On Thursday, Digg, the once-hugely popular social news site, sold to startup incubator Betaworks for $500,000, according to The Wall Street Journal‘s sources.
The $500,000 figure is absurdly low for a company that raised $45 million in investment from some of Silicon Valley’s biggest names, but it wasn’t just a cash deal. Equity in Betaworks was also part of the deal, and we don’t know how much that was worth. AllThingsD got Digg CEO Matt Williams to say that “the overall consideration was significantly larger” than $500,000.
Williams took over as CEO when Kevin Rose left the company in March 2011, going off to do his own thing. It never amounted to much more for Rose than an eventual job at Google after his intervening startup failed.
Digg went on without him, trying out a new model organized around topical social newsrooms, a redesign that its existing users hated. But the company was gutted in May, when 15 key engineers – more than half the company – were hired away by The Washington Post Company to work on its digital offerings.
The site still receives seven million monthly visitors, according to comScore, and it’s still a well-known brand with sharing buttons scattered across the Web. The Journal reports that Betaworks plans to fold it into News.me, a kind of social news community with a cutting-edge mobile app that’s much better suited to the way people read and share in this day and age.
None of the remaining Digg staffers will be going along.
The bottom line for Digg is that Reddit won. Digg’s mechanisms were too easily gamed, and shrewd users abused the rules and concentrated too much power in their own hands. Reddit, by contrast, is governed by a “karma” system that is as equitable as possible, and it has a cadre of moderators ensuring that the best material rises to the top and the worst is punished. As Reddit soars to prominence that Digg itself never saw, Digg has sold for a song.
Digg and Betaworks jointly announced the news Thursday on their company blogs.
