The latest report from Nielsen Online about traffic to social networking sites in the US shows Windows Live Spaces has taken a 15% hit for year-over-year February traffic.

Kip Kniskern of LiveSide points out that, though Windows Live Spaces came in 4th for the year, it does endured a 15% drop. A pretty significant fall, yes? MySpace is of course still the #1 network for unique visitors per month, and according to Nielsen’s numbers, grew 4% from last year. Facebook is #2, but its traffic is supposedly not yet half as trafficked as the market leader. LinkedIn sits firmly in 5th, with a hefty 271% growth trend in its pocket.

All of this data covers the February numbers, and with some of the major news that has hit so far in March, such as MySpace’s developer platform going live and AOL buying Bebo, 2008 is bound to be an even rougher time for Microsoft and its Windows Live Spaces property.

FlowPlay, the company which we reported as having raised $3.7 million in funding back in February, has launched the first of their planned virtual gaming worlds: ourWorld.

Targeted at the “tween” demographic of 8 to 12-year-olds, ourWorld is a casual gaming platform where kids can build two-dimensional avatars to navigate around a Flash-based world. Dean Takahashi of Venture Beat reports that for $6 a month a user can engage in MMORPG-style quests to achieve goals, play simple games, or even get a “job” so they can earn “flow” (the energy that runs ourWorld) towards winning spins on the prize wheel, giving them more things in the virtual environment.

The market for virtual worlds is growing, and reports estimate that by 2011, people will be spending $13 billion annually on online gaming. The question here is if parents of tweens are willing to shell out a monthly subscription cost when places such as Second Life, which does have a teen-friendly area, can be played for free at the basic level. While advertising may annoy some people online, if it makes “free” ways to entertain you kids, parents are likely to take it. Only time will tell if the subscription model is really a sustainable one.

Spitzer has managed to stay in the news a lot lately, and so has his friend, Ashley Dupre. So we’ve determined yet again that sex and politics go hand in hand. And if you like the Obama girl, then you’ll love SexyPolitics. It’s a site that delivers snarky quizzes in an effort to get people more involved with politics. Remember that strip news show? How much of the news do you remember by the time the female reporter is topless?

Well, the concept has spilled over to SexyPolitics. You choose the person and the outfit, and they’ll strip down to their undies as you get questions correct. I will go ahead and admit that a lot is thrown at you once you begin to take the quiz–the questions are long and wordy, the music is playing in the background, you’re wondering why there’s a person moving around on your screen. It’s distracting. Maybe I’m just really tired right now, but I don’t particularly find this quiz format to be the most beneficial for retaining information (in SexyPolitics’ defense, there is the option of skipping the strip tease, as well as turning off the music, as VentureBeat notes).

You can always go somewhere else on the site for the good stuff. SexyPolitics’ staff provides editorial content for you to sift through, and you can leave comments, share with friends, and do all the other stuff you find on a typical blog. There are also some t-shirts you can win, based on your quiz scores and site activity.

In all, the interactivity on the site is pretty limited, and there aren’t any action-oriented options for you, like finding local resources or collectively aiding in a cause. SexyPolitics doesn’t really seem to be going for that approach, which is fine. It looks like SexyPolitics may be expanding on the types of quizzes it offers–maybe they’ll be shareable at some point, as well?

So, Seesmic acquired Twhirl, which obviously means that support for videos will be the next step for the fantastic AIR-based Twitter client. However, this acquisition also means that Twhirl’s creator, Marco Kaiser, will now be working on the project full-time, and that we can expect even better support and many new features for the software. Being an avid user of Twhirl, here are five suggestions for features which I think would really make Twhirl even better:

1. Threaded conversations - Quotably is a great little application that threads your Twitter conversations, but on its own it seems a little out of place. This functionality would function so much better if integrated into a Twitter client like Twhirl; of course, it would have to be optional, so you can turn of the threads if you prefer the standard Twitter message stream.

2. File embedding - this is an obvious steal from Pownce, but Pownce pretty much took its entire concept from Twitter so I guess they won’t mind. In Twhirl version 0.7.3. Twhirl gave us the ability to easily send images using Twitpic. Now, why couldn’t the same thing be done with files, using some free online storage application?

3. Pulling updates from Jaiku/Pownce - Currently, Twhirl gives you the ability to crosspost your tweets to your Pownce and/or Jaiku accounts. However, you cannot follow the updates from your Pownce and Jaiku friends. Perhaps not many people are active both on Twitter and Pownce/Jaiku (I, for example, am), but it would be a nice touch, if for no other reason then to be consistent. Also, adding Tumblr to the crossposting list would be cool, too.

4. Faves & Groups - I’m following over 500 people on Twitter. At one point the saturation does become huge; receiving over 20 tweets every couple of minutes can be hard to follow. An option to mark certain users as favorites and display them with a special icon, or a different color would make things easier in some situations. A step further would be to create groups - sets of favorites like tech, friends, family. Again, Pownce already does this, and that’s why Pownce is such a great service; I think it would be nice to have this option for Twitter, too.

5. Support for instant messaging protocols - this one is probably a bit far fetched, and I can imagine Marco’s hair standing up as he reads this, because it would probably take more work to do this than all he’s done on Twhirl so far. But, in the distant future, why not? I’m annoyed by the fact that I have to use Miranda (thankfully, Miranda supports Gtalk, ICQ, AIM, Jabber, Yahoo, and MSN, otherwise I’d have to use even more clients) Skype and Twhirl for what’s essentially a very similar thing: short messaging with my friends. If someone can create a cross platform app that does all this well, more power to him.

Dailymotion was already in the habit of helping indie filmmakers promote their work, even going so far as to participate in filmmaker festivals around the world. Now the video-sharing site is taking things a step further with the inclusion of full length films in its new section, called Cinema Dailymotion, according to 901am. This is an online screening series for viewers to watch streaming, full-length films and documentaries.

Dailymotion has also ramped up its partnerships in order to introduce premium content for the new cinema section. To set things off, Cinema Dailymotion is featuring “Red Without Blue,” an award-winning film from IndiPix. Having recently finalized its deals with its digital fingerprinting service INA and also offering HD embeds, Dailymotion is out to differentiate itself from other video-sharing networks, and more fully embrace the premium content offerings that are out there, seeking an online presence.

This move also speaks to the niche startups like wildscreen that are launching with alternative advertising methods in order to lure new users in. With established video networks like Dailymotion and MySpace moving further into the filmmaker’s arena as well as Dailymotion’s own alternative advertising methods, more distribution partnerships will come as a result of the overall weeding-out process, as the industry continues to feel out the best way to build audiences via the Web.