Digg, the "social news" site which was once the poster child for Web 2.0 and valued at up to $175m, has been sold to New York technology development company Betaworks for just $500,000 (£324,000) in cash plus equity.
The sale of the seven-year-old site, founded a few months after Facebook, marks a colossal loss for its former venture capital backers, who put in a total of $45m during its life as an independent.
Digg reportedly still gets more than 16 million monthly unique visitors – but it has lost its ability to drive the direction of the net's interest as it once did.
Having once looked as though it could be the biggest driver of such social news, the site stumbled multiple times in trying to remake the way that users could vote stories up or down its front page – and lost its advantage over rivals sites such as Slashdot and Reddit.
"We are turning Digg back into a startup. Low budget, small team, fast cycles. How? We have spent the last 18 months building News.me as a mobile-first social news experience. The News.me team will take Digg back to its essence: the best place to find, read and share the stories the internet is talking about. Right now."
In August 2006, Kevin Rose, Digg's founder, appeared on the cover of BusinessWeek and in a feature inside it.
At the time the site was described as the 24th-most popular website in the US, "nipping at the The New York Times' (No. 19) and easily beating Fox News (No. 62)", according to industry tracker Alexa.com.
The site's value was estimated then at $60m – and it was mentioned in the same breath as the then-fast-growing Myspace.
An important misstep came in May 2007 when some posters used Digg to post a "crack" for the encryption used on HD DVD discs, and Rose began deleting them – which caused a user revolt. The founders then said they would stop the deletions.
But doubts had begun to surface earlier that year about the site's robustness against "sock puppets" who could create multiple accounts in order to vote up their content in order to drive valuable traffic to outside sites.
Wired magazine's Annalee Newitz said she had pushed a useless blog to Digg's front page.
Although by mid-2008 the rumours were growing that it was so big that Google might buy it (a rumour that never came close to fruition; Digg remained independent until this takeover), the seeds of problems had been sown.
Despite a funding round in 2008 which effectively valued the whole company at $175m, the troubles were growing. The final straw for a significant number of users came as Digg tried to redesign itself in order to prevent Wired-style gaming in mid-2010.
First came a dramatic drop in users in spring 2010, as measured by Compete.com, compared to Reddit and a new web service called Twitter.
Some thought that was due to tweaks in Google's algorithm which meant that people weren't driven to the site in the same way.
It seems early 2010 marked Digg's high water mark, with between 37 million and 44 million unique users a month.
But even then, webmagazine reckoned that it was on a slope that only headed in one direction: down.
"In the soon-to-be end, Digg will become known as the first network to die from social fatigue," wrote Mike Phillips in June 2010. "Facebook and Twitter are booming, LinkedIn is holding steady and even Myspace seems to have settled into a niche. But Digg is in a deadly, unrecoverable tail spin.
"The fact is, people – real people – are beginning to tire. Submit this, upload that, vote on this, 'like' that, be my 'friend', check in here, suggest this, retweet that ... there's already so much to do. The only thing left to 'Digg' is a grave."
guardian.co.uk © Guardian News and Media Limited 2010
image: © aaron_anderer