Digg Copies The Old Media Model
DIGG this:
BusinessWeek’s Spencer Ante got ahold of Digg’s financial statements. They are frightful, even for a startup. Last year, the company took in $4.8 million and spent $7.6 million, for a loss of $2.8 million. In the first nine months of this year, losses grew almost as fast as revenues: Digg took in $6.4 million and spent $10.4 million, resulting in a $4 million loss. At an annual clip, that’s more than $5 million out the door a year.
Keep in mind that Digg has a lucrative three-year advertising deal with Microsoft, that pays the site a guaranteed rate for its inventory. Without that arrangement, struck last year — driven, most believe, by Microsoft executives’ desperation to get in on the Web 2.0 craze — Digg’s losses would likely be far worse.
Now it all makes sense: Digg CEO Jay Adelson’s repeated attempts to sell the company to News Corp., Current Media, and Google, at a valuation of $300 million or more, came to naught because there’s no real business there.
These people are trying to own what people create, and pay nothing for it. Can an editor be worth 300 million dollars?
Mugs away!
Posted: 20th, December 2008 | In: Reviews Comments (2) | TrackBack | Permalink
