Posted March 7, 2008 8:58 am by with 11 comments

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UPDATE: As we said, TechCrunch is hit and miss with these types of rumors. Digg is denying them.

I know that most of the grumbling about Digg comes from marketers–who, for the most part, are annoyed because we can no longer expect traffic from the social voting site. But, surely there are enough other Digg users who feel that Digg is not quite the voting democracy they thought they were signing up for, and are abandoning the service.

And, maybe Digg knows that the clock is ticking, if it wants to sell out while it still has users and traffic to sell. That’s my take on why Digg is reportedly anxious to accept a bid lower than the $300 million valuation given by its investment bank Allen & Co.

According to TechCrunch (which has a hit and miss history with these types of rumors) a number of companies are interested in making a bid:

Google, our source says, will likely bid $200-$225 million, which Digg would likely accept…Microsoft is looking at a somewhat lower price. That makes sense, since most of Digg’s revenue today comes from a three year advertising deal that Digg signed with Microsoft last year. That deal has revenue guarantees – and Microsoft may be hesitant to value Digg based on revenue that they supply.

As suggested, Google might only be interested because it would be a slap in the face if Microsoft loses out on buying a company it already has an extensive advertising deal with.

Meanwhile Mark Evans hopes a company, other than Google, is able to pick up Digg–lest we all start suffering from Google Fatigue.

  • rcjordan

    You nailed it.

  • I guess we need to sit tight (and speculate of course) and see if this “scoop” is accurate or rumor.

  • Great analysis, Andy. Clearly another example of how too much control kills social media… and social networks.

  • PS3

    Was it too much control, or too much spam? Sites like Subvert need to be kicked into touch.

    Still, what’s the odd $100 million between friends !

  • Digg is the really great site. It cost not less than 200 millions.

  • Nice analysis, friend. I have only one question like PS3 ask is it too much control, or too much spam ?

  • I wonder if Microsoft’s advertising deal with Digg has a cancelation clause or anything if the company gets sold. Microsoft would be so pissed if they had to pay Google.

  • If Google wins the bid will it continue providing Microsoft with adspace for the rest of them 3 years or will it simply compensate them? Awkward!

  • This will be interesting to watch.

  • Yes, you’re right.

  • Steve Teal

    Digg is getting old. With new “laws” from Google stating they are going to penalize site that have excessive backlinks from social bookmarking sites such as digg and mixx, traffic will start to decrease. Unless of course, digg partners up with another company in it’s area, then it might be time to jump ship.