Digg pulls a Myspace, sells for $500 000

Oh how the mighty have fallen. Social media news aggregator Digg is being sold for less than a tenth of what it used to be worth reports the Wall Street Journal.

The company, which was founded in 2004 by entrepreneur turned angel investor Kevin Rose, was once worth US$160-million and managed to raise US$45-million from big name investors such as Facebook investor Greylock Partners, LinkedIn founder Reid Hoffman, and venture capitalist Marc Andreessen.

The site works much in the same way as Reddit does. Users post links on Digg’s home page, then others vote on their choices, determining the prominence of the stories they posted.

According to the Journal, various companies have been bidding for the social news aggregator for a while now, but Digg settled for a US$500 000 offer from Betaworks, saying that it had “the best plan for reviving its brand”.

Betaworks is a New York-based incubator for social-media startups that believes in “creating companies, scaling germs of ideas, crafting the future of the social web. One good idea at a time”.

Digg CEO Matt Williams has disputed the figure of the sale according to All ThingsD, saying “the overall consideration is significantly larger.” He also said that Betaworks would build “a new version of Digg from the ground up, in the cloud”.

The social news site still has a well-known brand and a significant monthly user base. According to tech research company ComScore it was still receiving more than seven-million visitors a month as of May.

“Digg is one of the great internet brands, and it has meant a great deal to millions of users over the years. It was a pioneer in community-driven news,” said Betaworks in a blog post. “We are turning Digg back into a startup. Low budget, small team, fast cycles.”

As of May, half of Digg’s engineering team left to work for The Washington Post’s SocialCode division. The remaining Digg team will not be joining Betaworks as part of the acquisition. However, Williams will join venture capital firm Andreessen Horowitz as an entrepreneur-in-residence, according to the Journal.