One thing that has become a certainly in our little tech world - a few months can’t go by without rumors surfacing that a sale of Digg is imminent. CEO Jay Adelson and cofounder Kevin Rose are in a perpetual rumor cycle. The problem is, they seem to be the ones at fault for the rumors. The reason? They’ve been trying to sell Digg for nearly two years, on a nearly constant basis. And the guys they’re pitching keep leaking it all to the press.
Rumor History
- Blogger Kevin Burton was infamously first to bat with a statement that a sale of Digg to Yahoo was a near certainty in January 2006, for $30 million (he was wrong).
- We know with a high degree of certainty that Digg did try to sell itself to Yahoo, and probably others, for $20 million or more in May 2006. No offers were made, according to our sources.
- By the end of 2006 the price had increased - they were asking for $150 and turned down soft offers in the $100 million range. At the time, Comscore said they had just 1.3 million users.
- We have confirmations from potential buyers that Digg continued discussions throughout 2006 and into early 2007, looking for at least $100 million, but no offers were made.
- Over the last few months Digg has been shopping themselves again - and the price is at least $200 million according to a source who’s been pitched. Again, no offer.
- Now, we’re getting reports that a sale is imminent, in the $300+ million range. A source close to Digg says they’ve heard nothing about this. That doesn’t mean it isn’t happening. But we have no independent information that this time, the rumors are true.
Hire A Banker. Sell This Thing, Already.
In the past, Adelson has always said they have never tried to sell Digg. He says they will meet with companies when approached, but they are never the party trying to make the sale. The problem is that too many independent sources have told us that Digg has tried, hard and persistently, to sell to them. The company has been on the market for nearly two years. There is just no way to deny it.
Frankly, I don’t understand why they are so anxious to sell it. They’ve turned the corner on usage - most of the submissions and traffic today are based on non-tech stories. There is a real argument that Digg can be a mainstream news sorting service. Comscore shows them at 11.5 million monthly uniques, with a nice growth curve (see below).
There is no good reason to sell Digg when it continues to grow like a weed. But that doesn’t seem to deter Adelson and Rose from trying to dump this thing at every opportunity. They’re always asking for more than people want to pay, however, and they haven’t been able to create a bidding war to jack the price up.
Perhaps the most recent rumors are true. If they are, I congratulate the Digg team and investors. But if the rumors are as true as the previous ones (meaning not at all), then I suggest they hire an investment banker to put together a proper pitch deck, approach the key buyers, and get a real bidding war going. That’s the way to sell a company for an absurd valuation. The slow burn approach does nothing but create a never ending cycle of rumors.
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Does anyone know how much revenue (or profit, if any) digg makes?
‘The slow burn approach does nothing but create a never ending cycle of rumors.’
Perhaps being denied multiple times does indicate something? Imagine the website as real estate property; if a house is in the market for a while and does not sell, the history doesn’t go away. prospects start asking questions.
If the intention of selling is true, the drag certainty isn’t helping any more. Somebody digg deep into the Microsoft contract, or terms of investors. there has to be something no-so attractive for new owners.
PLEASE NEVER SELL DIGG!!
What would have happened if Google had been sold?
Digg’s allure is it’s independence from the establishment. The nitty gritty people’s news. It can expand vertically and develop into something even bigger.
This is different from a MySpace or YouTube - this is more of a revolution and should be completely free of the establishment.
lol @miss universe, digg and google don’t even belong in the same sentence
“Pigs get fat and hogs get slaughtered” Just sell it, cash it, and move forward… ! We are approaching the end of the Web 2.0 Cow-milking-cycle !
hey, they should hold to the site, if what you stated is true they are better off holding to the Business for 2 or 3 more year, just read the story about The latest forecast for Internet advertising, they may be holding 1 or 2 Billion dollar’s…. unless they do not believe in their own business plan…….
I heard Digg will join Opensocial.
@Rick: I laughed out loud at your post because it’s true.
Maybe it’s the whiskey talking but with the markets the way they are I’d think they would want to flip it at this point.
They should definitely sell, and soon. I’ve been using Digg for a very long time (in Digg years) and I think I speak for most of the older users that the site is losing something. Duplicated stories, SPAM, etc are starting to get to me. There was a story on the front page today talking about how to be a “power digger”. Basically it said digg articles, add friends and then send a shout to them asking for them to digg your articles. I use to LOVE this website, but now I’m not so hot about it. I do continue to read the news on the front page but I just wish it would go back to how it use to be, before it was too popular and people abused “the community”.
NOBODY on digg clicks on ads or has any interest in them -relevant or not. They’re quite lucky to have Microsoft on board to give them the 200-300million dollar leverage over any possible deals. Until the day prospect buyers figure ways of monetizing from the digg community, Kevin and Jay have to come to work everyday and pretty much do what they do. haha
Frankly, not even NY Times or Washington Post would need to dish-out big bucks as one of the techblogs has suggested. They’re already getting major traffic, for free!
Kevin should settle for the best offer and run with it.
How many off you click on the adds here (Tech Crunch, site) I am sure digg has a similar conversion rate……. who knows what the value of advertising in the web is???? as of today it may be undervalue or overvalue…… can’t wait to see…..
Kevin’s probably too bored of Digg. Time to move on to his many other babies.
I’ve always thought Digg should be sold, I even gave them a break and watched a few months ago, when they added social networking features to digg.
They’ve had their shot, it’s time to sell.
$150m for a user base that is smart enough not to click on ads…
Don, advertising is more than clicks. Otherwise we wouldn’t have television commercials. Branding doesn’t require clicks.
What about the argument that there is no value in Digg?
Their user community is the worst in the world ….. Digg actually hates it users. I mean after all they did try rather hard to screw the company over on the whole HD DVD hexadecimal thing. I mean who wants to buy a bunch of users that are for the most part douches?
Digg has dugg and they have built them seleves the enviable pariah of the industry .
I don’t click on coca cola or mcdonalds. i drink and eat sometimes.
Why does it sound like Arrington is just jealous that these guys will cash out at some point and all he gets to do is write about it?
I’ve been following Digg for sometime, above and beyond any other company - and I highly advice Digg to sell - now
Digg… Digg. people(oh digital designers i mean) are still using digg. Being as offensive as possible, digg sucks. Not being a photoshop user interested in the top 10 web palettes, i guess though i can’t really comment on this. Get a feed reader, watch the sites you like and stumble upon the rest. Digg was cool when it contained the stories i liked but the concept is fundamentally flawed. Not everyone likes the same things… duh. sell digg, make out while you can. The
I nternet has moved on.
@john b goode
Why will Arrington be jealous, are you, I bet he makes more than you…..:)
@ John
Puhleez, that’s an absurd conclusion… First of all Mike will probably cash out at some point himself and secondly he is 100% correct, the Digg for sale rumors are starting to be irritating.
The main thing Digg has going for it (that can’t easily be duplicated) is the intangible ‘cool’ factor. The irony is that any sale to a megacorp means a loss of this coolness. This is especially true if Jay/Kevin don’t come along with the sale for the long term (which is probably not what they want).
Catch 22 if I ever saw one.
Digg is fantastic - they have huge amount of traffic and that’s what I like about them..
Probably $100 buy is really worth it.. but what would they be buying? Is it really quality site?
Well said … but, it’s really only diversified out of tech news and into tech and Ron Paul news.
It would be intresting to see an EU company, or an Asian company but Digg.
US internet companies expand aggresively overseas but not vice verse. I think some foreign company would do good to shake up the US market.
So how about it Baidu.com?
All companies are always for sale at a certain price.
At $300 million - each Digg unique visitor is worth $16.30. More analysis and data here: http://blog.compete.com/2007/1.....orth-1630/
The day that Digg becomes the preferred source for news is the day that…
(to the tune of John Lennon’s Imagine)
- Ron Paul is president
- There are more atheists than christians
- Females are 2nd class citizens just like in the Middle East
- Ubuntu outsells Microsoft
- The Digg effect knocks out electricity throughout California
- The 9/11 conspiracy is finally revealed via Techcrunch link
I wish them luck in selling it.
But given their revenues come from a sweethart–and temporary–ad deal with MS, whoever buys it at anywhere near that price will be proving the greater fool theory.
Jason–the curse of popularity. People with extreme views will gravitate towards soapboxes big enough that people will listen. As reddit’s traffic picks up, it has become more Digg-like. Of course, Conde paid a reasonable price for it.
There’s definitely a peak where the Internet guys have realized that Digg isn’t worth buying but that old-media guys don’t understand what’s going on and may way overbid. If they can, Digg should take the money and run before the old media guys catch on too.
[TC, OTOH, provides some real value. I think CNET would be dumb not to buy it if Mike is willing to part with it at a reasonable price.]
@30 v true.
I don’t think Digg covers its server costs with its revenue.
Honestly, if you are a web master - you don’t want to be dugg - its not worth it.
Its a great site if you are launching a video games console and want publicity.
I would sell for whatever I could get - Digg is a bit of a white elephant to be honest….
yeah I would of off loaded it a while ago. Lets face it, it will never be a facebook or a mySpace and the feature set is almost complete. Dump and run. I am not sure how much is left for the founders?
Dump it. It’s turned to a big piece of crap now.
Digg is like that little dive restaurant that nobody except a select few know about. Once the word is out, it goes to shit trying to please everyone.
“Does anyone know how much revenue (or profit, if any) digg makes?”
Thats just it - last I heard, after all these years digg still isnt making profits (someone please correct me if I’m wrong).
Buyers are more savvy now, you need to have a proven business model.
Still in negotiations …..
“Google is not ahead of us, In the area of search specifically, Google would lead.”
http://fakesteveballmer.blogspot.com
I’ve lost interest in Digg since as the user base gets more inundated with the masses the links, topics and worst of all headlines are less appealing. Eventually people will start to mimic the traditional media’s approach that is scare tactics and instilling fear to gain attention and popularity.
Really, Kevin should sell so he can buy a condo in San Fran like he talks about on Diggnation before the sites’ membership stagnates. Whether or not you sell for $100M or could eventually sell for $1B is really a simple choice to make. It would be awful to turn down offers and then realize that they should have sold for a mere $30M when they had the chance because no one will touch them.
Maybe they are just retards like their readers.
Does anyone know if they’re making money from the advertising or if they are actually giving the current advertisers good value of their money?
I wouldn’t be surprised to see a company like the The New York Times buy digg. If you remember, back in 2005 the Times Company bought About.com for $410 million in cash. It seems like a good fit to me, especially for a company whose newspaper business will continue to be hit by new online media sites like digg.com.
I really don’t see Microsoft buying digg, especially since half of the digg community seems to hate Microsoft. I’m sure some of these core users would jump ship if they did in fact purchase digg. Although stranger things have happened, so you never know.
Another example of a web 2.0 company whose valuation is based on eyeballs.
Their profiling stuff was supposed to make it sticky, but I don’t think so.
No wonder they are trying to sell it before people clue in and understand there is a reason they have been unable to monetize it.
Another poster boy for a bubble if they get the kind of numbers being tossed around.
@Mik If digg is real estate, they would fix it up to sell. I don’t think there have been any site upgrades in a while. The rest of “Web 2.0″ is moving forward and growing. Shouldn’t digg keep up with the times?
Mike - one thing I didn’t get from you analysis is WHY you think people aren’t buying Digg, aside from the price alone.
As you would know, there are many ways to structure a deal. It doesn’t sound like the company is that highly coveted.
Make sure to Digg this story!
I left Digg because of the hostility of the members as of late. Their new “friend” system was an afterthought and makes the site far too easy to spam. I move on to http://www.tagsum.com . The developers have some really innovative ideas, great features, and revenue share to actually reward solid submissions.
PLEASE DON’T SELL!!!!
First rule of selling your company, do not talk (publicly) about selling your company. Doesn’t play out well.
kevin, don’t sell!!!
http://digg.com/tech_news/Kevi.....igg_PLEASE
please, do not sell!
digg + late sale = friendster
Digg is worthless, it is regularly taken over by a bunch of elitist liberals and Paulbots. If they sell it they are getting away with alot of money for little return, unless thinkprogress or rawstory buy it.