The social list site Digg was sold to Betaworks for $500,000 last week – a tiny sum considering the company was once worth an estimated $160 million. In 2006, Digg was described as the 24<sup>th</sup> most popular site in the US, according to industry tracker Alexa.com; in 2008, Google reportedly offered to buy the company for $200 million.
The social list site Digg was sold to Betaworks for $500,000 last week – a tiny sum considering the company was once worth an estimated $160 million. In 2006, Digg was described as the 24th most popular site in the US, according to industry tracker Alexa.com; in 2008, Google reportedly offered to buy the company for $200 million. Digg was founded in 2004, by then-27-year-old Kevin Rose, as a news aggregator of online content. It became one of the pioneers of social sharing, using aspects such as crowdsourcing content and user voting to determine which stories appeared on the first page. Over the past few years, the site has struggled with the growing popularity of other social sites, such as Google and Twitter, as well as a series of design updates which proved unpopular. A site redesign in 2010 provoked a negative backlash from users and it struggled to recover after that - user numbers fell by more than a half by the end of the year, according to ComScore. Although Digg supposedly received higher offers from bidders that included technology and publishing companies, Digg was sold on Thursday 12th July to "technology incubator" Betaworks for a fraction of their previously-estimated value. Digg chief executive Matt Williams said in a blog post: "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. We wanted to find a way to take Digg back to its start-up roots." Betaworks plans to incorporate Digg into the company News.me, which presents users with the best stories shared by their friends on Facebook and Twitter. The deal includes all remaining assets: their brand, website and technology. None of Digg's current employees will be moving to Betaworks. A number of sources claim that the total acquisition cost was closer to $16 million, with the Washington Post acquiring the Digg team for $12 million and LinkedIn buying around 15 patents for around $3.75-$4 million. However, the sale of the seven-year-old site still marks a huge loss for its former venture capital backers, who invested a total of $45 million in Digg. The site's fall from grace should serve as a warning about how quickly social media sites can be devalued if they don't keep up with consumer needs. Even social giant Facebook is not safe, with its stock prices falling by 16.5 per cent since its initial public offering in May. Reports claim that the US user numbers have dropped by 1.7 per cent over the last six months and of the 23 countries where Facebook penetration exceed 50 per cent, only nine showed increased in user numbers over the past three months. What are your thoughts on the rises (and in some instances, falls) of social media sites?