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Why would the founders of Digg, the fast-growing social news site that gets more than 20 million unique monthly visitors, keep trying to sell it (at least according to some reports)?
The question could have two answers, both of which may be true: either Kevin Rose and Jay Adelson want to get rich and/or the traffic on the site they run isn't quite what it seems.
The second possibility is more compelling now that longtime Digg users have revolted because of changes the site recently made to its algorithm. Those changes will dilute the power of prolific posters.
While the disgruntled Digg veterans now say they're appeased after an online heart-to-heart with Digg's founders, the truce won't change this simple fact: If a sale goes through, Adelson and Rose are about to get rich, thanks in part to their own vision and hard work but also to long hours of effort from people who won't get a dime from any acquisition.
Therein lies the great irony of social networking startups: For all the socialist-like talk of building a community, every successful site will eventually be divided into its haves (i.e,, people who will profit from its success) and its have-nots (those who won't.)
That's not a horrible thing, of course. Tech visionaries deserve to get rich , and if users enjoy spending time sharing stories with their friends, that's fine too.
The dustup about the changes has less to do with where the money goes than the fact that Digg today is not what it once was.
It started as a way for young, mostly male geeks to find out what other young, mostly male geeks were writing about things of interest to young, male geeks. The site's audience is 94% male and 88% of users are between the ages of 18 and 39, according to Federated Media, which sells advertising for Digg.
More than half work in the tech industry and two out of five write a blog.
But unlike Slashdot or other tech blogs that employ editors to choose content, Digg chose the path of egalitarianism, using an algorithm to decide which stories should rise to the top of its page.
Or at least its founders said they did. But the dust-up with veteran Diggers has shined a harsh light on the fact that the opinions of some Diggers have long been more equal than others.
The recent development confirmed long-held suspicions about Digg -- that it was a "democratic" site in name only -- the way North Korea is called a Democratic People's Republic.
That kind of startup sloganeering -- like Google's talk of doing no evil, which meant little after the search giant decided to cooperate with China's Internet police -- often becomes little more than marketing collateral when it meets the reality of the marketplace.
Still, the algorithm worked well for the Digg party faithful, at least until bloggers and businesses hungry for page views figured out that gaming Digg was a great way to get more of them.
The fact that the site can easily be gamed is perhaps only a secret to those strategic buyers now considering acquiring it.
The gaming can be done in a straightforward manner, with shocking headlines or provocative subject matter.
As I write this, the top headline on Digg reads "Why the cult of Scientology needs to be abolished." Now that's news any 20-something IT pro can use, ay?
It's tabloid journalism without the editors, and it works. Just ask Rupert Murdoch (who reportedly has been among those interested in acquiring Digg).
Gaming Digg can also be done less transparently - by having friends Digg stories for you or by paying spammers or a marketing firm to do the same. While Digg is constantly adjusting its algorithm to prevent someone from repeatedly doing it, the fact is it can't stop a well-coordinated, anonymous campaign to push a single story near the top of its rankings.
The net result of all this is that while Digg started as a tech news sharing site, it's now much more about entertainment along the lines of "News of the Wierd" or "America's Funniest Home Movies."
But more than being prone to gaming, Digg is, in fact, a game. Don't take my word for it. Here's an excerpt from the open letter that the unhappy Digg users sent to Digg's management:
"Digg is, in part, a game. It always has been -- and that is one of the reasons we love it. That it helped us share useful, entertaining or interesting content only made it that much more fun."
Now that Rose and Adelson want to expand the reach of the site, however, (either to sell the company or keep building it), the old guard apparently feel like pawns -- quite expendable -- in what they thought was their own game. It's kind of like a Stalinist purge, except instead of getting an ice pick in the eye in Mexico City, like Trotsky did, your blog post gets "buried" by the brutal, surprisingly discriminate hand of the Digg algorithm.When I read the following passage from the open letter of the early Digg users, I began to feel some actual pangs of sympathy: "In short -- the site has become too powerful a media force and its lack of transparency and faith in the community is reason for concern. In addition, the allure of instant traffic has led to the manipulation and abuse of the site by trolls and spammers."
But then the small group of users -- all male -- couldn't resist ending their manifesto on this juvenile tack:
"The collective "WE" built this site from the ground up and while it is sad to leave it, the time has come to move on. We as a loose group of social bookmarkers will find a new community that will allow us to stay in touch and stay informed.
"If Digg is a game then we are ready to play for keeps. What happens if the most powerful users in the community decide to leave? Will others join? Is Digg anything without us? Let's prove it."
Yeah, and if Mr. Digg won't let us powerful kids play in his digital tree house any more, we'll go find another!
The whole story might be funny if it were confined to Digg. But it's not. During the next two years or so, as VCs who've invested in social networking sites want to see some returns, growing pressure to expand site audience is going to test the relationship those sites have with their charter users.
That's not to say Digg won't command a hefty price from an acquirer. If the rumors that the company has hired investment bankers are true, the site may very well fetch several hundred million. But it won't get that amount for being a males-only niche site for techies.
Selling out online isn't confined to social news sites, of course, nor is juvenile finger-pointing. High-profile bloggers Michael Arrington of Tech Crunch and Robert Scoble, a former Microsoft exec now with Fast Company, managed to interweave both trends recently in a tiff over -- take a breath now -- the propriety of blog sites accepting real, actual dollars from advertisers.
Like similar rumors that Federated Media and TechCrunch also have potential buyers sniffing around, the Digg rumor is evidence that the Web 2.0 bubble is nearing its capacity volume. When two or three of these deals get signed, we'll know the top is nigh, because insiders usually sell at the right time.
On the other hand, as any VC will tell you when they're speaking off the record, strategic investors almost always overpay, with the notable recent exception of Murdoch's purchase of MySpace. The list of deals proving the rule would be long, indeed, but Sun Microsystem's recent purchase of MySQL for $1 billion comes to mind.
Meanwhile, like early hippies SHOCKED at the idea of people charging REAL MONEY for Grateful Dead merchandise, the idealistic and pioneering users of social networking sites may end up OUTRAGED that startup entrepreneurs like Rose and Adelson -- not to mention their investors -- want to see some payback on their time and money.
For perspective, I would point them to the words William Shatner once used while addressing a convention of diehard, uniformed Trekkies in a famous Saturday Night Live skit: "I look around at all of you and I''ll I can say is, 'get a life.'"
Or perhaps Rose and Adelson will point them to the (paraphrased) words used in the title of a book by the English satirist Douglas Adams: "So Long, and Thanks for All the Diggs."
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