A social networking company is not a technology company like Intel is a technology company; its users are its product.
Digg has been sold for the astonishingly low price of $500,000 to Betaworks, the Wall Street Journal reports. There are sad things about this and there are funny things about this. This sale, along with Facebook's IPO and Reddit's spinout, marks the end of the first era of social media.
It is easy to forget how high-flying Digg once was. Digg was supposed to be the future of all media, not just social media. People were going to rule the Internet; people were going to curate the web. Down with gatekeepers! But, as many Digg users quickly discovered, new gangs of gatekeepers kept a tight grip on the site's story flow. These guys played the Digg system, often with a mix of social and monetary motives, and Digg never figured out how to incorporate their power users into their community without giving them all the power.
Here was the huge problem with the Digg system. People submitted stories that were nominally voted up or down. But those stories didn't get more traffic linearly as the upvotes flew. No, you only got a bunch of traffic if the algorithm selected the story and sent it to the front page. This meant that trying to "pop" stories on Digg was like playing NBA Jam with hotspots turned on. The same amount of effort sometimes yielded 12 points and sometimes 2 points and most often 0 points.