Mr. Rose (Photo: flickr.com/joi)

In the winter of 2004, soon after the husks of once-great dot-com startups had dried and shriveled, a 27-year-old college dropout named Kevin Rose deployed a barebones new site, simply named “Digg.”

It was one of the first social networks in existence. Back then, the term “social networking” hadn’t shouldered its way into our lexicon yet. Facebook was a nascent, walled platform for college gossip; Google was still idly toying with its search algorithm; Twitter wouldn’t launch for another two years.

News itself was a hierarchical affair, largely produced and disseminated by trusted broadcasters and editors. Journalism’s democratizing forces hadn’t congealed, yet; bloggers weren’t sitting front row at fashion shows or making a living off of Google Ads. The idea that a community of Internet geeks could manipulate the news cycle would’ve elicited howls of mocking laughter from the Conde kingmakers.

Mr. Rose, then an occasional tech TV talking head, launched Digg with the notion that it would change all that. Digg wants “to give the power back to the people,” proclaimed Mr. Rose in a 2005 preview of the website on the tech TV show The Screen Savers. By “digging” or “burying” links, users could effectively weed out the detritus and let the news they liked best filter its way to the top. The site’s functionality gave users the power to decide what deserved to be seen, and they were rewarded by spotting links early that would eventually become popular. Diggers garnered further clout by interacting with each other. Real power users began to emerge, enabled by their nimble maneuverings on the platform.

These days, stodgy publications like The New York Times pen fawning profiles of BuzzFeed bloggers and Business Insider newshounds, seemingly entranced by their mystical ability to foresee what will go viral. But Digg’s power users are the predecessors of keen-eyed bloggers, and Digg gave them the platform to broadcast their Internet soothsaying abilities. “The service forced me to get very good at finding news and interesting stories — and doing it fast,” wrote one-time Digg power user, former tech reporter and current venture capitalist M.G. Siegler in a recent blog post. “It also forced me to hone my headline writing skills.... Without Digg, I almost certainly would not be where I am now.”

“It was the first iteration of social news and social sharing,” Aubrey Sabala, an early employee of Digg, told Betabeat by phone. “In a lot of ways it was ahead of its time.”

But a funny thing happened on the way to the Internet revolution: following a handful of hefty capital rounds, mounting investor pressure put the focus on monetization. And some of Digg’s power users turned to the dark side, allowing advertisers and publishers to pay them for “diggs” so that their content could make it to the front page. In 2009, Digg rolled out a clunky ad experience, much to the chagrin of its fan base, which began to jump ship for Facebook and Twitter. A buggy overhaul of the site released in 2010 was the final straw: Digg crested the hill on its final decline, the majority of the site’s devoted users eventually decamping for Facebook, Twitter and Reddit.

But now Digg, the sleeping--or is it dead?--community giant, is getting the chance to redeem and recreate itself in the moneyed bosom of the New York tech scene, thanks to an acquisition by startup incubator Betaworks. Betaworks, nestled in the Meatpacking district steps away from the Highline, purchased Digg’s core assets just a handful of weeks ago, and set out to recreate the Digg experience from the ground up. What’s left of the Digg brand will be revived by the News.me team, another Betaworks social news startup that has been tapped to resurrect Digg’s decrepit corpse. And they've done it in just six weeks.

It’s an opportunity few startups ever get: to atone for their sins and start from scratch in a safety bubble, protected from the pressures of monetization and investor interests. They can build a purer product this time, learn from the lessons of Digg’s former incarnation, and hone in on accurately catering to the way users consume news.

But with its one-time competitor Reddit miles ahead in the race for relevancy, is it too late?

***

Mr. Borthwick with Mr. Siegler (Photo: flickr.com/techcrunch)

Less than 24 hours before the launch of the new version of Digg, Betabeat arrived at the Betaworks office, an airy, sprawling labyrinth of Apple products and side-by-side desks occupied by work crazed young people. We’d arrived just in time for a chocolate covered banana cart to show up, heralding a quaint office gathering celebrating the new Digg. Jake Levine, the former manager of News.me who became manager of Digg following the acquisition, told us that before the acquisition went through, he talked about Digg in codewords to his teammates. “We called it the banana stand,” he said, referring to a beloved Arrested Development plotline.

“Digg is one of the great iconic web 2.0 brands,” said Betaworks CEO John Borthwick in a clipped British accent, after we’d settled into a corner conference room littered with Betaworks stickers. (Sadly, there would be no frozen bananas for this Betabeat reporter.) Through the glass doors, we could see a red pole strung up with a Guy Fawkes mask, the universal symbol for the hacker group Anonymous. “It helped define a whole new wave of company creation and innovation," Mr. Borthwick went on. "But also this idea of socially curated news is something that they helped create.”

It was a pure idea, but the infusion of capital, coupled with the inherent drawbacks of the Digg voting model, ultimately led to Digg’s demise. “The company raised a lot of money maybe a little bit too fast and couldn’t figure out how to make money and then sort of went through a painful process of growing downwards,” Mr. Borthwick admitted. “Sometimes companies get pumped up like athletes full of steroids, so much so that they’re really strong and fit but they can’t actually walk any longer so they kind of fall over on their own weight.”

In short: mo’ money, mo’ problems.

Mr. Levine (Photo: Twitter)

Digg’s rebirth will also happen in a very different media environment. “It’s 2012, it’s not 2004,” emphasized Mr. Borthwick. “So what Digg needs is to change a little bit.” By scrapping the old code and rebuilding the infrastructure, Mr. Borthwick said that the new Digg will operate at 1/15th of the cost that the old Digg was running at just last month.

Additionally, now media companies that previously mocked the power of online communities are clamoring to plaster their links all over social news sites. Conde Nast snapped Reddit up back in 2006, hoping to expand its web properties, but its DNA never really fit the Conde mold, due to the site’s unwavering dedication to its community and refusal to cater to publishers. Social news communities like Reddit have grown from a barnacle on the side of the Internet to one of its primary content generators. Traffic-hungry blogs like BuzzFeed source a substantial amount of their content right from the trenches of Reddit. And with 2.5 billion pageviews a month, the amount of traffic Reddit can drive to a site in a single day could trounce pageview targets for an entire quarter. (Previously: Loving the Alien: How Erik Martin, King Bee of Reddit's Hivemind, Harnessed the Buzz)

For its part, Digg may have spread itself too thin, attempting to simultaneously placate disparate groups with competing interests. “I feel like when they moved to version 4, they were trying to serve too many constituencies: publishers, the users and the advertisers,” Erik Martin, Reddit’s general manager, told Betabeat by phone. That 4th version, which launched in 2010 and introduced publishers to the site, was so buggy that it crippled Digg’s functionality for weeks. "Many people will tell you that v4 of Digg was the tipping point, and I agree, for a simple reason," Miguel Lopez, a former Digg power user, told Betabeat by email. "It alienated the hardcore users and the community that had formed around the site.... They drove their most loyal users away, and for any 'social' site that is plain suicide."

“The front page went from interesting, to a bunch of corporate sponsored ads and a few threads that managed to squeak through,” wrote one Reddit user in a recent post about what killed Digg. “I didn’t come to Reddit because it was better or because it replaced digg for me, I came here because digg had a sudden heart attack and died.”

So how did Reddit avoid the same tragic fate as Digg? Its algorithms don’t allow users to collaborate and game the system, for one. “The frontpage we designed was a constantly rising and falling list of links (not like how digg and all of its clones just had a chronological format where once something got enough diggs it became #1 on the frontpage--an easily exploitable way to get a ton of traffic),” said Reddit cofounder Alexis Ohanian in an email. “It's not perfect, as we're always fighting cheaters, but we've also had to explain to an unsettling number of publishers that reddit, unlike its past competition, is not designed to be ‘gamed.’ We've had to reprimand quite a bit of bad behavior that used to be the status quo.”

In a way, Reddit is immune from many of the pressures that Silicon Alley startups are forced to contend with. Being scooped up by Conde did have its privileges. Unlike Digg, Reddit didn’t have to rely solely on ad revenue to sustain itself. Had Digg curbed its hubris and accepted Google’s offer of $200 million for an acquisition in 2008, it may not have had to roll out so many of the premium features--like “Diggable ads”--that drove users away. “We’ve been lucky in a sense with the Conde Nast situation,” admitted Mr. Martin. “It did protect us from having to quickly monetize.”

The new Digg, which will be tweaked with scientific precision at the lab-like Betaworks, won’t have any ads at all--at least not in version one. It will also be free of the clutter that has bloated Digg for years: with no Digg navigation bar and no “Newsroom” feature, it will be image-friendly, lightweight and easy to use on your cell phone. The interface looks a lot like a typical news blog, with a large image and headline dominating the top half of the screen, while other stories collect in neat boxes beneath it.

In a nod to the dominant forces of social media, the number of “Diggs” on a story will also account for the times it’s been shared on Facebook and Twitter, in order to provide a more holistic portrait of what’s popular across the web. This move also has the added benefit of making it much harder for power users to game the system. For version 1, users will have to login using Facebook Connect in order to "Digg" a story, a temporary move that already has some legacy users riled up.

“There’s a lot of attention and pressure and visibility for tomorrow,” Mr. Levine told us of the version 1 launch. “But what we care about is not launch day, it’s the 14 days or 28 days after launch and the iterations that follow.”

“We could have spent six months on it or a year, but we realized that if this was going to be a good product then we needed to get it out the door as quickly as possible,” he added. “The six week time frame forced really hard decisions, to focus on what is the single thing that Digg does well and that users expect from Digg, and how we could do that well.”

***

A few weeks prior to the launch of the new Digg, the Betaworks team published a survey to their blog soliciting user feedback. The consensus was unanimous: 92 percent of those surveyed would not recommend the old version of Digg to a friend. Users wanted the simpler Digg back, the one that surfaced interesting content and enabled a community of diverse individuals to post and respond to stories they cared about.

“I spent a weekend reading through all of the responses, and time and time again they said, ‘I came to Digg to find great stories. I came to Digg to find stories I couldn’t find elsewhere, the weird and the funny and the geeky,’” said Mr. Levine. That’s where the new Digg will start. From the belly of Betaworks, it will eschew revenue models and investor interests and focus on remaking Digg into the kind of site Internet users used to love.

Digg once went in search of monetization, but now the new team behind it wants what the platform was offering all along: a snapshot of the hivemind, a place capable of measuring the Internet’s pulse. Now, the new Digg team has the same advantage that Reddit obtained when it sold to Conde.

“Part of what we want to do is stay as small as possible for as long as possible,” said Mr. Levine. “So that we can continue to be beholden to just our users, and not incentives for monetization.”

On the back of his iPhone case, a black and white “Fuck it Ship it” sticker caught the lamplight just right.

To pull the right articles from the social media deluge, News.me's iPhone app analyzes the links shared by your friends and followers on Twitter and Facebook to determine what's relevant to you, using some metadata from Bit.ly (another Betaworks company) to help figure that out.

News.me already has a pared-down email product (of the top five links a day) and an iPad app that launched last April, albeit without the Facebook connection. But as general manager Jake Levine told us yesterday, the iPhone app is where things get social. The clean interface displays a nicely-formatted photo, headline, and, immediately below that, what your friends have said about the article, including their tweets and Facebook status updates as well as reactions on News.Me.

To make responses sound more meaningful than a generic "Like," the startup offers a shortlist of other one-word responses, including Ha!, Wow, Awesome, Sad, and Really? As much as it makes us groan a little inside every time a startup thinks slapping on some social = $$$, in this case, it sounds utilitarian. Seeing your friend's response is a great indicator of the likelihood that you'll want to click through--depending on the friend, of course. When Mr. Levine demoed the product to us via Skype, for example, we saw reactions from Reuters newshound Anthony De Rosa (alongside his sister and other Betaworks employees.)

How long did it take them to choose those five little words? "Oh my god a long time," Mr. Levine responded with a combination laugh/groan. "We actually decided on this the day before submissions." He said News.me reached out to five people to brainstorm ideas, including Wall Street Journal and Nieman Labs alum Zach Seward, who offered the following inspired suggestions: Woah, Huh, Damn, Uhhhh, and tl;dr.

The new iPhone app also supports offline reading--phew--and saves articles to your News.me Reading List (you can automatically import your Twitter favorites, as well as integrate with Instapaper and the News.me iPad version). One can always tell which products are built in New York vs. San Francisco, said Mr. Levine, based on how much they care about how it works underground.

News.me's six-man team has a strong technical bent, steeped in news and discovery, including CTO Michael Young, the former lead technologist for the Times's R&D lab, as well as the iOS developer behind Epicurious, and the designer behind Wired's iPad app. Which may be why they offer a thoughtful approach to modern media consumption. "We’re of the philosophy that Twitter and Facebook will kind of form foundational layers of the social web on which purpose-built social networks and applications will emerge," explained Mr. Levine.

"Instagram and Foursquare are the best examples of that," he added. "These are networks that are built for one type of conversation, one type of sharing. We think news is a similar category in that it's big enough to be interesting as a business and it’s a big enough part of people’s day, it helps make important decisions, but its small enough to benefit from a focused network."

News.me competitor Summify was recently acquired by Twitter, and some of its users migrated over to News.me. With other players like Percolate and XYDO moving over to the enterprise side of things, by offering their news curation products to other companies and brands, "We’re the lone vestige for actual consumers," said Mr. Levine.

As for the Summify acquisition, Mr. Levine anticipated that, "The challenge [Twitter] is going to face is that people build their networks on Twitter for a bunch of different use cases, which means that people are sharing a bunch of different types of content so to make meaning out of that content is incredibly challenging from a discovery perspective."

True enough, which made us wonder if you could limit News.me to a particular Twitter list (to keep your movie and food friends, say, out of your tech stream)? Not yet, said Mr. Levine, but they're working on it.

Lean with it, rock with it

In a certain way, the web is a terrible medium for trying to read articles. Your browser is full of distractions like Twitter and email that need constant attention. Which might be why users of News.me, the betaworks service created in conjunction with the New York Times, read an average of six times more articles on their tablets than they do when browsing News.me via the web.

"The experience on the tablet is more immersive, more contextual," said Jake Levine, general manager at News.me. "When the iPad first came out everyone was complaining about how you couldn't multitask, but I think more and more publishers and app creators are coming to see this as an advantage." 

The new iOS has push notifications, which have enabled some amazing features like Foursquare radar. "I think there is a lot of potential there, but it may come at the expense of the focus we found among our tablet readers," said Mr. Levine.

Another trend that has popped up among News.me readers is heavy usage on days that break their typical routine. "People have very set patterns of news consumption, but we are seeing that when this changes, around a holiday for example, users want to be able to understand what they missed." If the people you follow on Twitter represent the average amount of information you want to consume each day, those are the best guides for what you missed. "On News.me, users are looking to tap into their social graph to surface the most relevant stories, the ones that got people talking, as they play catch up."

The massive sales of Amazon's Kindle Fire over the holiday weekend have many in the tech blogosphere declaring a new era in the tablet market. But Mr. Levine says that News.me will continue to be iOS and HTML5. What is interesting to him is less the hardware platforms than the new social networks. "I look at my Facebook account and there are hundreds of people who were relevant to me when I joined five years ago that I have no connection to now. I think for News.me, we're going to be paying close attention to the smaller, splinter networks that are forming around very specific activities."

Jake Levine is an Entrepreneur in Residence at betaworks. This post originally appeared on his blog. This article reflects his own opinion and are not necessarily those of his employer.

The network neutrality / common carriage debate is one of the most important debates of our time. At stake is the freedom to innovate, the freedom to listen, and the freedom to speak. To date, arguments for or against common carriage have focused largely on the relationship between Internet service providers and content creators, but a new threat is emerging.

Companies like Facebook, Twitter and LinkedIn have unlocked new ways for people to connect, curate, and consume. They have changed and continue to change how we interact with the web – how content is distributed, discovered, and delivered. But with the emergence of this new social layer comes a threat that rivals that posed by the great information monopolies of the 20th century – AT&T, the Radio Trust and the Motion Picture Patents Company, companies known for price gouging, anti-competitive behavior, and the stifling of innovation.

I recently finished Tim Wu’s “The Master Switch: The Rise and Fall of Information Empire.“ For anyone interested in network neutrality, this book is an incredible primer. Beyond presenting a thoughtful analysis and historical review of the information industry, Wu provides a compelling read – one might even call it a page-turner! If you haven’t yet, go buy it, and read it.

Network Neutrality

If you’re familiar with the basics of network neutrality, feel free to jump to my main argument below. If not, let’s start with a definition for common carriage.

At the heart of common carriage is the idea that certain businesses are either so intimately connected, even essential, to the public good, or so inherently powerful—imagine the water or electric utilities—that they must be compelled to conduct their affairs in a nondiscriminatory way.

As a simple example, if a man operates the only ferry over to town, that simple boatman is in a position of great power over other sectors of the economy, even the sovereign authorities. If, for example, he decided to charge one butcher more than another to carry his goods, this operator could bankrupt the one who didn’t enjoy his favor. The boatman is thus deemed to bear responsibilities beyond those of most ordinary businesses.

Wu, Tim (2010). The Master Switch: The Rise and Fall of Information Empires (p. 58).

Reflecting on Wu’s review of information monopolies, one can extract two primary tendencies manifest in countless examples throughout history. First, like all institutions they follow a law of self-preservation. If the ferry owner senses a threat to his monopoly in an innovation outside of his control, he will do everything in his power to acquire or squash it.

• The Motion Picture Patents Company consolidating control over film production and distribution by ransoming access to patent licenses and buying up independent theaters, ultimately leading to the independents’ flight to Hollywood.
• RCA buying up nascent radio networks to create a single national content creator and distributor.

The tenuous relationship between distribution channels and that which is being distributed is summarized neatly by Wu:

You cannot serve two masters, and the objectives of creating information are often at odds with those of disseminating it.

Ibid., p. 306.

Social Network Neutrality