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Social Networking - Friday, October 28, 2005

Digg Becomes a Company

Digg is a San Francisco Internet start-up that ranks news items by letting people choose which stories they like. It just received $2.8M in venture capital from Omidyar Network, Marc Andreessen, and Greylock Partners. We also understand that a comparable site - Memeorandum - may close a round of financing shortly. Furthermore, we have caught wind of other developers working on the same type of technology in skunk works.

Sites that make users prioritize or create hierarchies for news is nothing new. SlashDot has been doing it since 1997. But new sites like Digg and Memeorandum are showing that user-prioritized news is indeed a fantastic and easy easy way to drive traffic to a site built by one-man and a server. And because there are an infinate number of interfaces to slap on these sites competion is not scary. SlashDot has not diminished Digg's reason for being.

So what next? What will Digg, Memeorandum and the stealth companies do with the money they raise? They haven't even tried to make money by selling ads on their pages. Digg has built a lot of traffic just in tech and Memeorandum has done it both in tech and politics. They could expand their destination sites to other topics, get the same breadth of coverage that Topix.net covers, then perhaps partner/get bought by the types of big publishers that bought Topix. Or they could just private label their software. The a:c and other sites could have a section for user-prioritized news and we would rev share with this platform. At this point, the game is less about tech and more about strategy and deal-making. Thus the suits in the room.