Changing the rules of the Digg game

A management shake-up, tepid traffic, and a hyped product revamp that still hasn't seen the light of day: Much has been made, lately, of the woes facing onetime social-news darling Digg.

But even if things turn around after the release of Digg's "Version 4," which will go live later this year following an alpha test that's starting to make the rounds, its launch will give Digg an additional challenge. It's built up an elaborate network of influence and deal making between media companies and "power users" over the years, and the Version 4 launch may amount to nothing less than a regime change.

"With the new way that Digg Version 4 works, the new homepage, 'My News', when you log in is going to be the curated content of the publishers, tastemakers, and friends that you follow, and that's going to define your customized news feed," Matt Van Horn, the company's head of business development, explained to CNET. In other words, gone will be the singular focus on the top choices of the Digg community, a grassroots rabble that's managed to build up a finely honed pecking order of influence over the years. And, in turn, gone will be many media companies' attempts to harness the power of Digg's community by dealing with those select few.

"It'll supposedly end the concept of the Digg power user, which has been a problematic thing for them," media consultant Rex Sorgatz, whose company Kinda Sorta Media has worked with digital publishers to build effective social-media strategies.

"Something like a hundred people control a huge percentage of the (Digg) home page," said Garrett Camp, the CEO of StumbleUpon, a "discovery" service whose advertising program is targeted by many of the same media strategists who work to bring in Digg traffic. "It's got some personalization, but it's really only when you're logged in."

It's been both a blessing and a curse for Digg that it became such a choice destination for the young, geeky, and vocal: The community has been beyond loyal, but its slant toward high-level tech news, fringe politics, and all things Apple has kept it from having a lasting grip on the mainstream. But Digg has another kind of loyalist, and those are media companies. Despite reports that Digg is passe, marketers and consultants who work on digital-media outlets' visitor analytics and social-network promotion say that Digg is still an extremely significant source of traffic for their sites.

Version 4, with users' personalized home pages putting the central most-Dugg list on the back burner, will change that.

Obviously, Digg had to do something. Executives have teased the major revamp for over a year now, hinting repeatedly at features that still have yet to launch. At the same time, there's been clear internal friction: CEO Jay Adelson quit his post in April, citing an "entrepreneurial calling," with founder Kevin Rose returning full time to the company and taking over the helm. There was a round of layoffs shortly thereafter. Other prominent Digg employees have quit too, joining the ranks of companies like SimpleGeo, a start-up co-founded by longtime Digg lead architect Joe Stump, and AOL.

Meanwhile, Digg's Valley cred has been waning. In 2006, an ebullient BusinessWeek cover story depicted a cheeky Rose on the eve of Digg Version 3's unveiling, the company fresh off the announcement of a VC funding round that valued it at $60 million. Four years later, there are no more rumors about Google or News Corp. courting Digg for a sale. The social-news aesthetic that was once unique to Digg and a few other sites has now been co-opted by Facebook, which now offers "like" buttons that many publishers run alongside the Digg buttons that have been placed there for promotion for years; and TweetMeme, which aggregates Twitter links into a Digg-like interface.

"It feels like its cultural influence is dissipating," Sorgatz said of Digg. "It seems less relevant."

"Twitter's sort of stealing (Digg's) limelight, and Facebook with the 'like' button is doing what they always did," StumbleUpon's Garrett Camp said.

In the days of the heaviest hype, some media companies turned directly to influential Digg users as a way to buy traffic; in its heyday, one source in the digital-marketing world explained, a Digg power user could pull in $3,000 to $5,000 per month for those services alone. While it still goes on to an extent, those price tags have fallen.

"The only thing left to Digg is a grave," Website Magazine dramatically asserted early this June, pointing to Compete.com data that said the once-hyped social news site saw its traffic plummet by 13.8 million unique visitors from March to April.

Digg says those numbers are misleading. "Most of it is due to the Google algorithm change that took place in mid-February, and that was really directed at Facebook and Twitter and we saw the negative effects of that," spokeswoman Michele Husak told CNET, hinting that the impending product revamp may see additional traffic aberrations. "We're shifting our platform over to Version 4, so there will be some obvious changes in what the numbers look like."

Traffic at Digg might not be plummeting, and arguably, it's more than lukewarm. There are 40 million unique visitors, even if it's just a few of them doing the "digging." In many cases, particularly sites that deal with content that Diggers find particularly appealing, Digg still trumps inbound traffic from Facebook and Twitter. Sorgatz pointed to one of his clients, TheWeek.com, which continues to see big traffic coming from Digg's politically minded users. "They're really big on political cartoons, and occasionally they will get Dugg and on the front page, and suddenly servers go bananas," Sorgatz said.

"I think the demise of Digg is greatly exaggerated. I think they're still a huge site," said Jonah Peretti, the CEO of BuzzFeed, a start-up that works with media companies to help them drive their content "viral," and has partnered with many sites including Digg.

The idea of "going viral," with the sudden bursts of traffic that ensue, is an appealing one to publishers. One consultant forwarded a document to CNET that it distributes to clients who want to figure out how to get on Digg's front page by making inroads with the site's elite. "Digg is the ultimate social media exercise in quid pro quo; if you are not willing to interact and help promote (by Digging) other users stories, you will not be able to use the site effectively," the document explained. "Most Digg sharing is done through instant messaging; if you don't have access to IM during the day, you won't be able to grow your Digg profile and status."

But the document warns that there is "no exact science" to getting on the Digg front page, and that the community can be unreliable. BuzzFeed's Peretti agreed, saying that media companies should now expect to see a steadier stream of traffic coming from Digg rather than the massive peaks and gulfs that many now experience.

"With Digg, if you get on the front page you know that it sends (lots of traffic) all at once, but then it might not send very much for a couple of weeks, and then it sends a lot again," Peretti said. "The blessing and curse for the old Digg model is that you send it all at once and people notice it and get excited, but it also makes it hard to depend on, it makes it all about the front page rather than personalization."

With Version 4, the company hopes to replace the back-room dealing of the old Digg with an official presence on the site for media companies and publishers.

"I think we're hoping to still allow for that (hit-driven business) while being able to send more predictable, regular traffic," Matt Van Horn said. "The default home page is going to be 'My News', which is going to be the customized news feed for you, so we hope we're going to send a lot more 'long tail' traffic, but we're still going to have a 'Top News' page."

Van Horn, an energetic 26-year-old, is known in the media industry as the guy who puts together open-bar "Digg Swiggs" for the local digital crowd on his frequent visits to New York. These days, tasked with easing media companies into a new, post-"power user" Digg, he's arguably a more prominent face of the company than Rose himself.

"I think that the savvy will always evolve," Van Horn said. "The Digg algorithm has always been changing; it's very different than it was years ago. I can't speak to the relationships that media companies have with power Diggers, but I do know a lot of smart media companies that have a lot of people that are very active on Digg. I think that the smart ones and the savvy ones are going to evolve and learn to be successful in the new Digg ecosystem."

Van Horn's job entails not just working with media companies on how to wrangle Digg, but also encouraging them to promote Digg itself in the process. "One of the smartest things that publications can do is optimize their sites for getting Dugg most easily, so having yellow Digg buttons with the number count as well as modules of the most-Dugg stories can really help both on the old site and on Version 4," he said.

But when all is said and done, Digg is a community site. It's the people pushing the buttons who are ultimately in control. And the company may have a chicken-and-egg problem on its hands: for a new Digg that relies in part on your friends' recommendations, it helps to have friends already using Digg actively, and for millions of potential users that won't be the case, at least not immediately.

"They have a ton of unique visitors, of which most do nothing," StumbleUpon's Garrett Camp said. "I've seen the screenshots, and it's neat, but I don't know enough people who use Digg for it to be effective for me."