driving licence information. The offer is also only available to 16-24 year olds which clearly outlines Blyks target demographic.

This deal comes after recent articles have been released detailing how mobile phone companies are readdressing network policies, moving increasingly toward a system that enables them to better monitor messages and voice exchanges in order to compile accurate user information which in turn can be sold to advertisers.

Although any plans are in the very early stages, mobile networks have suggested that any technology used to monitor customer preferences could include an opt out clause, however no guarantees have been made. The Data Protection Act does currently restrict the use of personal data by mobile phone companies and they cannot pass on information to a third party without the consent of that person. However there are also ethical issues with such a technology, and the potential for this technology to be abused is a big worry for many.

Motorola are already said to have developed technology that can scan text messages for details on customer location and activity. This technology could enable keywords such as ‘Food’ or ‘Hungry’ to be scanned in text messages and as a result an advert for a local restaurant, in relation to the mobiles emitted GPS data, could be served to the users handset.

We can already see how exsisting models serving personalised adverts as a result of archieved user data have proved lucrative in the area of internet search, and many social networks are also devising such a model. As a result of recent developments in mobile search, information collected from mobile users would essentially create a gold mine for network providers, and as the web experience greatly improves on the mobile over the coming year this data could be harvested.

Some estimates predict the market for mobile advertising will exceed £5.5 billion by 2011, and companies willing to part with information on user trends would certainly receive a large slice of that pie.

With these estimates I’m guessing Blyk may be the first, buy will certainly not be the only network to offer the delivery of adverts to the mobile handsets of customers in return for cheaper or even free services. For now I’ll keep my personal data off limits and pay my monthly contract fee.

Whitehaven in Cumbria became the first place in England to have its analogue television signal switched off early this morning, marking the start of the national switch over to digital that will take place by 2012. The rest of the country will be switched to digital at different periods of time between 2008 and the 2012.

By the deadline all analogue television transmitters will be turned off and replaced by digital, offering extra television channels as standard, improved picture and sound quality, new interactive menus and features as well as several access services.

For homes that currently only receive the five UK channels either a new digital TV will need to be purchased or the signal to an analogue one converted through a set top box. Most new TVs come with a built in digital turner now.

With the first switch over happing last night, it was reported that 500 homes had not properly prepared themselves, and around 1200 people woke up with TVs not working. That figure accouted for two percent of the population of Whitehaven, and if the same proportion of people remain unprepared over the next five years it is estimated that 1.2 million will find themselves in a similar situation.

Digital UK is the body responsible for the switch over and are offering support to anyone with problems. Digital UK said the results in Whitehaven were promising and compared figures to the ten percent of people who were unprepared for the switch over in Sweeden and Finalnd.

There was however cause for concern as these figures could easily rise as the campaign stretches further across the country, as the level of advertising and support for Whitehaven would be unsustainable on a national level. £1 million was spent on the campaign and four support centres out of a total budget of £600 million. At the same spending rate £1billion would be needed for the entire countries switch over to digital.

So there it is, check out when your area switches over and be prepared.