Saturday, December 20, 2008

Not Digg-ing It

I have an account on digg and used to read/visit digg fairly regularly, but not very much lately. I spend more time in facebook, twitter and google reader. And a little in friendfeed. I guess the lesson is "sell while you're hot!" Bad news for digg's Kevin Rose, ontop of the closing of Twitter clone Pownce.
Black Holes: It Costs Digg $5 Million a Year to Run the Internet
Perhaps Digg really is the future of the news business. The headline-discussion site, once an icon of the Web 2.0 movement, is losing millions of dollars a year.

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.

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