In a scorching parking lot in Austin two years ago, then-Digg CEO Matt Williams stated his case for the company's resurrection. Digg v4, hailed as the "new Digg," would reverse its flagging fortunes, he vowed.

Today social news-sharing site Digg -- which graced the cover of BusinessWeek in 2006 with a beaming co-founder Kevin Rose -- was sold for a paltry $500,000 to Betaworks, a New York-based start-up incubator.

In a statement, Betaworks said it will fold Digg into News.me, its mobile social news site. Betaworks promised to "turn Digg back into a start-up. Low budget, small team, fast cycles."

Digg's precipitous fall from grace isn't shocking.

The release of Digg v4 in 2010 was met with indifference and drooping Web traffic, leading to management turmoil and layoffs. Rose left Digg in March 2011. In May, Social Code hired more than half of Digg's remaining staff.

Meanwhile, investors were soaked. Digg took more than $45 million from investors since launching in 2004, according to The Wall Street Journal.