We’re hearing reports that Propeller, the Digg-like news site that was once Netscape.com, has been holding a severe round of layoffs that is reducing its workforce to only a fraction of its former size only two weeks after relaunching the site. It seems that most of the cuts consist of Propeller’s Scouts and Anchors - paid employees who actively monitor the site to pick out the best stories and ensure quality control of user submitted content.

According to our tipster these layoffs have been long expected - it was simply a matter of when. AOL’s budget cuts have extended to Propeller, and rather than reduce the pay rate of management, Propeller has simply downsized its more expendable content control team.

Propeller uses this team to differentiate itself from Digg, which doesn’t advertise an active role in the editorial process and tends to sometimes display stories of lackluster quality. The budget cuts may save money in the short term, but in downsizing its editorial team, Propeller is making itself into even more of a Digg clone.

Propeller has had a tumultuous history. AOL initially launched the site as a “Digg killer” at Netscape.com in June 2006. A little over a year later, there were rumors that the site was being shut down in part because of domain disputes. The site was finally moved to Propeller.com in September 2007.

Update: Ryan Budke, Propeller’s Program Manager, responds in the comments:

“Well, as Propeller’s Programming Manager and the one who runs the aforementioned Scout team, I can say these reports are being blown a little out of proportion. We did let a few Scouts go, but it was 4 out of about 35, so that fraction we were reduced to is roughly 9/10ths.”

Budke also says that while the Anchor team has been substantially downsized (only about 2 people are currently working full time as Anchors), this was a result of gradual attrition, not because of budget cuts.

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Propeller, AOL’s Digg-like news site, launches version 2.0 later this morning. The site sports a new design and logo and now has a mascot - described as “part professor, part citizen journalist” (see image below).

But the biggest feature change is the removal of a pure Digg-like vote count. In its place is an algorithm based popularity ranking of 1-10, which takes into account “many more aspects of participation” when determining popularity. Voting on a story is now called the more nebulous “prop it.” The service has also cut down the number of news categories. Those remaining include Arts & Entertainment, Business & Finance, Family, Humor, News, Science & Technology, Sports and Style.

Taking a page from the Yahoo Buzz playbook, headlines from the service will also be integrated directly into AOL and AOL News.

Propeller has had a rocky history. It first launched in June 2006 under the Netscape.com domain as “a better Digg” in that paid editors chose the top stories from user-submitted and voted links. Soon the site was paying top Digg users to move to them.

In August 2007 rumors circulated that the site was going to be shut down. We called it “Kaput” last September, but we were wrong: the site would live on under a new domain, Propeller.com.

Netscape traffic promptly spiked downward, but Propeller, led by general manager Tom Drapeau, filled the gap and has had steady growth since then.

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Update: screenshot and additional details of Publish2 is here.

New startup Publish2 hasn’t launched or even entered private beta yet, but the company has scored $2.75 million in funding. The investor, Velocity Interactive Group, believes in the idea so much that they put both Ross Levinsohn and Jonathan Miller on the board of directors.

Publish2 is talking freely about the product, they just won’t show it to anyone yet. The idea is to create a news resource for news rooms, who are increasingly stressed due to headcount cuts and competition with blogs.

The main service will be a Digg-like social bookmarking site, says CEO Scott Karp. Like Digg, anyone can submit a link to a news story. But the only people who can vote on stories are pre-approved journalists. The goal, he says, is to avoid Digg’s spamming issues and ensure that only quality news can get to the top in any category. He says it’s “Digg, powered by journalists.”

It’s sort of the opposite of Yahoo Buzz, which launched last month, in its approach. Buzz only takes links from pre-approved sites, but anyone can vote. Top stories must pass through an editor, though, before going to the Yahoo home page.

It seems that everyone has tried one variation or another of Digg. In addition to Buzz, AOL launched Propeller in 2006, which also required editors to approve top stories. And there are others with models that fall somewhere in between.

Publish2 will also allow newsrooms to use the service to create customized headline feeds Presumably the quality will be high because only journalists get to vote stories up. That may be true. But it’s just as likely Publish2 will end up a ghost town. One of the main reasons for Digg’s success was the viral way stories spread. People send stories to their friends to get them to Digg them up. Those people, seeing Digg perhaps for the first time, may come back to read the news. Publish2 won’t have that benefit.

We’ll withhold judgment until the product launched and we can take a look for ourselves.

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Yahoo launches the much anticipated Yahoo Buzz tonight - a Digg-like site that takes stories from pre-approved news publishers (100 to start) and let’s users vote on stories and push them up to the top of the page.

To see it in action, click on the buzz button at the end of this, or any, of our posts (update: button functionality won’t be live until Tuesday). Like Digg, the more users that vote for a story, via the embedded button or on the Buzz site, the higher the story goes on Buzz. But user voting isn’t the only factor in how well stories do. Yahoo is also looking at their search engine logs in real time to determine hot or breaking news. Stories on that topic will get an extra boost in the rankings.

But there’s another part of Buzz that will get publishers excited - every day a few of the most popular stories will also be featured on the Yahoo home page. Yahoo has been experimenting with linking to third party news directly from their home page since last year. In one case, the Buzz team told me, 2 million visitors were sent to Wired for a linked article in the two hours it was on the Yahoo home page. 2-3 stories from Buzz will go on the Yahoo home page daily.

Buzz has categories including entertainment, world news, U.S. news, sports, business, health, and travel. Images and video are also separate categories.

Of course, many publishers won’t be able to handle that kind of traffic flow. But Yahoo is also prepared for that. Smaller sites will only be linked on a fraction of the total home page views - in effect, Yahoo is turning down the firehose for those that can’t handle it.

Yahoo isn’t the first large company to try out the Digg model. In mid 2006 AOL relaunched the Netscape portal as a Digg-like site. AOL eventually moved the service to a different domain name and renamed it Propeller. The service has about 3.8 million monthly unique visitors (Comscore), compared to about 12.5 million for Digg.

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Social voting outfit Mixx has taken $2 million Series A1 in a round led by existing investor InterSouth Partners.

Mixx offers a category based social voting service that competes with sites such as Digg, Reddit and Propeller. McLean, Virginia based Mixx was launched in September 2007 with talent including former executives from Yahoo!, AOL, USA TODAY and The Associated Press. The company has regularly launched new features in an attempt to stand out in a market place with strongly entrenched loyalties to existing players.

Mixx added the LA Times to its investor group in December. Total funding to date is $3.5 million.

(via VentureBeat)

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Social voting remained a popular past time in 2007 with sites such as Digg more than tripling their audience, but some sites fared better than others according to data from comScore.

One name with a long history is the AOL owned Netscape.com. The site was relaunched in June 2006 as a Digg clone with high hopes that a new generation would use the once great brand as an alternative to Digg. The strategy failed dismally, but the termination in the end was even worse. From November 2006 through to August 2007 (the last full month as a Digg clone) Netscape’s traffic dropped from 305 million pages views a month to 137 million, a 55.1% drop in 9 months. AOL dumped social voting on Netscape September 19, and things went from bad to worse, with traffic dropping in August from 137 million page views to a dismal 38 million in November, down 72.3%.

The new home for the Netscape social voting experiment Propeller performed reasonably, but failed to capture most of Netscape’s previous social voting audience. With 13 million pages views (according to comScore) in November 07, Propeller has managed to pick up less than 10% of Netscape’s August audience.

The big winner once again in the social voting space was Digg. Starting at 11 million page views in November 2006, Digg saw a 318% increase in traffic to 46 million 12 months later. Reddit fared well increasing from 2 million page views in February 2007 (the first month it was big enough to be recorded by comScore) to 9 million in November, although October was a highpoint with 16 million page views.

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Michael Arrington wrote on Saturday about a new Digg competitor called Mixx, and how it was attracting “Digg Refugees.” Digg clones or similar social voting sites are far from new, but given this new competition does Digg still come out on top? Since reading Michael’s post I’ve spent time using several Digg-style sites to see if I could find the answer.

Numbers

Numbers should never be the final arbiter of what is good. Windows is still the most widely used operating system world wide but many would argue it is far from the best; however numbers help, and as comScore demonstrates Digg is still the most popular social networking site when compared to three competitors: Reddit, Propeller and Mixx.

It’s hard to make out Propeller on this chart, but with a microscope they are a small blue dot just below the October (green) line for Reddit. Despite some of my previously harsh observations on the service they are doing remarkably well under their new banner; if Reddit sold for a rumored $12m in October 2006, Propeller must be worth around $30-50 million now based on the traffic alone. Mixx is soo small it doesn’t register on comScore’s metrics.

More people use Digg, but does it make them the best service?

Content

Content is something that benefits from a bigger user base, and again Digg has the advantage here. When Propeller launched (originally the old new Netscape) then head Jason Calacanis promised a better version of Digg because the results and top stories would have the guidance of paid guides. It works as much as it provides a broader picture of news stories, but it fails in the same way that any non-democratic decision making process does: it doesn’t always have the support of many. It’s not unusual to see stories on the top of sub-sections (say Tech) on Propeller that had a handful votes despite the site having a reasonable user base that usually sustains stories on mid-range 2 figure sums. If it has two votes, should it be on top? It wouldn’t be on Digg.

Reddit has the problem that despite it providing perhaps the biggest difference in terms of the content and links provided, it appears to be beholden to the political campaigns of Ron Paul and Dennis Kucinich. I find some interest in both campaigns given their interesting and often inspiring use of the internet as a campaigning tool, but I’d figure that I’m probably in the minority on that one.

Mixx is getting there. Since Michael’s post the number of people voting on the site has definitely increased and even former Netscape head Jason Calacanis is now participating (a Mahalo link was the top story as I wrote this post).

Usability/ Looks

Appearance is subjective and no two people usually agree on any given site, but there’s just something about Digg. Whether it’s the nice big headlines, the easily accessible voting box and bury buttons, the colors and layout that just work; it could be that it’s a case of familiarity but I just don’t see the same on the other three sites.

Reddit is functional and simplistic, which works for them, but it isn’t pretty to look at, and it’s probably not the best first impression for new users either.

Propeller tries to sit somewhere between Digg and a functional news sites, and it doesn’t do a bad job, but I’ve never felt as comfortable with it. Headlines are smaller and visually it doesn’t feel quite as accessible as Digg; but having said that this is a subjective view only, and others may well disagree. Mixx is remarkably similar to Propeller, soo much so (once you get to the sub pages) that I’d suggest that Mixx isn’t a Digg clone, it’s a Propeller clone.

Overall

One often heard criticism of Digg is that the headlines can only be understood by “insiders,” those that know tech. It’s occasionally a valid criticism but over all Digg’s biggest strength is its depth and variety of content. The politics pages don’t require an in-depth understanding of the latest screen manager for Linux, nor do many of the sub-categories. Redditt is Digg’s closest competitor appeal wise, but it doesn’t have the depth and variety of news headlines. Propeller and Mixx will have the greatest appeal to a new, non-geek/ non-first adopter audience, but that very same audience may not be quiet as embracing of social voting itself. It’s the right demographic to appeal to because it’s an untargeted audience, but Digg continues to gain new followers as well as its audience broadens (despite the small decline in the comScore graph); call it a race for middle America.

On what I’ve seen I still believe Digg to be far and away the best social voting destination based on its current competition. However all competition is good and I do encourage others to try and use other sites; it’s the best way of keeping Digg honest in the future.

Update: I’ve just noticed Allen Stern is hot on Propeller. Read here.

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New startup Mixx, which went in to private beta just two months ago, may be finding itself with the right product at the right time. Digg users, including top contributors, are showing an increasing amount of frustration with the Digg community, and many are leaving. Conspiracy theories that Digg auto buries stories with certain topics or linking to certain sites only compounds the problem.

Some users eventually go to Reddit, Propeller or any of a number of other Digg-like sites. But a disproportionate amount of them seem to be heading to Mixx, and writing about their choice.

Dave Eaves gives Mixx a thumbs up and says “I have already had quite a lot of success with getting my submissions voted on, this may be partly due to the fact that many of my digg friends have joined the site.”

Vandelay Design says “Unlike 99% of the other Digg clones, I think Mixx has a real chance for success…Mixx has a much more positive audience than Digg. It always amazes me that even the most popular and highest quality articles can get so many negative and unnecessarily degrading comments on Digg. So far the users of Mixx have proven to be quite a bit more pleasant, something that I know will be welcomed by most users.”

Finally, JD Rucker notes that a lot of top Digg users are at least experimenting with Mixx. And he mentions specifically that Greg Davies left Digg for Mixx.

Mixx users have even set up a category in their forums called Digg Refugees for users to discuss the phenomenon and spread conspiracy theories.

Compete shows traffic rising dramatically since launch, without the usual drop off that occurs after the initial press about a site dies down. It’s still a blip compared to Digg, the fact that early adopters are leaving Digg and quite vocally telling the world about it, Mixx may be a startup to keep an eye on.

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Traffic on AOL’s Netscape portal has plummeted since the site dumped its social news voting model and reverted to a new portal, at least according to Alexa.

Unfortunately the comScore figures for Netscape aren’t yet available for September so we can’t confirm the traffic crash, but despite Alexa’s argued issues the crash in traffic as shown by Alexa is unlikely to be an Alexa only quirk.

Tony Hung, who first picked up on the traffic crash notes that “[the traffic crash] validates Jason Calacanis — and indeed all the hard work Netscape folks have done over the past year or so to cultivate a community in Digg’s shadow — that so many of the people at Netscape were genuine fans *of* social news.” He’s right.

If Alexa is to be believed, Netscape’s traffic is now at its lowest level ever and ranks at a miserly 2,200th, a far cry from the days where Netscape was in the top 10 destinations online or even in the Top 600 during its time as a Digg clone. Some one at AOL may have some explaining to do given that the decision destroyed the traffic (and value) of Netscape by over 50%.

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AOL has announced that Propeller.com will be the new home for the Netscape social media experiment. What was once considered a possible Digg-killer is now relegated to the backwaters of AOL.

In a statement, Tom Drapeau said that AOL was “working hard behind the scenes to ensure a smooth transition before we officially launch at this new destination,” which given the site isn’t live yet is code for we eventually found a spare domain to rid ourselves of our Digg clone.

It might be too early to Deadpool the Netscape Social news experiment yet, but without the type-in traffic and brand recognition of the Netscape name, the whole idea will struggle to survive; after all the Netscape name, and previously Jason Calacanis’ evangelism was really all the site had going for it. I’ve heard some unconfirmed reports that since the initial announcement the site has been bleeding staff and contributors as well; I give it 12 months max, or AOL flogging Propeller off during this time for a fairly low sum.

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