It seems like every other month rumors of Digg either being acquired or being shopped come up (see our November summary here). VentureBeat has word that Digg is getting serious about a sale and has hired Allen & Company to shop the site for $300 million.
Investment bank Allen & Company has been involved in a number of high profile acquisitions and mergers previously, including Seagram and Universal Studios, Hasbro and Galoob Toys, and Disney and Capital Cities/ABC. An interesting tidbit on the company: it apparently doesn’t like publicity to the point that it doesn’t even maintain a website.
The obvious question is will Digg sell with a $300 million valuation given that it has been on the market (quietly) for months with no interest to date?
If anybody has a spare $300 million and would like to buy Digg, Allen & Company’s contact details can be found here.
300M…what multiple is that of digg’s annual revenue?
Wow, congrats that is a high price. lucky for them, but i still think it is kinda low if you compare that one adult site was sold for a lot and digg is really popular and a good site.
Whoo, is this for real?
At $300mill = ~$75/registered user?
~250 mill page views/month
–
For the uninitiated and those who enjoy goldilocks analogies, where does this put the valuation of digg (too high, just right, too low)
(I’m going off of some older numbers and fudged them a bit)
the $300m guarantees Rose fanboys will stay?
The users should buy digg. That would be sweet.
I think more important than the price itself is who purchases it. If the wrong company purchases Digg, hardcore Diggers will jump ship to other similar sites. It’s a tough buy because so few of the companies with $300 million to spare can actually convince the users to stick around after it’s sold off.
I personally find most of the articles on Digg to be rubbish. I don’t frequent the site as often as I used to due to the high amount of useless articles that appear on the site. I consider myself a reasonable savvy, well educated user - the ‘norm’ I suspect. I can’t be the only person who thinks Digg is 90% crap and 10% ’sometimes’ worth reading.
I doubt they’ll sell for anywhere near $300 Million. Has anyone ever tried watching an episode of Diggnation? Unbelievably bad!
The digg 2 years ago might of been worth some nice green. However, the digg today and morphed into a giant out of control community populated by trolls and non-tech people. Meaning it is completely opposite from how it used to be in its prime.
It’s a damn shame the had to sell out and open it up to 3468376483764 other categories.
@AG
Good point - I can only imagine what would happen if, lets say for example, MS/_other_large_corporation_ purchased digg
The furor over the DMCA issue several months ago comes to mind…
Now that might just get snatched up by the almighty Google!
Thank You
1. Create crowdsourcing or social networking site.
2. Make yourself visible and remind the users how much you love your job and them.
3. Wait until userbase exceeds 10 million.
4. Sell.
5. Profit!
Please let digg know that I might be interested in purchasing them. Right after I make my next house mortgage and car payment.
your fellow worker,
angela hayden
art goddess
digg just isn’t that interesting anymore.
They should have sold it a few years ago when it was actually a cool site. Anyone have figures on how much ad revenue they are currently bringing in? I have a feeling it would take a very long time. Here’s my fuzzy math:
250,000,000 pageviews x .02 (average clickthrough rate on ads) = 500,000 clicks per month @ $1 per click = $500,000/month = $6,000,000 a year in ad revenue. I guess it would take 50 years to make $300 mill. But that’s not putting a lot of things into consideration such as growth and increases in ad cost, additional monetization, etc. Does this sound right to anyone?
Waiting for it to go downa little more!
fakesteveballmer.blogspot.com
If the company is acquired and K Rose leaves, I think it will be a good thing. The guy has sort of this weird co-dependent following that makes visiting the site feel icky and awkward.
Hey, I think I will pimp my site the same way Kevin Rose did.
“Hey ladies and gents, there is this great site called Coders’ Hangout. It’s a place for programmers to hang out. So be to sure to visit *COUGH..mysite..*COUGH” Coders Hangout! They are da bomb!”
http://codershangout.com
Now, send me a check for $300 mil.
Dang, it’s hard pimping a site when you have free publicity to millions….
Yeah, I’m a little jealous.
cbmeeks
@rfre - isn’t $1 per click a bit high?
Problems with Digg Structure is
1) Most users are around and gone after few months, short-term loyalty with revolving door
Has failed to create Killer app
2) The front page posts are recycled news of web, nothing new there
3) Getting to front page remains domain of power users
4) Site has failed to innovate since forever
5) Mob mentality crowd which creates abusive comment section
6) Has not kept up fast web2 players like facebook, youtube, etc
7) Model can be easily copied, and even improved on very quickly
9) Lack of focus and lost that uniqueness of early success year
10) That big old creepy house on web2 avenue, no one wants to buy
@rfre
I think your head is in the right place, but your assumptions are way off. As chrisw notes above, $1 per click is very high (for content based plays, though not for actual search terms). More importantly, your estimate of 2% average CTR seems very high to me. That might be average CTR for some highly targeted ads (e.g. paid search), that is crazy high in my experience for a site like Digg.
Digg’s traffic has increased lately and most of 40 year old virgins from last year, aka tech heads, have disappeared. Stil 300M Peso es tu much dinero.
i get 25 million pageviews per month. i’d HAPPILY sell my site for 10% of $300M
I heard that Rupert Murdoch is going to buy Digg and then start selling position on the first page to the highest bidders.
$100M tops. No revenue and no real revenue model. Perhaps Microsoft buys them cuz their web business is terrible. Does anyone ever go to MSN.com?
@stone
No.
You guys are probably right. That makes a $300 million pricetag even more of a headscratcher.
Kevin Rose is hero worshipped over at digg but he can’t care too much about the community if he’s actively looking to sell it.
They will probably sell to the company out there that needs the eyeballs to show growth and that is the least in touch with the internet.
John - I would disagree on at least one point…
3) Getting to front page remains domain of power users
Not true - at all!
It’s a negative self-fulfilling prophecy to make that claim.
I’m hardly a “power user” (submitted less than 40 stories). ~25% of them have gone to the front page, which is as good a ratio as some prolific diggers have.
Now if you want to call me a “power user” since I’ve made the front page, so be it, but I think that’s pushing it a little bit.
Now the interesting bit is this: All of those stories that have made the front page were my own content, from my own website, and it’s pretty clear that I was self-promoting my site.
That’s right! I broke one of the biggest “rules” of Digg by submitting my own content as a story, and it still hit the front page! Go figure. Nowadays, I hardly get a chance to submit my articles anymore since they usually get picked up pretty quickly and submitted by other people.
The fact remains that if you submit good, original, and intersting content to Digg (even if you break the “rules”) - it will hit the front page eventually.
It’s worked just fine for me.
Wayne …. what is your site and your digg ID?
It is amazing that many people miss the key fact that the only feasible business model for Web 2.0 sites is advertising. So the analysis by rfre is on the right track, though optimistic. This means that the $300M for Digg would require sky high P/E rations. I cannot think of any justification for paying a massive premium — even high growth has its limits and it is highly doubtful that they can dominate a sector like Google has.
During Bubble 1.0 it was pretty clear that the valuations were based on vapor and I hope that we do not repeat the same mistakes and create a Bubble 2.0.
$300M is no more incredible than $15 billion for Facebook, perhaps even a bit more credible. They need to get off the Google AdSense crap though. Here’s another look at the math:
250,000,000 x 10 epm (earnings per thousand) = $2.5 MM per month. That’s $30MM per year in revenue. Give it a valuation of 10x revenue and you’re looking at $300M. Any site that can’t get at least a 10 EPM is peddling rubbish.
Based on the first page “news” on Digg of today, it is more like many of the joke sites and the advertising pageviews on it are worth as much.
I don’t see a real fit with any news organizations with this one.
Why won’t the owners take the IPO route and let the markets decide if the company is worth 300 million or more?
1.) Having looked into a Digg clone, Pligg, and wondering what the marketing/money model is on a rating site like this, the only conclusion was some sort of advertising model. Most opinions that I have read on this was that a voting site is a losing proposition for advertising like that.
However, traffic does cure a lot of evils.
2.) I think that this is probably more serious this time around given that Google is rumored to be starting some sort of social voting system for search results and the founders of Digg want to get out before they have nothing left of value.
Ultimately I think that the “voting” system will be incorporated into the search engines directly and that Digg and Reddit and others like that will become the fads that they are.
who will buy them and why?
i am totally perplexed the only company who might buy them maybe is a advertising firm since some of the info digg throws up is useful to gauge what is a samll fragment of the web following and this might help them with market analytics etc
But I dont see a big internet player buying them since it will be a bad bad investment for them to justify but maybe a private equity will pick it up
and their asking amount is way too much to be even justified with no revenue model
Yea, that makes sense. I forgot they partnered with Microsoft and are selling on a CPM basis. Highly targeted ads can probably fetch a $20 CPM or more. So I guess $300 million doesn’t sound so crazy afterall.
300 Million only !!
Consider Digg a somewhat large community that has the tendency to visit sites that make it to the home page. How many visits a home page usually generates? I’ve heard about a few thousands… Perhaps 20,000 ~ 30,000 top? Multiply that by 4 to get to the high end: that’s your community. Nothing compared to what sites like Facebook or even less popular/buzzy sites generate. Digg is above all, buzz because when those 20~30k users “move”, the ground shakes, but it is still 20~30k or whatever the number ma be. It’s not millions. Not even one.
So where all those other high numbers we sometimes read about come from? Millions of visits, and reg.users, etc…
My guess is that everyone and their dogs are submitting content to Digg. They’re not really loyal, frequent Digg users, they don’t read the home page or anything else for that matter, they just submit stuff… Then they reload those pages again and again to check those counters… Sometimes some groups may submit and digg each other. Again, no value to the site other than gaining page views, as those activities mean little or nothing to Digg other than accumulating page views. So my guess is that the majority of people who visit Digg do not READ Digg.
If a company is interested in Digg, they will ask for all those numbers and more. They will get a much better picture of what’s going on than my little conspiracy theory. If those numbers had been actually good, Google, Yahoo, MS et al would have not let it go. But they did. So I’m going to think that what I’m saying, though it might be somewhat off, it’s not by miles.
There is an old M&A adage ‘companies are bought, not sold’. Hiring an investment banker to shop it sounds desperate. If there were a buyer, one would quietly retain a banker and get a deal done. The noise around this deal sounds like fishing/hype… and we all keep saying Bubble 2.0 is near, right?
if Digg is worth $300 million (or Facebook worth $15 bn) then all the subprime mortgage CDO’s are money good. It’s interesting how investors never learn from their mistakes.
I think you need a lot more data about Digg to be able to evaluate the price range. Using guesses while good for discussion it will not give a clear idea without the actual figures.
I agree with Mark @40. This reeks of desperation. The great Web 2.0 ponzi scheme marches on.
If anyone can make that happen, it’s Allen & Co. They’ve been behind some of the bigger Internet and New Media deals of the past few years, but have chosen to stay out of the limelight.
Wow, That would be an amazing buy, Bill Gates maybe
if it is for real
Dale
http://dzrbenson.com/blog/
I just don’t see it. But hey…..I am not an expert. Good luck to them anyway. Get it while you can. Whoever buys them clearly are looking to buy the user base because digg is not what it used to be.
Ok, say Digg was what is was a few years ago when it started, we all knew and loved Rose for it. Just like everything else on the internet it is/did eventually get ‘old’. There was no reason for the original users to stay active there and has slowly gone down hill. You can obviously tell that 40 somethings with way to much money are trolling the internet looking for stuff to buy. Digg is a household name these days but why? I used to check everyday even hour for new diggs that were real. Now i click on a digg and it’s a picture of a cat. If they get $300m fir that site great deal for them, buy a new computer. I doubt it will happen. Internet rumors come, cause a big deal and then fade away. We’ve heard about Digg allegedly being sold then you never hear about it again. I’m not saying it won’t, it will ofcorse but not for $300m, one of their sons will slap their dad in the face for buying Digg because they wont be able to turn it into anything.
$300M seems to be very high prize considering the deal.
digg has it’s “digg this” buttons everywhere, including I think the New York Times, but $300M? I used to like digg, I hardly ever go (since Facebook grew)
Right price. Right choice. Digg on.