Digg: What Went Wrong?

You may have heard recently that news sharing/ranking website Digg had to lay off a third of its staff after a relaunch of its site flopped. Two years ago when I visited Digg on TechTrek, Digg was a darling of the Web 2.0 generation of startups. It had a charismatic founder in Kevin Rose, a veteran of the first dot-com bubble in CEO Jay Adelson, and an innovative idea that was poised to change how we consume news. Those Digg icons were all over the web. It turned down lucrative acquisition offers from Yahoo and others. Digg was the kid that was too cool for a million dollars because they had their eyes set on bigger things.

Well things have unraveled since then. Digg had trouble with mainstream adoption and lost its core users to Reddit. More importantly, Facebook’s “Like” and Twitter’s “Retweet” buttons have replaced Digg on most websites. This latest round of layoffs is the largest but certainly not the first as they’ve cut 10% of staff twice since 2009. Jay Adelson left the company earlier this year. Even the company’s major revamp, Digg 4 (which I reviewed favorably in beta), was poorly received. Digg appears to be a dead man walking now eclipsed by its rivals and its core fan base is in revolt. With such a dramatic fall from grace, one has to wonder: Was Digg’s fall inevitable, and if so should we be concerned about many of today’s social and mobile startups?

The answer to the first part of the question is a resounding no. Just look at Reddit, which has thrived during the same period of time. Reddit is a favorite of the hip, quirky, tech-savvy community. In other words the same group that made Digg cool. However, as a mainstream consumer, I would never use Reddit because its UI is unpolished and most of the top stories are kind of odd. Again, I said the same things about the original Digg. Digg knew it had to become more mainstream in order to compete with the rising popularity of Facebook and Twitter. Yet when Digg tried to change, its fanboys revolted. This brings me to my first conclusion about many startups these days:

The business interests of a social startup and the community’s interests are sometimes at odds. Niche fan bases have limited value and in the long run may actually be a constraint.

Few companies have successfully made the leap to mass adoption. Most companies have fallen to their deaths or are too timid to try. The last outcome is fine if you sell out. Reddit is part of the massive Conde Nast publishing empire so it has no pressure to grow and give its investors a payday all on its own. Digg turned down acquisition offers and tried to build its own empire. Its competition was Twitter and Facebook. The problem is news sharing is a feature on Facebook and Twitter while on Digg it is the entire product. This brings me to my second and more important conclusion:

A feature is NOT a product and definitely NOT a sustainable company.

This is what really worries me. A lot of startups I hear about these days are very narrowly focused. They have a novel way of doing something but they compete against one feature of someone else’s product. The current environment makes it possible for these companies to get funded and move their ideas to market, and there’s nothing wrong with that. There is some real innovation going on here. However, it’s foolish to think there are any fortunes to be made with most of these startups, and founders and investors alike would be wise to sell sooner than later.

I don’t think there’s going to be another bubble like 2000 because this boom is not driven by the stock market. Even if a lot of these companies fail, there will be a much smaller impact on the overall economy. However, you do have to wonder how many of these companies have a future. For example, I’m worried about Foursquare and Gowalla. Although they’re slightly differentiated and have strong communities, they are merely features on Facebook. With Facebook Places and the inevitable check-in fatigue setting in, they could risk becoming the next Digg.

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63 responses to “Digg: What Went Wrong?

  1. Pingback: Frank MacDonald » Digg: What Went Wrong nocachyblog

  2. Great post!

    I’ve been mulling over similar ideas recently. You hint at a larger issue I see with the ecosystem: the depressive effect of the heavyweights like Google and Facebook. How does a startup even compete when they can so easily be squashed by one of the big guys? A founder may have a great company, but if Facebook mimics your core competency as a feature of their new mobile app, you’re right to be worried. You’d be screwed.

    It’s interesting that you suggest Twitter is more than a network of news sharing. I think Twitter is in the business of connecting people to information, rather than people to people. When compared to a behemoth like Facebook, the service Twitter provides is not much more expansive than what Digg provides. I would argue that Twitter is an example for future ‘Digg-like’ companies to follow. Like Digg, Twitter grew from geeky beginnings (just look at all the early adopters with short handels) and found widespread usage from a very limited product. It is still too early to label Twitter an complete success, but its continued growth bodes well for the future.

    I have a hard time pinpointing the reasons for Twitter’s survival. It it the format? The Celebrity effect? Whatever it is, it hasen’t run out (yet), and Twitter is growing while Digg is shrinking. To get back to your point about business interest vs niche fanbase, Twitter was able to widen the fanbase to be totally inclusive without losing interest from the core fans. Why couldn’t Digg? It’s not that Twitter users have a lack of alternatives, and Digg users had many. I would guess that it is because Twitter is fundamentally looking forward to mobile, while Digg is rooted in the traditional browser.

    It’s better to be lucky than good.

    • Watching my teenagers on the phone, texting texting texting about inane issues, I can see how Twitter not only survives, but thrives. The limit of 140 characters is perfect for people who want to be sending an endless series of short, barking messages, and yet do not want to invest time in writing or communicating in depth.

    • To answer your point about Twitter, I think it comes down to having your own customizable social network. You have the choice of who you want to follow so your Twitter stream is relevant to your interests. The Digg homepage however is what the entire Digg community finds important. If that’s a niche community and you’re not part of that niche, the stories on there have little appeal to you.

  3. Pingback: Tweets that mention Digg: What Went Wrong? « nocachyblog -- Topsy.com

  4. Unfortunately, it just seems Facebook and Twitter have engrained themselves in the social media psyche as the only necessary destinations. Others who challenge need to create a pressing need for inclusion…and Digg just didn’t do it!

    Interesting insights… :)

  5. I really enjoyed your post and congratulations on being “freshly pressed!”

    I am currently taking a new media class, and we have discussed how the influx of social media has changed the dynamics of public relations and marketing, in particular. I liked your point about how a feature is not a sustainable community. Social media has allowed marketers to appeal to diverse niche markets, and I feel this is great for smaller, narrower businesses. However, if properly implemented, larger brands can take advantage of new media as well (i.e. Pepsi and its Refresh Campaign).

    Scott Monty, who is the head of social media at Ford has a wonderful blog that you might find interesting: http://www.scottmonty.com

    He says that LinkedIn is the business meeting; Facebook is the hallway conversation; Twitter is the cocktail party.

    http://ahersko.wordpress.com

    • Digg’s latest version became a bad newspaper. I like reddit for its human angle.

      I don’t want bias – left/right,newspaper stuff, or spam (no i am not looking to buy a house in Detroit ok)- the more digg made it all msm in its top 10 is when ‘social’ sites loose it.

      You too should embrace this human aspect rather than digg the top ten msm articles.

      • I liked Digg 4 in theory because you could follow stories that your social circle dug. Unfortunately, Twitter already does this pretty well. You’re right, in practice their execution was horrible

  6. Being a non-techy, I’m utterly confused by Digg, Reddit and the like. I don’t peruse such sites or use them for anything myself. I have a tweet button and the like on my blog for people to potentially use, because I’m somewhat aware that people do use them and can potentially drive up visitors to your site, but for me it’s with much head scratching.

    As for Digg… well, that’s the Free Market at work for you. Easy come, easy go, let the buyer, or user decide.

  7. I really like your take on the state of the social media trend. I’ve been often wondering the same thing. Do you have a social media crystal ball that you’ve been looking into? Great post!

  8. You state very elegantly what I would repackage as this: Digg forgot that its main attraction was that it could provide links to news items that the user base found interesting instead of what the commercial interests wanted to be seen as interesting. By trading this main asset away for sponsored news and then creating fake accounts to pretend that the news items were from real people, it lost is purpose.

    On the other hand, I don’t think that Digg was just a feature. It was a community of millions of individuals. But that community was locked out by the demands of the VC investors, who traded the combined synergy of the community for links sold to the highest bidder.

    • You make a good point, but I wanted to clarify my point about Digg being a feature. From a product standpoint, Digg does what Facebook and Twitter can do just as well-sharing news -with little additional value. Twitter and especially Facebook on the other hand let you do other things too like chat with friends, post pictures, etc.

      From a business standpoint, we wouldn’t be having this conversation about Digg if they had been content with remaining a niche company or selling to a larger content provider like Yahoo or AOL. Unfortunately due to poor judgment (or someone mentioned hubris), Digg thought they could keep growing on their own. I think this is what led to their downfall and something that could trip up many startups today.

  9. This is really interesting. I’m not the most web savvy girl, I’m just figuring out all these sites as a blogger. And I always wondered what differentiated the survivors from the rest, and whether people make good money off these companies, and how. Thanks for sharing!

  10. Digg Dugg Their own Grave. I remember seeing a gleaming Kevin Rose at a search conference a few years ago. He was on the top of the world. How quickly things change.

  11. Will MySpace be next? Hanging by a thread as it is, they are taking a huge leap into the unknown over the next few weeks. I hope not. I love the unruly beast.

  12. It’s funny logging into Digg now. I was in it before the change/upgrade (whatever it’s called)and the site seemed to be active, energetic and ready to go; if that description makes sense to anyone. Now when I log in it’s like opening the door but no-one’s home. They must be next door at Reddit! Interesting and informative article.

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  14. One of the things that has helped Twitter(and the iphone at first) most is its non-combatant attitude towards others incorporating it into other systems. If you want to create an app that uses Twitter without asking, it’s okay. Want to create ways to use Twitter, they’ll let you. People have been allowed to create usage channels for them with no lawsuits or retaliation. This is the opposite of the music industry. So if your a start-up, maybe don’t be afraid to incourage your fanbase, or startup programmers looking to make a name for themselves, from doing your work for you and in ways you didn’t know you needed. Just a thought.

  15. Great post! I think it can be good to focus on 1 niche, but at the same time you want get as many hits as something that offers multiple niches. (Digg vs Facebook). Not every body can create a Facebook, although people will keep trying Im sure. Sometimes you need settle for the smaller prize and build another project and chip away at a single niche.

    http://consolidatingstudent-loans.org/

  16. I just haven’t really seen a place for Digg on the web anymore. You’re right, I use the “facebook like” feature much more than I ever used the dig feature (the technicality problem with digging was also aggravating, the button would usually make you try to submit instead of just adding a thumbs up).

    In addition, I am much more reliant on google reader/feedly, netvibes, to find my news stories.

    Why should people go to digg which is now more of a feed service itself, with you having to subscribe to sources?

    • Good catch but it actually illustrates the point I was trying to get at. When I first started using Digg I was already sharing links on Facebook. I tried to Digg a few stories but it felt redundant and more of my friends were on Facebook than Digg. It made no sense to keep using it.

  17. Nice post, I have to agree with a lot of what you said, especially since I am one of the former Diggers, now a member of Reddit. The Digg idea was brilliant, but when Digg v4 came out, it really moved away from what had made it great – the user submitted news (companies and other feed sources could submit their own news) and by that time a lot of the community had also degraded. Apparently with great internet popularity comes great comment stupidity.

    I’d also like to point out that a lot of facebook’s later features seemed to be based on, or at least inspired by, the digg model. Facebook just made it more convenient for the masses.

    Cheers,

    http://www.alexanderfogleman.wordpress.com

  18. Pingback: Digg: What Went Wrong? (via nocachyblog) | East Coast by West

  19. Good post and you hit the nail right on the head. New start-ups really require courage to enter the markets, specially with the big boys around. However – start ups tend to chip away at the big boys, sharing the global Online market bringing in new and fresh ideas. This has been the driving force to get us where we are.

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  21. Pingback: Digg: What Went Wrong? (via nocachyblog) « In islamic world Blog

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  23. Very interesting and informative article about the way social media is going. I’m a blogger so it’s helpful to learn which sites I should be investing my time in, and which sites I probably shouldn’t. Thanks for the info!

  24. I found this post to be very fascinating. It’s too bad about Digg, because I think that it was an original idea, and could have become extremely popular. However, when there are larger companies sitesl ike facebook, it’s hard to compete. Digg probably should have taken the offer, and been content with the money.
    Another interesting thing I noticed was that you mentioned ,” The business interests of a social startup and the community’s interests are sometimes at odds.” When Gap decided to change it’s logo, fans revolted the idea completely. Therefore, Gap decided to go back to the old logo, and I think that was a wise decision. Fans are the basis of the company. I mentioned this example just to reiterate what you stated.
    Thanks for sharing, I thought this was extremely interesting!

  25. A bit off topic, but you mentioned Reddit. I was watching an interview that Steve Huffman gave, and the whole project seemed very low-budget and a bit amateurish. If I remember correctly, he and the other co-founder spent the first couple of months astroturfing, creating all of the initial traffic themselves, before they got significant outside users. I’ve never used or even seen reddit myself, but I do know that that in four(?) years two kids straight out of undergrad were able to put together a site that you say “as a mainstream consumer, I would never use…because its UI is unpolished and most of the top stories are kind of odd.” Yet the company attracted a buyer, and they probably netted in the ballpark of $10-20M on the deal. Considering the minimal amount of outside investment they took and the small number of people they’re splitting the profits between, it’s not exactly a bad ROI for the effort and (seeming lack of) sophistication required. Clearly, my understanding of the whole thing is quite superficial, but it’s definitely intriguing.

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