Kevin Rose Jumping Out of The Digg Boat?

by Daniel in — 29 Comments — Updated — Reading Time: 3 minutes

If you haven’t heard yet, Digg is for sale. And they haven’t just raised a for sale sign, they actually hired a private investment firm to shop around seeing if anyone is interested.

Much of the discussion on the Internet right now is about the price tag: $300 million. Some say it’s too much, others say it’s fair. Honestly I don’t think that is the most important point. The question that strikes me is: why would Kevin Rose and his crew want to sell Digg in the first place?

People sell companies mostly for two reasons: they need the money to invest in some other project, or they think the ship is sinking and want to cash in before it’s too late. Digg recently sealed a wealthy contract with Microsoft, and sister company Revision3 is growing quite well, which leads me to think that the second option might be the right one.

Not that Digg will sink overnight. They are far too big for that to happen. The Titanic of social bookmarking sites, if you will. But I think that some holes are starting to appear in the hull, and that is usually the best time to sell, when only the captain is aware of the incoming water.

Check out Digg’s Alexa graph covering the past three years. Looks like 2007 was not a good year for them:

Right, you might ask, but what are these holes? Well, there are four main ones.

1. Is it really democratic?
The Digg system was a very clever idea. Let the users determine what is good and what is not. Let them submit their own news and stories. Let the wisdom of the crowd rule.

The reality, however, is quite different. SEOMoz confirmed sometime ago that the Top 100 Digg users control 56% of the material that goes in the front page. Considering that Digg has over one million users, that is not a democratic picture at all.

2. Censorship
As the site grew in popularity many people decided to use it as a marketing tool. Spammers and scammers included.

In theory the users themselves with a couple of passive editors could solve this problem. That is how Wikipedia handles it after all. But Digg went one step further and started banning sites, sometimes not even publicly with the so called “auto-bury” list.

The result was chaotic because a myriad of legitimate sites got hit on the way. Want an example? Copyblogger is among the Top 30 most popular blogs on the Internet, with over 27,000 RSS readers. Recently it got included on the auto-bury list, meaning that its stories can no longer make it to Digg’s front page.

If you want more information about this practice, ForeverGeek covered the problem extensively in the past.

3. Low quality traffic
Sure, Digg can drive sheer amounts of traffic to any website getting featured on its front page. But is the traffic valuable? Many people argue that is it not.

What does low quality traffic means? It means that visitors won’t click ads, won’t visit any page on your site beyond the initial one, won’t subscribe to your RSS feed and so on.

Personally I don’t think that this is always the case, but depending on the niche of your website the points do apply.

4. Lack of focus
When Digg was created it was heavily focused on technology. It might appear as a limitation for some people, but the users loved it. They were all tech-savvy individuals, and Digg worked as a user driven version of Slashdot. It was a very successful formula.

Over the time more and more sections were added. Politics, entertainment, health, images, videos… you name it. As you can imagine the quantity of low quality and not relevant material being submitted increased exponentially.

They tried to grasp the world, not quite successfully.

Don’t get me wrong, I have been a Digg user since 2005, I like it and still visit the site daily. I just think that the whole system has several flaws right now, and instead of trying to fix them the owners are jumping out of the boat. They want to cash in while the site is still riding the wave, especially because the wave might not get any bigger.

When Kevin Rosy made it to the front page of BusinessWeek last year people started to speculate that he could want to sell it for $60 million. He declined these rumors, starting that the site still had a lot to growth, that they had many plans for it and a bright future to come.

Well, looks like Kevin changed his mind, for some reason. Else how could we explain this sudden resolution to sell Digg?

Update: Tamar has an interesting article explaining why no one should buy Digg.

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29 thoughts on “Kevin Rose Jumping Out of The Digg Boat?”

  1. I’m not sure how one would value Digg. 300 million sounds ludicrously high to me, but the potenial deal is far out of my league to offer an expert opinion on.

    But frankly, If I had 300 million, Digg would be about the very last property I would think of buying.

    Your article hit several of the high points about why I think Digg is useless, unfair, needlessly discriminatory and a drag on the web in general.

    It does excel at one thing … it gives the script kiddes and other basement boys with no life a place to hang out and be rude to people … better, perhaps to shunt them off to a non-influential “holding cell”, else they might spread their snarkiness everywhere.

    Digg is openly hostile to new ideas and in particular openly hostile to many bloggers. It is the antithesis of democratic, it is the personal kingdom of Mr. Rose and his minions … if they sell, I wish them the joy of it, and good ridance.

    And for those who ever got any traffic from Digg? Bet it was worth nothing. On some of my blogs I use a Socialize bookmark plugin. I’ve edited Digg out of the selections and I’ve thought seriously of blocking Digg referals completely… the people who surf from Digg are not my type of audience.

    Not bitter, just very un-enthused with exclusive “boys” clubs and preppy fraternal orders in general.

  2. Anthony’s got it spot on. If he was even able to get $30 million I’d be surprised it’s probably worth about as much as $10 million and certainly no more than $30 million (if sold today). Anything above that is pure hype, and each day that it isn’t sold that $30 million looks less and less likely.

  3. Judging anything by an Alexa graph is misleading – Google finishes the year a little lower than it started, too. Alexa is based on an artificial demographing, from which the most savvy web users are excluded – its ratings mean very little.

  4. i think Rose would be foolish not to sign the deal – and split the cash 50/50…between a retirement account and his next idea.

    digg is on it’s way out because (as was mentioned in this excellent post only in passing: marketers got a hold of it).

    even with the autobury…nothing can be done.

    digg dug it’s own grave.

  5. I completely agree on your point…
    I don’t really like their system, only big sites hit front … many quality posts are left behind. Moreover there are many bury squads out there

  6. This sounds like a rumor, if he really wants to sell then he wouldn’t update the site with new sections like images n all, I agree with `digg system has several flaws right now but they got some good technical crew they can manage the things.

  7. I gave up on Digg a long time ago.. but if I owned, I’d happily sell it for even $30 million because I think you are dead on – its days are numbered.

  8. A $300 million price tag? And you ask why they are selling? If I could sell a blog for that sort of money, I’d, like, do it 🙂

  9. I liked your objective tone of writing this article, Daniel – good job.

    I was never a big fan of Digg and most probably will never be. Everything is TOO much about Digg – too many nasty comments, too much useless traffic, too many low quality articles featured on the front page, too much control, and too much ego.

  10. Daniel,

    Digg will be more prone to a nose dive than other sites in the top 100, simply because its focus are the web savvy. This group of users are turning more and more to Firefox. The problem is, when they use FF, they’re no longer using the Alexa toolbar, which is the only thing Alexa can use to monitor traffic. That’s why I reckon the traffic slump is maybe more unreliable than for the average site.

  11. Every time I visit Diggs (which is not often), I get a feeling it’s full of juveniles. As for the rumors of $60 mil sale, I think he tried to decline the figure (60), not the fact (sale).

  12. Daniel,

    Very good insights into the reason for the sale.

    I dugg it!

    I think that another problem is the increase in competition. Everyone is getting into the web 2.0 game and the competition for our attention is growing. In fact, the number of social bookmarking, social networking sites, etc. is just plain to difficult to keep up with.

  13. How-To Geek, flattered by your words.

    I agree with you 100% that focusing on quality content will pay more on the long run, that way you won’t be dependent on external websites.

  14. I really found this post and the comments fascinating. I’ve never really like the whole Digg thing but everyone says that, as a blogger, it’s a necessary evil. But I have a pretty targeted niche audience so I don’t see how Digg would ever give me a big bang for all the trouble I feel like it’s worth. The whole thing seems full of self-promoters and spam anyway. I’ve gotten out of the routine of “digging” everyday and there has been no impact on my traffic. I’ve decided to spend my time doing more valuable things for my site – like writing new content.

    Thanks for the insight. It’s nice to understand some of the ins and outs – like the autobury thing. Never knew that existed.

    The other thing I started to see happen was certain blogs would have EVERY article hit the front page even when it was pretty junky stuff. I guess they just had a few of the “right” friends.

    Oh well. I’m officially over it I think

  15. I joined a few social media sites and to be honest, Digg is not one of my favorites. It sounds disheartening when I see people actually do trade Diggs at forums like Digital Point and other places.

    Although the traffic seems to be of bad quality, many still enjoy the come-and-go Digg effect. The skills of leveraging will be put to test when you get a windfall of traffic like this.

    Anyway, we shall just see what will happen to Digg for 2008.

  16. The quality of the traffic is definitely a problem for site owners… Digg traffic does not stick around, and does not come back. The only thing you get for your trouble is a jump on your Alexa rankings, which most people agree is a worthless rating system.

    The fact that Digg doesn’t show who buries a story is huge because there’s no accountability. Just in the last day I’ve seen two good stories get buried for no good reason, and with no explanation.

    Finally, I think it’s better to simply build good content and get the readers to come back. This blog is a great example… the daily articles are always interesting, and this is one of the very few blogs that I read religiously. (Good job, Daniel!)

  17. It could be Armen.

    I also don’t think that the real figures are as bad as they look in the graph, we all know that Alexa ain’t 100% reliable.

    But for a site in top 100 I think they should at least serve as an indicator.

  18. Low Quality Traffic – Exactly. I don’t understand why everyone likes to get dugg. I mean yeah, it could be exciting for once, but all those digg comments (or as it’d be said around the community: “DIGGZ COMMENTSZ SUCKZ” … or something like that … ) are nasty!

  19. I agree on some points. Digg is very limited in use, and although it doesn’t send the same stream of traffic, StumbleUpon seems to give more credit to good pages.

    However, I would question the extent of the Alexa drop. Maybe the nose-dive, is down to an increase in the use of Firefox among social site users?

  20. I visited Digg everyday for months and months last year, but when the post continued to demonstrate that most of the contributors seemed to be 13 year old boys, I quickly jumped ship myself and haven’t been back since. And I don’t miss it at all. Your idea that the quality of the site has gone downhill since it embraced more than just tech stories is spot on as well. But really-nothing to see here-move along.

  21. Actually, Digg is a democracy- a direct democracy. Our founding fathers, notably James Madison, knew that such a government would fail when people began to “game the system.” This has now happened on Digg.


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