Digg Doubles Its War Chest to Challenge Yahoo Buzz Internationally
Social news site Digg is announcing today that it has raised another $28 million from existing investors, bringing its sum total raised to more than $40 million. Remember when people used to tell stories about Digg rejecting VC money as too much in its early days? Those times are long gone.
The paradigm that Digg has popularized, letting users vote on which stories should be on the site's front page, is now found in any number of other places. From the programming geeks at StackOverflow, Reddit and Hacker News to the customer service requests at Dell Ideastorm, Uservoice and elsewhere - "it's like Digg for..." is now a commonly used phrase. No where, though, has Digg itself faced a bigger challenge than in Yahoo's new site Buzz.
Digg's Plans For the Money
In its announcement today Digg said it was going to use the new infusion of cash to double its staff to 150, expand internationally with local sections and languages and offer publishers new analytic services. The New York Times got an exclusive interview about the announcement and it's publishers of that scale that Digg will undoubtedly be focusing on with many of its new features. Very large content publishers will probably be willing to pay for services telling them which of their content "is popular with Digg readers," the rest of us little people know that about our content pretty easily!
Can Digg localize effectively? It's easier said than done and requires more than just translated language in an interface. This is something that Yahoo! is very well practiced in.
The Buzz Challenge
Yahoo! Buzz is a site that works much like Digg but sends selected stories to the front page of Yahoo.com, one of (if not the most) visited websites in the world. In April, traffic analysts Comscore reported that Buzz had already passed Digg in traffic. Digg now says it sees 30 million visitors per month.
Can Digg continue growing in the face of such a challenge? Raising a big pile of money isn't a bad idea at all right now. Digg will need to promote itself, to localize intelligently and to continue growing outside of its initial tech-focused subject areas in order to stay on a path of growth.
We like Digg a lot and we're excited to see what it does with this money. Acquisition of the company would have been interesting, but CEO Jay Adelson says very few suitors could maintain a position of neutrality with regard to their own content if they bought Digg. Google presumably could, but apparently that sale fell through.
For now we'll wait and watch as this trailblazing company tries to stay at the front of the parade that it made popular in the first place.
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I'm curious as to what the funds are going toward? An extra $28 million is, obviously, an amazing sum for a news aggregator. So, do they have a huge burn rate? Are they nearing profitability? Does Digg have what it takes to sustain itself as a growing business.
For the record, I think that it has enough of a user base to sustain itself, but can it grow to be profitable and offer the return that the venture capitalists is what I'd like to know.
Digg has already peaked. Now it can go nothing but down. It was nice while it lasted but in the end they will sell it for way less than they can get right now.
So "position of neutrality" is the new reason for no sale? Funny, last I heard it was "not enough money." The cynic in me wants to point out my opinion that "position of neutrality" probably isn't as much of a concern to Jay Adelson and crew at a certain price point.
I use both Digg and Yahoo! Buzz Perhaps because I started out as a Digger, I like the platform better. Let's hope that Digg (Google) doesn't get so worried about staying on top that they "redesign" the site distastously (see Propeller). Interesting to see what the funds will go towards.