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Following downward spiral, Digg sold for £324,000

Social news sharing site Digg has been sold for $500,000 (£324,000) to Betaworks, a New York-based firm that builds and invests in technology companies.

Under the deal, Digg shareholders will be awarded equity in a new Betaworks division that will use the site’s assets and technology. It’s a stake believed to be worth somewhere in the “single-digit millions,” the New York Times has said, citing a person involved in the deal.

Digg will join Betaworks’ roster of social media-oriented products like bitly, bloglovin’, and Chartbeat. The site will be folded into its service, which distributes top stories shared by a user’s Facebook and Twitter friends through a daily e-newsletter and iOS app.

"We are turning Digg back into a startup. Low budget, small team, fast cycles," Betaworks wrote in a blog post. "The team will take Digg back to its essence: the best place to find, read and share the stories the internet is talking about. Right now."

It could very well be a good move for the company, whose public fall from grace in the tech world has been well-documented. In a 2008 investment round, Digg was valued at more than $150 million (£97 million). Google was reportedly looking to snap the company up for $200 million (£130 million) that year, before the deal fell through during final negotiations. Over its seven-year existence, venture capitalists invested some $45 million (£29 million) in Digg, betting on its success as a leader in the social sharing world.

When it launched in late 2004, Digg was lauded for its democratic sharing function, which allowed users to vote stories up (digging) or down (burying), so that the most popular stories were pushed to the top of the site. The emergence of a so-called “Digg Mafia” or “Digg Brigade” - groups of users who wielded more influence than their peers in popularising or censoring links on the site - eventually became a controversial part of that mechanism.

Efforts over the years to make the site more community-driven, and likely more monetisable, proved unsuccessful. A number of redesigns and changes to the site’s core functions alienated users, who ostensibly preferred the Digg of yore. An August 2010 overhaul of the site was the final nail in its coffin: users were outraged that the redesign, in addition to it being crashy and bug-laden, ostensibly emphasised user popularity over content quality and allowed pesky RSS feed auto-submissions that appealed to publishers.

As social networking sites like Facebook and Twitter began to encroach on content-sharing territory - more than 60 per cent of all content shared on the web is done through Facebook and Twitter, according to an AddThis report - Digg found itself increasingly irrelevant. So much so that even its employees began jumping ship. Following major layoffs, co-founder Kevin Rose left the company in 2011 and famously joined Google Ventures earlier this year. More than a dozen Digg engineers were hired away by the Washington Post in May.

Digg’s CEO Matt Williams will reportedly move to venture capital firm Andreessen Horowitz, where he will serve as an entrepreneur in residence. Betaworks founder John Borthwick will take over as Digg’s chief executive.

“Digg has always been a site built by the community, for the community. Over the last few months, we've considered many options of where Digg could go, and frankly many of them could not live up to the reason Digg was invented in the first place -- to discover the best stuff on the web,” Williams wrote in a blog post. “We wanted to find a way to take Digg back to its startup roots.”