Once a Social Media Star, Digg Sells for $500,000

Post by Simone Hoyte

http://online.wsj.com/article/SB10001424052702304373804577523181002565776.html

The Wall Street Journal reports that Digg has been sold for $500,000 to Betaworks . Digg is a social media news site that allows users to submit stories and vote stories up or down. Once valued at 160MM, Digg began its descent through a mix of social and monetary motives, and never figured out how to incorporate their power users into their community without giving them all the power.
Digg had the promise of being the future of all media, not just social media and enabled individual users to curate the web. But, as many Digg users quickly discovered, gangs of gatekeepers kept a tight grip on the site’s story flow. People submitted stories that were nominally voted up or down. But those stories didn’t get more traffic linearly as the up votes flew. The traffic was instead driven by an algorithm selecting the story and driving it to the front page.
The only way to consistently get on the home page was to work at it like a job. And so, some people began to work at it like a job, and then it became their jobs. While some really thought of themselves as an important part of the journalistic enterprise, many others contracted out their services to entities of all kinds. Stripped of any institutional sense of editorial ethics, many Digg power users ended up promoting all kinds of inferior stories along with good stories from legitimate writers and sites. Everyday users were realizing that nothing they submitted ever even had a chance of going to the front page.
In short, the community broke. And the community drove the content machine. Social networking companies are not technology companies as much as they are community companies. Digg introduced likes and friending, quickly replicated by competitors and Kevin Rose remarked that Digg failed because Social Media grew up? But is that true? It appears Digg failed to evolved.
Questions for class:

1) Digg was once valued at $1600MM but lacked the cultural resonance to stay competitive. What does this collapse mean for other social networking sites?

2) What was your personal experience like on Digg?

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2 thoughts on “Once a Social Media Star, Digg Sells for $500,000

  1. I am a Reddit lurker who does not use 4chan, 9gag, or Digg. The thing all of these sites have in common is that there is nothing to lock you in. It is so vast that you don’t build relationships with other users. These websites are exclusively driven by content. I have several friends who submit and it is a huge deal for them to try and make the front page. It is a huge thing if Digg was trying to shape the discussion in their algorithm and I can understand posters’ frustration and migration from the website. You want the discussion (presence on frontpage) being shaped by some solid algorithm based on popularity. The three other websites also have an algorithm that is open. On Reddit, it seems most users are happy with it because you can customize the content very well.

    I think the takeaway for other sites like this is that they are operating on a razor’s edge in terms of their treatment of users. The user base can be very fickle as they have no switching costs. Therefore, the site will be more difficult to monetize through advertisements or directed content.

  2. I used to read Digg frequently back in 2006, 2007 but slowly ventured onto other sites, because, like therealdylansullivan said, there’s nothing to really lock you in. Although I was no longer an avid Digg reader, I was still interested in seeing how the business would perform and gaged the hype around “Web 2.0” based off services like these.

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