Analysis of the Digg Fizzle

What strikes me about this whole thing is the denial that Digg is simply operating under typical corporate business practice. As we all know there is one thing on the minds of the Digg brass now, and that is getting the big payout. Quite simply they are doing what it takes to attract venture capital or outright buyers. Obviously the Digg name is quite valuable as web brands go, but that looses value when you consider the user involvement ratios. As Valley Wag pointed out, much of Digg’s Front Page (FP) submissions come from a small minority. We all know and love these users, they are minor web celebrities in their own right, but to Digg they are an indirect enemy. Perhaps this sounds nutty, but consider the recent changes to the Digg algorithm promoting random users to the FP. In the past the FP was basically the domain of that hardcore minority, a change which was certainly made for a reason. Along these same lines, why does the new algorithm merit diggs from friends as less meaningful than diggs from non-friends? So far it all comes back to “penalizing” established diggers who submit a great deal of FP content and hold huge friend lists.
So why the penalization, and why consider top diggers to be the enemy? To me this is all a play to increase attractiveness to potential buyers/inventors which Digg feels must be waiting behind the curtain. When an investor sits down with Kevin and Jay and crunch the numbers, they don’t want to see a small minority of users being put in the FP spotlight. That’s bad for loyalty ratios. If a new digger can submit a few stories and immediately see one of those submissions go FP he is logically more likely to embrace Digg as a favorite web destination. It’s the basic psychology of seeing your name in the lights. What they don’t care about is that same user hitting the FP a year from now, with his large friends list and high submission rate, when he has become well known. They don’t care at that point because that user has already played their part; now it’s time for another new no-name user to FP with his early submissions.
Yes it is a short term play, but that’s really all the Digg brass are concerned with. They are looking to sell within months, not years. Why play a game for long term loyalty when they can boost page views and stickiness today by making all new users potentially much happier? In Digg’s situation this business plan isn’t really unsound or even bad; it meets all of Digg’s present goals. As a social bookmarking user and fan I don’t think it’s cool, but hey, that’s why I use Mixx.