Update: Matt Williams Matt Williams told The New York Times , “the price floating around is inaccurate.” While Williams declined to give a final price, he said that because stock was involved, "the total consideration is more than the value quoted.” It looks like the $500,000 price reported by The Wall Street Journal was for Digg's core assets. Digg's investors likely got additional equity in Betaworks and Betaworks-backed companies.

How the mighty have fallen. The social sharing site Digg has sold for just $500,000 to New York startup incubator Betaworks.

The small selling price just goes to show how quickly fortunes can turn for even the hottest web startups. According to The Wall Street Journal, Digg took more than $45 million from investors since launching in 2004.

On its blog, Betaworks says it is going to fold Digg into the News.me team.

The company also vows that it is going to "turn Digg back into a startup. Low budget, small team, fast cycles."

Since the release of Digg v4, dubbed "the new Digg" in the summer of 2010, the once-hot company has met with a series of challenges. Poor reception led to plummeting traffic, changes in management and layoffs. Digg co-founder Kevin Rose left the company in March 2011.

In May, the Washington Post Company's Social Code hired away more than half of Digg's staff. Since then, The Journal reports that a number of companies bid on the remaining assets.

Digg CEO Matt Williams shared the news to the Digg community . Williams says that Betaworks will still unveil a new cloud-based version of Digg as a complement to the existing News.me offerings. Williams will join Andreessen Horowitz as Entrepreneur in Residence as soon as the transition to Betaworks is complete.

At this point, it almost looks like the most valuable part of Digg is the once-hot brand name. It may be hard to remember for some web users, but in a land before the mainstreamification of Reddit, Digg was the place to be.

We look forward to seeing how the News.me team integrates the assets into its service.

Are you surprised with Digg's low sales price? Let us know in the comments.

Photo courtesy of Businessweek.