Michele Steele at Forbes Video Network interviewed Digg CEO Jay Adelson to discuss site usage and acquisition rumors. The video was posted on November 22, 2006.
Steele asked Adelson about the size of the Digg audience (Digg has claimed 20 million uniques a month, v. 1.3 million that Comscore reports). He responded by saying that Digg sees about 1.5 million uniques per day when RSS readers are combined with website traffic, and he claims that third party website monitoring tool are flawed (I agree).
Steele also asked Adelson about the recent rumors that Digg was close to selling for $150 million. He denied the rumors and stated flat out that Digg is not currently in acquisition discussions with anyone.
My favorite exchange is when Steele asks Adelson “What will keep Digg from being a one trick pony?” His answer - “community.”
Digg.com is only popular becasue that have taken massive advantage of the google search engine, in fact we all or a debt to google and maybe digg should give half of the money they make from a acquistion to google
Hi hate digg the only digg there buddies like techcrunch
Comments 1 and 2 do not make any sense at all.
That interview didn’t seem rehearsed….
“What will keep Digg from being a one trick pony?” His answer - “community.”
yet they won’t engage with community developers
I should know I got a C and D letter and they never responded to my asking for permission to keep diggcard going under a different name.
Do you see him blinking after she asks: “Are you in discussions right now?”. They are totally up to something.
I think the basic premise behind digg is really very strong. That said, they seem to be making very little progress in the way of meaningfully expanding their offering or monetizing it. Much of what they are doing are cute gimmicks but the novelty wears off quickly.
Kevin or Jay - send me an email…I have a few ideas for you.
Comment #2: sounds like sour grapes to me
“taking advantage” == “recognsing an opportunity”.
your comment (if it were valid) would apply to virtually any profit making company out there.
lol community has the power what bull, they have all the power and they are just into digging all the silicon valley buddy sites, not the everyday joe blow
Wow - Michele Steele has a grating and incredibly annoying voice. Reminds me of a barking chihuahua.
my evolution of keeping up with tech news…
- read slashdot faithfully, always seemed to have relevant/interesting posts and discussion
- switched almost cold turkey to digg, again relevant/interesting, more more activity
- but, in the last 2 months, my digg reading has dropped significantly and now I’d say I keep up via techcrunch and gigaom, i still scan digg, like the programming references, but the gaming of digg has started to drive me away…
just my experience
___________________________________________________________
Digg is a web 2.0 phenomenon.
Before Digg the only other option for Social Bookmarking User Generated News was either Edited Submissions, Forums / MessageBoards or Chat.
Digg made the actual Members part of the FOCUS along with the story and allowed instant replies and a mass voting.
Ironically, Forums were actually going in that direction, by adding REP points and displaying the amount of pageviews and replies - but it appears Digg did everything better at one place. Maybe there were just too many forums dealing with hundreds of topics, ….who knows why Digg filled a void.
digg.com/tech_news/Putting_A_Price_On_Digg_Jay_Adelson_on_Forbes_com
The video made the Digg Homepage a few days ago - there are over 100 comments by Diggers.
Interesting that the FIRST comment received 100 buries.
The “widsom of the crowds” and “community” aspects of Digg indeed make it powerful and engaging. Sites that leverage User Generated Content will have a unique position in the marketplace in the future. It is this very premise that will change many business models in the future (not just news type of sites like Digg) and unseat traditional business models.
The number of unique users is open for debate, but they have carved a very loyal user base with their service and it continues to grow. The bottom line is that the numbers are growing and of substantial size.
We are working on a platform that will be somewhat similar to Digg but not in the same “news” space. Imagine users being able to leverage online technology combined with web 2.0 tool sets that facilitates “Collective Business & Consumer Wisdom”. That is what we are currently in alpha mode with at MojoPages.com
Rodney Rumford
Our experience in web 2.0 tells us that leveraging community is only one chapter of the story. In the publishing business great masses mean medium content. If you want great content you need great people.
I definitely agree that third party web site monitoring services are flawed. That’s for sure.
I’m not gonna comment on the content … but uhm … this woman has the most irritating voice I’ve ever heard … I’m really sorry if this offends you … just work on it and try to talk slower, thanks
So Jay was in NYC for the interview, met him at the Techcrunch8 party, pretty cool guy.
The highlight of the night was when Jay walked up to the HitTail.com’s table and the gal at the table looked at his name tag - “oh.. you work at Digg”… and the next question she asked - “What you do there?”.. and guess what. Jay said “I’m the CEO “….. You can imagine what happens next… it was pretty funny to have witnessed that.
Love the community answer.
The acquisition rumors is good news for http://www.mediarati.com, as it a sign that it,s likly to get a buyer too if digg is acquired.
Agree with the points about Michele’s voice being tough to listen to and also the ‘yes I have something to hide’ response about ongoing discussions.
I’d be interested to see more YT clips like this via Techcrunch.
Overly confident guy, doesn’t even bother to sit like a man and face the reporter, yet he talks about community. Aha, my ass, who does he think he’s kidding, George Bush?
Besides Google analytics, what are the other type of platforms that can track visitors?
I do find it funny that:
a: Jay can’t sit up straight
b: that “Forbes” the big bad news leader uses Alexa as their “benchmark” for traffic considering that as Jason C. pointed out, Alexa is really not useful at all:
http://www.centernetworks.com/jason-gaming-alexa
Alexa is great when you have a tech site, otherwise its not. So maybe they should have said 85th most popular tech site. Or maybe they could have used something better to check digg’s traffic.
Well, that’s good. As matter as the fact, I really enjoy the services. talking about the user behavior tracking, I do think this is important for a site but depands on the purpose…
this is without a doubt one of the most poorly produced web/video/news pieces I have ever seen. Whoever is responsible for this should be canned (unless their production budget is under $100/show - in which case they should be congratulated).
The Wisdom of the Crowds is a wonderful thing. However, the “Wisdom” was already there before Web 2.0. Collective wisdom came from the email, the telephone, postal mail, and even Avon parties. The “wisdom” in today’s time, is really about the speed of “Reach,” and with Digg, it allows users (the community) to report, transmit, organize, collect, & categorize that information & reach it to the masses in vast quantities.
Digg does a great job at this, but we definitely need a standardized way to analyze who are visitors are. 20 Mil unique visitors (A real visitor to a Website (versus a visit by a search engine robot) -counted by the unique IP address) per month is some great figures.
Based on the collective Wisdom out there right now, 20 million unique visitors per month, based on the US population alone is 6% of the US population. In 15 months, Digg will have capture the whole US population on Digg.
At 20 million unique visitors per month, according to Stuart Browns AdCalc, http://adcalc.co.uk/ that generates Digg aprox. $73 million per year at 1% CTR using adsense. A $150 million acquisition or sale would be ridiculous. They can make that in 2 years.
If Digg started in 2004, they should have at least 1 years worth of financial statements. Assume 40% in expenses for the ‘05 yr which translates to $43.8/yr given 20 million unique visitors per month, based on adsense revenues alone.
According to CNN’s Business Worth Calculator: (http://cgi.money.cnn.com/tools/bizworth/index.html), if you were to enter $43.8 Million into their calculator, the business is worth $130 - $280 million.
All this is based on just the unique visitors coming to the site. So, how are we measuring regular visitors, subscribers, etc? We seriously need to come up with a standard base measurement system, as the unique visitors & the regular visitors are key, and now even more importantly RSS & other type of subscribers. If not, we will have the Wisdom in the Clouds, rather the Crowds. At the end of the day, without real & factual data, how can we improve our content & cater to our readers?
Traffic to Digg is certainly trending up (see http://snapshot.compete.com/digg.com), but I just don’t see how they’re getting 20 million+ *unique* visitors each month - unless most of their traffic is international.
Don’t get me wrong, I love Digg, but just don’t believe the numbers.
It amuses me to see all this talk about the “Wisdom of the Crowd” in Web 2.0 from people who obviously haven’t even read Surowiecki’s book, or lack the comprehension skills to recognize that most of these “wisdom of the crowd” services, like Digg, fail to meet the qualifications for what constitutes a smart crowd versus a dumb crowd, as detailed by Surowiecki. Obviously, Surowiecki isn’t a god and his ideas are just ideas, but if you’re going to talk about the wisdom of the crowd you can’t ignore the parts of the concept that you don’t like or don’t understand.
Digg does not exhibit several of the characteristics of a smart crowd:
- Diverse. Digg fails on this point, since it is well-known to be used primarily by “tech geeks” and a relatively small number of “power” users provide the most activity.
- Independence of the crowd members. Digg fails on this point, as the mechanism by which stories get promoted influence the voting (i.e. if you find a story already promoted to the homepage, you’re probably more likely to vote on it). Additionally, we already know that there is group coordination going on to promote certain stories, and this is threatening to turn Digg into a completely useless service.
Additionally, while it is not one of his four criteria, in a lecture Surowieki gave entited “Independent Individuals and Wise Crowds, or Is It Possible to Be Too Connected?”, he noted that the wisdom of the crowd model works best when there is an outcome or truth (i.e. “Lucky Charms will win the race” or “The hog weighs 302 pounds.”). In Digg’s case, this really doesn’t exist. It is a popularity contest for news, and while we can reasonably agree that some news is “better” than other news, there are so many potential “answers” and there is no concrete truth that it is even more difficult to apply the widsom of the crowds model to Digg, even if it didn’t fail two of the four criteria miserably in the first place.
Next time Jay gets interviewed, I’d love for somebody to ask him about these points, because it seems apparent to me that most of the people that reference the wisdom of the crowds in the context of Web 2.0 are not very familiar with the theory and have probably never even read the book.
that was a jerkoff interview. all the questions were complete setups so he could promote his website more (to the geeks who already use it heavily). Nothing in depth, nothing hard-hitting (i.e. spamming etc). Overall, a waste of several minutes of my time.
The Wisdom of the Crowds is a wonderful thing. However, the “Wisdom” was already there before Web 2.0. Collective wisdom came from the email, the telephone, postal mail, and even Avon parties. The “wisdom” in today’s time, is really about the speed of “Reach,” and with Digg, it allows users (the community) to report, transmit, organize, collect, & categorize that information & reach it to the masses in vast quantities.
Digg does a great job at this, but we definitely need a standardized way to analyze who are visitors are. 20 Mil unique visitors (A real visitor to a Website (versus a visit by a search engine robot) -counted by the unique IP address) per month is some great figures.
Based on the collective Wisdom out there right now, 20 million unique visitors per month, based on the US population alone is 6% of the US population. In 15 months, Digg will have capture the whole US population on Digg.
At 20 million unique visitors per month, according to Stuart Browns AdCalc, http://adcalc.co.uk/ that generates Digg aprox. $73 million per year at 1% CTR using adsense. A $150 million acquisition or sale would be ridiculous. They can make that in 2 years.
If Digg started in 2004, they should have at least 1 years worth of financial statements. Assume 40% in expenses for the ‘05 yr which translates to $43.8/yr given 20 million unique visitors per month, based on adsense revenues alone.
According to CNN’s Business Worth Calculator: (http://cgi.money.cnn.com/tools/bizworth/index.html), if you were to enter $43.8 Million into their calculator, the business is worth $130 - $280 million.
According to this site: Digg’s worth: $19,107,985.38 http://www.business-opportunit.....w.digg.com
All this is based on just the unique visitors coming to the site. So, how are we measuring regular visitors, subscribers, etc? We seriously need to come up with a standard base measurement system, as the unique visitors & the regular visitors are key, and now even more importantly RSS & other type of subscribers. If not, we will have the Wisdom in the Clouds, rather the Crowds. At the end of the day, without real & factual data, how can we improve our content & cater to our readers?
One trick pony? Steele needs to take a look at Metcalfe & Reed’s Law. These are two measures which I think are the foundation to having the collective wisdom to be tracked, categorized, organized & counted….
Digg it?
Jay looks like a drunk in that interview. Messed up hair, dark circles under his eyes and a messed up shirt.
Also, remember Fox would not touch Digg for $150mm so what does that tell you?
And do 70% of Diggs users really use FireFox? I highly doubt that Jay. Digg claims 20mm uniques, Comscore 1.4mm, thats a huge deficiency there.
Unfortunately, the future Digg will not be at all valuable to the techie. Community is what allows people to “Game” Digg. If Digg didn’t allow friends, the number of truly relevant stories near the top would be much higher. Instead, there is lots of junk floating to the top since those with tons of friends on Digg quickly make the front page. What’s worse is that non-techies read the front page only and keep digging it (e.g. today there was a 5 minute porno “how-to” on the front page, come on).
I’m actually back to reading slashdot a lot more now (along with blogs such as techcrunch) … it’s consistent, and if I want to read a lot more I’ll switch over to the firehose (definitely worth the $5 subscription fee).
This woman is a moron and Digg is a ridiculous site. I just checked, the number #1 Digg is “Why I Gor Detention”…please.
She’s really hot, Techcrunch should start a video nework and hire her as an anchor.
BTW check out http://www.yokster.com
Darrin: according to the BusinessWeek article a few months ago, Digg was approaching break even on $3 million in annual revenues. This is nothing to write home about. Digg may be an incredibly hot property, but as a business, $3 million in annual revenues is extremely modest. Perhaps they’ll be able to more effectively monetize, but the fact is that public information already indicates that Digg is nowhere near the numbers you’ve pulled out of thin air.
One of the biggest problems is Web 2.0 is numbers. Traffic and usage statistics are unreliable and always being debated. But this is really less important than revenues and profits, since I don’t care how many eyeballs you have if you can’t monetize them. And when it comes to revenue projections, I think Bubble 2.0 rivals Bubble 1.0 in the lack of common sense. There are incredibly intelligent people out there who, for some reason, seem incapable of distinguishing reality from fantasy when it comes to revenue and market projections.
In the case of your projections, Darrin, Google reportedly made $2.7 billion from AdSense in 2005, and according to USA Today, may pay up to 79 cents of every dollar back to the AdSense publishers. This means that the annual payout for AdSense to advertisers was about $2.1 billion. You assume a relatively high CTR of 1% and CPC of $1.00 to “project” that Digg earns $73 million per year. This would have Digg accounting for nearly 3.5% of all of Google’s AdSense payouts. Very high and would beg the question why Google hasn’t bought them out. So even assuming that we didn’t know for a fact that you were off by about $70 million, logic should tell you that there’s something problematic with your estimates simply by looking at the revenue projections you’ve come up with and comparing them to the size of the market (in the case Google AdSense payouts).
Note to investors and entrepreneurs: if your revenue projections have you making more money than the total size of the market, or you’re accounting for a noticable size of a very large market, your projections are likely flawed. Guy Kawasaki’s November 2 blog entry, “The Art of Projections in a Dotcom 2.0 World”, and some of the blogger responses around the web, have some very timely points about how revenue projections should be done versus how they are typically done.
Moving on to Digg’s valuation, valuations are not as simple as plugging your profits or revenues into a form on a website and getting a number. There are lots of considerations, including overall market projections, comparable transactions, the value of hard assets, debt, etc. I’ve had the pleasure of lunching with a valuations expert who has worked on billion dollar M&A deals and was really blown away to learn some of the nitty gritty details of the complicated analysis and computer modeling that gets done on some of these. In Digg’s case, there has to be a significant risk premium. You have a business that doesn’t have a significant amount of revenues, and it’s unclear how monetizable the eyeballs are (let alone how many eyeballs there are in the first place). Then you have the fact that it has no defensible technology and can easily be imitated, as it has been. Throw in the fact that you have a fairly small number of users that account for a significant portion of the activity, and there’s a track record of some of them leaving or threatening to leave when they don’t get what they want, and I think it’s pretty clear that this is an insanely risky business to acquire, and I’m not entirely surprised that News Corp. has apparently passed on the “opportunity” to buy it for $150 million.
It’s certainly quite amazing how quickly everybody has forgotten how easy it is to project massive fortunes when they just don’t exist. I suppose in Bubble 1.0 it was understandable. The Internet was new and we had a lot of qualified people talking about a “new economy.” In Bubble 2.0, however, we should know better. The old saying “Fool me once, shame on you. Fool me twice, shame on me.” comes to mind. Unfortunately we don’t live in the George W. Bush world of “There’s an old saying in Tennessee - I know it’s in Texas, probably in Tennessee - that says, fool me once, shame on - shame on you. Fool me - you can’t get fooled again.” Don’t get me wrong. There is always real revenue opportunity in any market, but for the most part, we’re in the process of getting fooled, again.
I see you got youtube videos again. Made up ?
Drama 2.0:
Regarding your statement on the Business Week article about Digg:
Yes absolutely Digg may be “approaching break-even on $3 Million in annual revenues”. However, my numbers were not out of thin air, they were referenced based on the analytical “Tools” and stats that are out there which I did reference.
“One of the big problems in Web 2.0 is the numbers” — Absolutely! This is a point I was trying to make, by referencing again, tools & stats tools, (one of which came from CNN Money site where I was able to analyze some numbers.
And “I” don’t assume anything. I’m “again” basing this on tools & information that is out there for the masses: (see the links to the websites).
But if you could see the point I was making, I stated that we need a standard system to not only track but also give accurate information. Because the information out there now is bogus.
And it should be time that we all stopped being “fooled”. These are the points I’m trying to make. Given this open-source community we will take & accept & report on these numbers. But the question is, why are we accepting these numbers?
So, Drama 2.0, at the end of the day, of course there’s a lot more to determining valuation. But every Internet property out there decides to determine there own, regardless of what any other person says. Just as in real estate, websites can be speculative.
Darrin: with all due respect, the “tools” you reference carry no weight. These are not “analytical tools” - they are online forms somebody has put together that let you plug in numbers and get a result. You can plug anything in and get something out. Garbage in, garbage out, in other words. You made up some numbers that you assumed made sense ($1 CPC and 1% CTR), but that obviously, based on the known range of Digg’s revenues, are not valid assumptions. So you received an invalid projection of Digg’s revenues and plugged them into an “analytical tool” on CNN’s website, which oversimplifies valuation, to get a flawed result (because the input was flawed). And then to add insult to injury, you link to an unscientific “How Much Is My Blog Worth?” calculator apparently put together by some blogger. This is credible and represents “analysis”?
Personally, I don’t really care too much about traffic numbers. Alexa, comScore, etc. A perfect solution to the problem of tracking “success” already exists and it’s called revenues and profits. Acquirers should look less at eyeballs and more at how those eyeballs are being monetized. A lot of these popular Web 2.0 properties have been around long enough to at the very least provide some initial validation that their audience can be leveraged to generate revenue in an effective manner.
And for what it’s worth, an Internet property does not determine its own valuation. If you want to sell, your property is worth whatever somebody’s willing to pay for it. Sometimes that number aligns with your valuation; a lot of times it doesn’t. In the case of Digg, it appears that News Corp. didn’t agree with $150 million. But there are plenty of fools out there chasing fools gold so Digg should keep digging for its $150 million. It just might strike the motherload.
Drama 2.0 is right on the money. A real valuation takes days to perform and cannot simply be plugged into a form-field. There are multiple ways to valuate a company as well; DCF and EPITDA being the most common (look them up). There is a complex formula to all of this, revenue, growth rate, debt, projections, industry are only a few of the factors.
Let’s look at the facts though: $3MM in revenue off of 20mm monthly unique visitors is ridiculous. Digg claims they have the same traffic as some of the top news sites on the web. Do you think CNN.com, or FoxNews.com could operate their web businesses off of $3mm in revenue? Let’s get real.
And for the record, the industry average CTR for banner ads is .30, not 1%. And I can bet you that Digg is well below the industry average CTR due to a high pageviews per visitor ratio - and that is a bad thing.
Regarding technology, the only asset which Digg seems to own; it’s easy to emulate unfortunately. The real advantage they have is their traffic since they own no content, and because their stories are voted to the front page by the readers, that takes the control away from the Digg management. And that looks very bad to someone that might be interested in purchasing the site.
1) Low click-through-rate
2) Traffic you cannot control
3) Technology that is easy to duplicate
4) No actual content that you own
This does not look good for Digg. They are in a real bad situation. And of course they have investors and 20+ employees to take care of, so they need to sell the site for a large number in order to make any profit. They should have sold it once they were on the front page of Business Week.
I agree with Drama.
It’s interesting how there’s been a lot of Digg press coverage lately. Feels like strategy.
I think they need to hurry and make their move, some kind of move. I’m probably wrong, but it feels short lived and relatively easy to duplicate their solution.
I can’t really figure out why Digg is so popular. YouTube and MySpace are damn addictive, but I can’t spend more than 1 min. on Digg. Trust me, I try and then try some more. But I just don’t find this website interesting
To put things in perspective, my landscaping company that mows my lawn does $4m in annual revenues.
They were able to grow that in less than 5 years. I think they are easily worth $150m or more.
Eyeballs / uniques do not equal big paydays in real revenues. Inflated acquisitions, maybe. But not when it comes to making serious cash.
Why Drama 2.0 I think I love you…..
Thankfully I’m not the only one who still believes a measure of health and profitability is derived from actual revenue streams…
I am sooooooo sick of hearing about Digg. I’m serial.
Digg is a WORTHLESS site!