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Summary:

Digg, which appeared to be stumbling after an ill-fated relaunch sparked a user revolt, now looks to be under siege. Two senior executives have left, and new CEO Matt Williams has slashed the workforce by a third. Is Digg on its way to the deadpool?

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Digg, which appeared to be stumbling after an ill-fated relaunch sparked a user revolt, now looks to be under siege. The former king of link-sharing services has seen two top-level executives — chief financial officer John Moffett and chief revenue officer Chas Edwards — leave the company in the past two days for jobs with other startups, and new CEO Matt Williams has slashed the workforce by more than a third, and says the company needs to “get back into startup mode.” But is such a thing even possible? Or is Digg on its way to the deadpool?

Not that long ago, Digg was a superstar in the world of “Web 2.0,” with its crowdsourced approach to news aggregation: a social-media twist on the Slashdot model. Websites large and small prayed for a link from the Digg homepage, and then trembled as their servers buckled under the load of millions of hits. Getting your site on Digg was a crucial step in getting popular attention even for mainstream publishers, and founder Kevin Rose wound up on the cover of BusinessWeek (with a photo he likely regrets) as the $60-million kid. Now, Digg is clearly in retreat — cutting staff, backpedaling on its heavily promoted, new features and watching its traffic decline.

How did it all go so wrong? Like plenty of other social networks — Friendster, Bebo and even MySpace — Digg just seemed to lose its mojo. Did it get complacent? Did Rose and former CEO Jay Adelson take their eye off the ball? Perhaps. Both got involved with Revision3, the Digg video spinoff, and Rose started to do some angel investing and other activities outside the company (one Hacker News commenter says the Digg founder “probably made more off of the sale of ngmoco than he would with Digg.”). Mostly, the service has simply been passed by, lapped by other competitors who have moved with the times and provided more features that users seem to want.

For many, Twitter has likely taken the place of Digg as a way of sharing interesting links. Others who wanted a community of users based on link-sharing have moved to Reddit, which some say has a more welcoming attitude. Reddit seemed to gain some significant momentum in the wake of Digg’s poorly received redesign and new features, in part because some Digg users hijacked the site’s front page and plastered it with Reddit links. As I pointed out in a recent GigaOM Pro report on Digg’s relaunch (subscription required), trying to appeal to new readers — as most of the site’s changes seemed designed to do — doesn’t accomplish much if you push away your core user base in the process.

Digg seems to have suffered from a certain hubris as well — the assumption that it had a comfortable lead over other services — and over-expanded. A number of observers have pointed out that despite getting as many, or more, pageviews as Digg, competitor Reddit has about 10 employees, compared with Digg’s 67 before the recent cuts and 42 after the layoffs (Reddit is also part of the Conde Nast empire, however, so it’s perhaps not a fair comparison). Should Digg have accepted one of the takeover offers it reportedly got from companies like Yahoo over the years? Possibly, although former CEO Jay Adelson says he doesn’t regret not selling the company, and suggests there weren’t as many firm offers as outsiders seem to think there were.

As Adelson notes, Digg isn’t on death’s door just yet; the site still has 20 million unique visitors a month, he says (although it may be less than that now). That’s a fairly large number, and the site’s revenues are reportedly in the $10-million range — but then, Yahoo has a huge user base too, and it’s widely seen as failing. New CEO Matt Williams says Digg is embarking on a new strategy of “engaging with users,” and is focusing on revenue-generating ventures such as Digg Ads. But those features depend on growing traffic and users, and Digg seems to no longer have either. Cutting costs may bring the company’s losses down, but you can’t cut your way back to popularity.

Related content from GigaOM Pro (sub req’d):

Post and thumbnail photos courtesy of Flickr user NightRPStar

  1. I wanted to “Digg” this article, but couldn’t.

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    1. I’m pretty sure our stuff is posted automatically to Digg, if you wanted to Digg it there, Jon :-)

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  2. Digg is going to be all right. Like you said, 20 million uniques. But it does raise a good question. Where is the best place to share links of common interest these days? Twitter? Facebook? Niche social vote-up sites. I’ve been using a new startup sports vote up site, http://www.ballhyped.com, and I seem to get a much better return on the links I post, and the conversations that are sparked from those posts. I think niche communities, that speak to the audience we better relate to, is the way to go. Would be interested in everyone else’s thoughts on that.

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    1. Thanks for the comment — just out of curiosity, do you work for Ballhyped? Regardless, your point about niche communities is a good one.

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  3. Andrew MacDonald Tuesday, October 26, 2010

    My opinion is that Digg is yesterdays news (no pun intended).

    The company didn’t move with the times, they didn’t listen to their users, they cut features which were very popular, and they sprung a new redesign on users without any engagement or feedback from its millions of users.

    Unfortunately, I think Digg will continue to loose traffic – it’s glory days have passed, and I don’t see how they’ll regain that in an age where mainstream users are choosing two social networking sites in particular. Facebook and Twitter.

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    1. That’s my feeling as well, Andrew. Thanks for the comment.

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  4. I don’t understand why it is unfair to compare the operations of Digg with that of Reddit. Reddit being part of Conde Nast doesn’t mean anything when it comes to the nitty gritty of running a website.

    It’s not only about the backroom operations. What about the user experience? Reddit also has the vote-up and vote-down buttons like Digg. Why wasn’t Reddit plagued by the user issues (Eg: power users, bury brigades) that Digg is supposed to have had?

    Bottomline – Reddit is a much better site than Digg ever was, despite the lack of shiny in the Reddit interface.

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    1. Thanks, A S — the point about Conde Nast was merely that Reddit probably gets some assistance in terms of support staff and other things (HR, accounting, etc.) from its parent company, whereas Digg has to pay the cost of all that itself. But your point is well taken.

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  5. There’s no question that Digg took a bad step and is paying for it. But, at least they hurt themselves while trying to improve their product, rather than letting it atrophy. What’s more, they’re moving quickly to repair the damage. Those are good signs.

    I don’t know if Digg will ever fully regain it’s mojo. But, I’m pretty sure they’ll recover at least somewhat and remain a strong presence on the web.

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  6. Scott Carmichael Tuesday, October 26, 2010

    The main reason I left Digg about a year and a half ago was that there were no more good conversations or content on Digg. Everything had some political/”this mindset only” slant and the goal of everyone was to get on the frontpage or Top 10 (Back in late ’07 my first submission got to #1 on Digg and had like 3,000+ diggs…and it was a link to an image I made making fun of Digg’s userbase). And the threads/responses became completely worthless, with ASCII art, bury everything threads and clichéd phrases being used over and over.

    When I went to Reddit, I initially found the look of the site to be so ugly and plain to Digg that I nearly gave it up. But once I started to see the amazing conversations, excellent stories and 100x better categorization of topics (they have super popular threads on programming, php, java, etc.) I couldn’t stop using it. And the reputation system there is so much better than what’s at Digg because it forces you to really think about what you post. As a result, most comments are useful and thought-provoking, not stupid Admiral Ackbar ASCII art for the billionth time.

    Digg stopped being useful in 2008 or so and became a complete waste in 2009. They should have sold it years ago when they had the chance.

    I find it amusing how the “ugly” site ended up being where most Digg-users flocked to though.

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    1. That’s a great point, Scott — it’s not always about the design or user-interface. In Reddit’s case, many users seem to prefer the community.

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  7. Digg has been buried… by it’s current management (and Kevin Rose, who pretty much sold out).

    I think it was headed long there before the redesign, which simply sealed the deal (the bury brigades were a symptom, all other sites dealt with such abuse/spam).

    I’m still surprised how anemic most community/moderation systems are compared to Slashdot, StackOverflow or Amazon… you’d think that creating community policing/governance methods would be put at the forefront of any decently sized online operation that depends on it’s community?

    I mean, there are things like disq.us and intensedebate, but even they are pretty weak (they don’t play nice with OpenID for example) and don’t have meta-moderation or such.

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    1. Thanks for the comment, roofus. I think you are right that social networks such as Digg depend on the community, and the site seems to have lost touch with that. Slashdot and StackOverflow are a couple of examples of sites that really do community management well.

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  8. yup. its probably over. who even goes to digg anymore?

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  9. I think digg can do alright with 20 million hits. All they gotta do is reduce all their expenses..and they’ll automatically be making some decent money…

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  10. i would have liked to have seen, for once, some of these guys suggest all employees taking a 20% pay cut instead of slashing half the work force. i mean, wtf? have a conscience. and some common sense.

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