The Digg Buyout Theory

17 Comments

Techcrunch reports that News Corp., had expressed interest in buying Digg, but nothing has happened thus far, and Digg might raise more money. I think the world of Digg, but frankly have no idea what it is worth. Some say $150 million.

One blogger thinks Google should buy them. His argument – since Google is based on the concept of “page rank,” and Diggers manually “rank” each post by digg-ing it, there could be some mutual benefit. From a pure eyeballs perspective, C/net would be ideal buyer. Digg could add some serious punch to their overall pageviews, and with their sales force, and Digg’s tech-heavy audience, it could be a profitable pairing. What do you think?

17 Comments

TanNg

Digg is full of fan boys. I don’t think fan boys have any value to marketers. No one is going to advertise an iPods to Apple fan boys.

rasterbator

Revision 3 is on the cusp of being a successful social networking media company. Why would they sell? The only reason I can think of is that Kevin wants his paper money to magically appear as cash in his bank account. Revision 3 would be devastated without Digg. It is their most successful franchise.

However, if anyone would be interested in Digg.com and diggnation, it would be AOL, Yahoo!, Google, possibly a smaller competitor who wants to compete with these big companies. AOL is invested in TWiT, and Leo Laporte. I would think that a bidding war would ensue if Yahoo! and Google were both interested.

StartupDunia

Digg’s mojo lies in its user community. Its what drives Digg and has made Digg what it is today. Whoever buys Digg, doesnt matter — they’ll be paying to buy the passionate user community that comes with Digg. Important point is not to antagonize this user community.

Cem Dalgic

Who did valuate the 150M$ and how? Usernumbers multiplied with X$? How much is X?

Nick Hawkins

Digg is way over valued if they think it’s ripe for a $150mm taking. Digg is ok, but a lot of news on there is “YouTube clip of the day” and “Bush Sucks”, none of which help me with tech news. It’s not relevant and is just a lot of noise. But hey, if someone is up for losing money, then I’m all for it.

MarcoPolo

$150m? It doesn’t really scale because the system is relatively easy to “game”; and that’s their core business. Not to mention the lack of critical mass (outside tech)

That begin said, I bet for Yahoo!

dave

why would google buy digg? it’s basically a hack of drupal from what i can see, or something that a couple of savvy devs could crank out in a matter of days with determination…google could do this alone and flip a switch within notebook (already involves collaboration potential) and simple say, ‘share just links’ similar to the upcoming yahoo bookmarks upgrade underway already…

what is the point? digg is already cloned a thousand times over, and if it were a printed pub it would basically feel like an ad for apple given all the cronies on digg spitting out props to apple every half hour…

come on, is this really news, or is there nothing else going on out there ;)

btw, cnet? yeah, they’re awesome at buying sites with about 5 to 10 thousand regular users (like consumating)…

David Evans

Time for some reasoned justification of valuation and due diligence on the whole “gaming the system with bots” situation at Digg. 20 million uniques a month? Show me. Newscorp? Come on, before Myspace you guys loved to hate on them. Why the heck would Google buy them? Most commenters here appear to be armchair M&A wannabes. A good exercise would be to get to the bottom of the monthly visitors first. If you can’t figure that out, the valuation is ridiculous.

Ashish

I don’t think Digg works that well outside the tech world for a variety of reasons. CNet could gain from it, but I’m not really sure it’s worth anywhere close to $150mm.

Kevin Cawley

AOL/Netscape
1. Calacanis gets to roll up “l#@&r” entrepreneurs (stripped a quote from one of the gillmor episodes)
2. They get the cool guy factor that is lacking

I hope Kevin and crew @ digg are hugely successful regardless of which path they select. And like Brian I think they are better off staying the course solo right now.

Brian McConnell

If I were Digg, I would hold out unless I were losing a lot of money. It seems to me that they have a big enough audience and low enough operating expenses that they should be able to break even or be close to it.

Rather than sell to Google, why not cut an exclusive advertising deal with them? Seems like it would be easy for them to make good money now, and still remain independent.

The risk for them in selling the company is that their users will lose enthusiasm and stop contributing to the service. It’s hard to get people to be enthusiastic about contributing freely to a big company.

Chris Griffin

“One blogger thinks Google should buy them. His argument – since Google is based on the concept of “page rank,” and Diggers manually “rank” each post by digg-ing it, there could be some mutual benefit.”

Everybody thinks Google should buy everything. It’s not hard to argue that Google should buy any and every web 2.0 company out there.

I don’t see how Digg could be useful to Google since they are in the business of providing relevant search results. “Diggers” are just a bunch of sheep and bots.

The problem with humans are we have thoughts and feelings. These thought and feelings will always get in the way of what is democratic, right, and fair. Put humans against the Google Algorithm and I’d most definitely place a bet on the algorithm.

tomo

Lets assume they have offers from all of the above. It becomes a decision on which company do you want to be a part of. Considering the team, board, etc i would place my bet on google simply because it is the safest route from a financial perspective AND they know alot of people at google …

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