UPDATE - As well as Betaworks, LinkedIn and Washington Post spend US$16m on Digg assets
Digg founder Kevin Rose on the cover of Business Week in 2006
UPDATE – In addition to Betaworks buying Digg for US$500,000 it turns out that social network LinkedIn and the Washington Post Company have also bought parts of Digg in a total package worth an estimated US$16m.
Siliconrepublic.com reported this morning that despite raising US$45m from major Silicon Valley investors including Greylock, LinkedIn's Reid Hoffman and venture capitalist Marc Andreessen, former Silicon Valley start-up darling Digg has been sold to Betaworks for just US$500,000.
However, TechCrunch this afternoon reported that as well as Betaworks, the Washington Post Company paid US$12m for the Digg engineering team.
LinkedIn is understood to have paid up to US$4m for at least 15 different Digg patents, including the patent for clicking on a button to vote up a story.
The 2006 cover of Business Week featuring Digg founder Kevin Rose blazed ‘How this kid made US$60m in 18 months’ and is considered to be something of an iconic moment in Silicon Valley’s revival following the dot.com implosion of 2000.
According to The Wall Street Journal, Betaworks intends to revive the news-sharing genre eclipsed by the rise of Facebook and Twitter.
It is understood that Digg received higher offers from other investors but chose Betaworks because it had the best plan for reviving the Digg brand.
In May, the Washington Post Company hired 15 of Digg’s engineering team for its SocialCode digital media subsidiary.
Rose now works at Google as a venture partner.
The revival of news sharing is an interesting endeavour and Digg’s monthly audience of 7m visitors is nothing to be sniffed at.
At its height, Digg offered internet users a platform to put together and curate their top news stories rather than wait on a newspaper editor to do so and the weekly videocast Diggnation was highly popular.
In the intervening years, opportunities to be acquired fizzled out and much of Digg’s thunder has been stolen by Reddit, another social news-sharing site that has surpassed it in terms of traffic.
What Betaworks intends to do with Digg remains to be seen but if it takes the right steps to satisfy the news-sharing site’s loyal audience and make use of the highly respected brand name, anything is possible.
Nevertheless, it is a cautionary tale for any tech start-up that is currently 'the buzz' and the venture capitalists' darlings: what goes up can also go down.