Chatter: How Digg became a social outcast

The once popular user-driven news site Digg that shot to popularity in 2005 thanks to a phone hacking scandal involving Paris Hilton has been sold for only $500,000. It was announced Friday that the site, which aggregates content according to recommendations by users and was once valued at $160 million, was purchased by New York-based […]

The once popular user-driven news site Digg that shot to popularity in 2005 thanks to a phone hacking scandal involving Paris Hilton has been sold for only $500,000.

It was announced Friday that the site, which aggregates content according to recommendations by users and was once valued at $160 million, was purchased by New York-based tech development firm, Betaworks.

Talk show host Kevin Rose founded the site in 2004. Two years later Rose was on the cover of BusinessWeek with the headline “How this kid made $60 million in 18 months.”

In 2008, Google was said to be in talks to acquire the site for $200 million. The deal fell through and Digg’s popularity waned with the emergence of Twitter and Facebook.

Digg chief executive Matt Williams said in a blog post: “Betaworks is combining Digg with News.me, a Betaworks company with an iPad app, iPhone app and daily e-mail that delivers the best stories shared by your friends on Facebook and Twitter.”

According to comScore, Digg had an audience of more than 7 million visitors per month as of May.

Here’s the chatter on Digg’s sale:

Julianne Pepitone @ CNN Money Tech
“As with many hotter-than-hot sites, Digg’s reign didn’t last forever. Users began to complain about a litany of frustrations, including that certain submitters were gaming the voting system and that the commenting sections had devolved.”

John Mello Jr. @ PC World
“Like many social websites, Digg had trouble making money. Online advertising couldn’t generate the kind of cash it wanted to make and supplemental schemes, like sponsored, in-stream links, just didn’t work.”

Paul Tassi @Forbes
“Why did Digg die a slow and painful death? It depends on who you ask. In the wake of this news, nearly every major outlet credits Facebook and Twitter with delivering the killing blow. While both sites are large and have grown while Digg shrunk, to credit them with the destruction of the site is incorrect. Though both are technically ‘social media’ sites, neither truly replicated the functionality of Digg as a vote-based news stream. Only one other site did: Reddit.”

Alexis Madrigal @ The Atlantic
“It is easy to forget how high-flying Digg once was. Digg was supposed to be the future of all media, not just social media. People were going to rule the internet; people were going to curate the web. Down with gatekeepers! But, as many Digg users quickly discovered, new gangs of gatekeepers kept a tight grip on the site’s story flow. These guys played the Digg system, often with a mix of social and monetary motives, and Digg never figured out how to incorporate their power users into their community without giving them all the power.”

Patricio Robles @ Econsultancy
“In the early days of Web 2.0, Digg quickly became one of the highest-profile startups in Silicon Valley, thanks in some part to the popularity of its founder Rose. The hype around Digg certainly helped: the company’s service was growing like a weed and investors were stumbling over themselves for an opportunity to invest. But businesses aren’t built on hype, and at some point, a company has to assume that it will need more to sustain its growth.”

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