The Social Analyst is a column by Mashable Co-Editor Ben Parr, where he digs into social media trends and how they are affecting companies in the space.

I'm pretty sure Digg founder Kevin Rose wishes he had a time machine right about now. While I bet he'd love to revisit the New Digg's rather rocky launch, he might use the time machine to go back to July 2008, when Google was a breath away from acquiring Digg.

Unfortunately for Rose, Google eventually decided that Digg wasn't worth its supposed $200 million price tag at the time. Ever since then, the company just hasn't been the same. Each change, successful product, delayed launch, controversy and failed sale has led to this pivotal moment in Digg's history.

The past two months have certainly been some of the toughest the company has ever had to endure. While Rose and the Digg executive team can't change the past, they still have the opportunity to make Digg into a mainstream powerhouse of social news that could eventually give it an exit equal to, or greater than the one Google offered the company over two years ago.

But first, Digg has a couple of big problems to solve before it's too late.

How Digg Got to This Point

Digg Version 3, the previous iteration of the popular social news website, launched more than four years ago. Yes, it's been that long since Digg's last major overhaul.

Things were (relatively) good back then. While Digg had to deal with a few controversies, it claimed more than 700,000 users and growing. At the time, some even pinned the social news site's worth at around $250 million, more than the $200 million Google offer in 2008.

But while Digg grew, its revenue did not. In the first three quarters of 2008, Digg lost $4 million on $6.4 million in revenue. That wouldn't have been a problem though if Google or Microsoft (which had a substantial ad deal with Digg at the time) had acquired the company in 2008.

It didn't happen though, so Digg had to make changes. In January 2009, the company cut its staff in an effort to become profitable. In April 2009, it ended its ad deal with Microsoft. In June 2009, the company introduced Digg Ads, where users control how much advertisers pay based on user diggs and buries.

Digg ads were a hit, but it came at the cost of Digg's accelerating growth. According to comScore, Digg's traffic dropped from 14.3 million uniques in January 2010 to just 8.8 million in July. As Rose recently told AllThingsD, the company panicked when the economy collapsed and focused entirely on revenue rather than new features. As a result, Digg wasn't gaining the large mainstream audiences that Facebook and Twitter enjoyed, and was threatened with obscurity.

The New Version of Digg, announced in March, was designed to address the traffic problem. Instead, tensions between Rose and CEO Jay Adelson bubbled up over the direction of the product and the company in general. Eventually Adelson stepped aside and Rose took over as CEO of Digg.

What Digg Got Right and Where Digg Blew It







Let's be clear: Digg had to do something to ratchet up traffic and bring in more mainstream users, and many of the company's goals with The New Digg, a.k.a Digg version 4, make sense. Letting publishers auto-submit their own stories took power out of the hands of a few "power diggers" and would put an end to "gaming" the site. A personalized homepage for every user would deliver unique content based on personal interests and the recommendations of friends. The personalized homepage would also end the guessing game behind whether a publisher would get 100 or 100,000 hits from the front page.

At least, that was the goal. Clearly, things haven't gone according to plan. Digg's users revolted and the site has experienced extended downtime and multiple bugs. The result: Reddit's numbers are way up and Digg fired its VP of Engineering.

Digg version 4 was a smart, even necessary idea, though. They had admirable intentions like focusing on a mainstream audience, nerfing power diggers, and adding personalization. They prepared users months in advance for the switch, and they even had an extended testing period to weed out bugs and gather user feedback.

It didn't matter though, because people are already getting their news elsewhere. There are simply more choices, from Facebook to Twitter. There is a reason Digg emulated many of Twitter's features in its overhaul; they want to become the Twitter of news.

While Digg could have done a lot of things better with the launch of Digg v4 (specifically, they should not have launched with the controversial suggested user list), here are what I believe to be the company's two biggest follies in this whole affair:

1. Digg took way too long to react to the changing landscape of social news. Twitter ate the company's lunch. Publishers started focusing on their Twitter followings and, later on, their Facebook presence. Digg, while it can still generate a nice traffic spike, wasn't the future of publishing. The company didn't take any bold steps for four years, and the results are apparent. 2. Digg chose dramatic overhaul over gradual changes. If we've learned anything from Facebook's many redesign and privacy fiascoes, it's that major overhauls of large websites don't go over well. The company tried to launch way too many things all at once, and the result was a buggy platform that frightened users. There's a reason there isn't Twitter version 4. or Facebook version 4; they make changes to their websites with gradual phases and staggered rollouts, making it all seem like the same platform, when in reality everything has been overhauled at least a dozen times. I understand that Digg version 3 just couldn't scale, and that's why it needed to switch to Cassandra. But hyping up the switch as the new version of Digg just didn't help their cause.

This Is Digg's "Do or Die" Moment







I was fascinated by Kevin Rose's attempt to address the controversy on Diggnation. He tackled it head-on, and I'll summarize it with these five points:

1. We couldn't scale with Digg version 3. 2. We've listened to the users and brought back some key features. 3. The Suggested User List was a really bad idea. 4. We're bringing new features, specifically gaming elements, to Digg. 5. We have to take risks to survive.

On all five counts, Rose is right. The launch went south, mostly because of the Suggested User List giving a few key publishers domination of the Digg homepage. But that's the past; the question is, what should Digg do now?

Digg needs to go on the offensive quickly to restart momentum. As long as the company is on defense by trying to appease its hardcore users, Digg will not move forward. Yes, Digg needs to cater to these users; they are the blood in Digg's veins. However, the company should win them over with new features that will delight and surprise them. Adding gaming elements like leaderboards and rankings could create a whole new generation of passionate Diggers, and that's only the beginning.

As Mashable's Pete Cashmore said when the new Digg first launched, this is Digg's "do or die" moment. Instead of fading into obscurity, Digg decided to roll the dice. Sometimes when you gamble though, you pay a heavy price.

Digg's not dead yet, though. It has enough chips to get back in the game. Digg needs to concentrate on quickly launching a stream of new features though, rather than dwell on the past or wait until another big upgrade or redesign to adapt to the rapidly-changing social landscape.

Your move, Digg.

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