$500k Price Tag For Digg Was Only For A Small Portion Of the Company

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The big news story today is of the purchase of social news sharing site Digg to Betaworks for the small sum of $500,000. The world was shocked at this number considering the massive impact that Digg once had. When they first launched they were THE way to share your content on the internet.  Unfortunately Digg has had a series of bad management decisions as well as facing serious competition from rivals like Reddit, Stumbleupon and others. However, the story behind the $500k price tag might not be complete as new information has come to light about the way the company was sold in parts to different buyers.

After the news went around the web about the $500,000 buy of Digg we have found out that this purchase (which is a total figure of between $500-750K) by Betaworks might only be for the domain name, traffic, data and the base code for the service. It seems that the larger portion of the company’s worth went to social The Washington Post. According to information available at the time of this writing the Washington Post bought the Digg team (or a major portion of the team) for a cool $12 million. This would explain the statement by Betaworks saying they were turning Digg back into a startup with a smaller budget, team and with faster cycles of product improvement. This would back up the possibility that Digg’s staff has gone elsewhere so Betaworks will need to re-staff and work with the code some before pushing the service in a new direction.

Beyond the Washington Post’s $12 Million there is also word that LinkedIn might have paid a nice sum for a number of Digg’s Patents (between 12-15 patents if the sources are correct). The patents all seem to relate to how items are linked, indexed and weighted (voted up or down). It would make sense as LinkedIn is working to a better news interface to their service (the current one is pretty bad).  The price for these patents is between $3.75 Million and $4 Million. This means that for the total purchase of the whole company formerly known as Digg the price tag was a much as $16.75 Million. Although this number is better than $500,000 it is still a shadow of some of the purchase offers from a few years ago which included a whopping $200 Million from Google. It also is about $30 Million shy of a recent investment that was intended to pump life back into the once great site.

We do hope to see Digg continue and eventually return to their former presence in the world of news aggregation, however with the massive popularity of Reddit it might just stay a small low budget company for the rest of its existence.

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