Digg Copies The Old Media Model
DIGG this:
BusinessWeek’s Spencer Ante got ahold of Digg’s financial statements. They are frightful, even for a startup. Last year, the company took in $4.8 million and spent $7.6 million, for a loss of $2.8 million. In the first nine months of this year, losses grew almost as fast as revenues: Digg took in $6.4 million and spent $10.4 million, resulting in a $4 million loss. At an annual clip, that’s more than $5 million out the door a year.
Keep in mind that Digg has a lucrative three-year advertising deal with Microsoft, that pays the site a guaranteed rate for its inventory. Without that arrangement, struck last year — driven, most believe, by Microsoft executives’ desperation to get in on the Web 2.0 craze — Digg’s losses would likely be far worse.
Now it all makes sense: Digg CEO Jay Adelson’s repeated attempts to sell the company to News Corp., Current Media, and Google, at a valuation of $300 million or more, came to naught because there’s no real business there.
These people are trying to own what people create, and pay nothing for it. Can an editor be worth 300 million dollars?
Mugs away!
Posted: 20th, December 2008 | In: Media Comments (2) | Follow the Comments on our RSS feed: RSS 2.0 | TrackBack | Permalink
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June 17th, 2009 at 3:00 pm
Aggregating is different than editing… These days content can’t be clearly owned anyway, (more attributable to Twitter than Digg) and the profitable commodity (audience) isn’t provided by content in the first place. Digg’s share in the ‘Content Equity’ comes from the enormous amount of exposure they give by directing web traffic to Dugg urls. I highly doubt that anyone who benefits from their content being Dugg is offended by the context from whence their visitors arrived. A lot of us pay Google a significant amount of money for a much less receptive audience.
A few years ago the concept of social networking was equally as disruptive (and in many was continues to be), where Iran be right now without a means of quickly disseminating their web content? The service we require the most right now isn’t content creation (there’s plenty of that) but effective global content distribution and filtering.
Ownership in these days is a shifting paradigm and I really don’t see the harm in Digg doing what it does well.
December 20th, 2008 at 12:24 pm
a cyber Madoff?