Digg Purchased by Betaworks for Pennies on the Dollar

This is a story all too often told in the cut throat world of silicone valley these days.  Digg was once in negotiations with Google to sell for a reported $200 Million!  The deal was never completed and after a series of unpopular changes to the site, and a dramatic drop in popularity, the once innovative social giant has been sold to New York based tech firm, Betaworks for just $500,000

This is just the final nail in the coffin for Digg after portions of the company have been sold off recently.  LinkedIn paid in the neighborhood of $3.75-4 Million for about 15 patents which were held by Digg.  The Washington Post then paid upwards of $12 Million for the Digg employees leaving the company just a shell of its former self.

Betaworks plans on bringing the Digg name and domain into their News.me properties, hoping to breathe new life into the brand, according to the Wall Street Journal.  While only time will tell, this could be a very smart move based on the bargain basement price that was paid for the company.  Digg still holds strong name recognition and a fair amount of traffic so it could help bring the popularity of their news site to the next level.

Digg was one of the earliest examples of the now very popular social news sharing sites.  It was started by Kevin Rose, Jay Adelson, Owen Byrne and Ron Gorodetzky in 2004.  It had acquired $45 Million for funding the site, and at its peak was visited by hundreds of thousands of visitors per day.  Experts believe Digg fell out of favor with their visitors after a series of changes were put in place causing over-regulation.  The site became focused on how it was moderated and regulated rather than on the users who were providing most of the content and value.

While the exact future of Digg remains uncertain, there are many lessons other tech companies can take away from the downfall of this once great site.  Making changes to a tech company is inevitable, and few things will kill a tech company faster than stagnation, however, every change must be well thought out and focused on the end user.  When the deciding factor behind changes moves from user experience toward things like profit, ease of moderation or anything else it will cause problems.  When companies remain focused on providing their users with what they want they will not only have happy visitors, but their profits will go up as well.

This is a lesson which seems to have gone unlearned by Kevin Rose who has moved from Digg to Google, where he only worked about two months before jumping ship for Google Ventures.  Where his erratic career will take him next is anyone’s guess, but if he doesn’t find another big idea soon he will just continue to lose credibility in the high-tech business world.  What we do know, however, is that marketers will be keeping a close eye on the future of Digg to see how and where it lands.

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Pesach Lattin
Pesach Lattinhttp://pacevegas.com
Pesach "Pace" Lattin is one of the top experts in interactive advertising, affiliate marketing. Pace Lattin is known for his dedication to ethics in marketing, and focus on compliance and fraud in the industry, and has written numerous articles for publications from MediaPost, ClickZ, ADOTAS and his own blogs.

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