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By Jennifer LeClaire
Newsfactor.com
Published: July 23, 2008 1:54PM
Google is reportedly ready to purchase the Digg Web site for $200 million. The search giant could beef up its news service with Digg, where readers select and vote on stories from around the Web.
The rumors began about a week ago when images on Web sites suggested Google was testing voting methods.
Some reports say Google could complete the acquisition of Digg within two weeks, and Microsoft Relevant Products/Services is said to be waiting in the wings if Google doesn't seal the deal. Digg has a three-year deal with Microsoft that would likely end if the search giant absorbs the popular news site.
"This rumor has been around for a couple of months. But this is the most concrete version of the rumor," said Greg Sterling, principal analyst at Sterling Market Intelligence. "Digg seems to be trying to create some sort of bidding for the company in order to get the highest return."
Digg Evolution
Digg describes itself as a place for people to discover and share content Relevant Products/Services from anywhere on the Web. From the biggest online destinations to the most obscure blog, Digg claims to surface the best content as determined by user votes. Digg doesn't employ editors, but relies on its community to determine the most worthy headlines.
Diggers can push news, videos, images and podcasts. Once content is submitted, other people see it and vote on what they like best. Submissions that receive the most diggs are promoted to the site's front page for millions of visitors to read. There is also a social-networking aspect as users launch conversations around stories.
"Digg is trying to evolve from a social news site into a 'recommendation engine' which uses the power Relevant Products/Services of the community to promote certain kinds of results higher or to use that crowd wisdom to identify what are the best or most relevant items in a category. So that presents some interesting opportunities elsewhere for Google Maps or local search," Sterling said.
Google's Motivations
The question on many analysts' minds is why isn't Google building a Digg-like technology itself? Arguably, Google has built something similar in its social-voting-for-search experiments. Digg may have a more robust solution, though.
Is Google simply buying one of the highest-profile news-aggregating sites, mirroring the strategy it used with YouTube? Google bought the leader in online user videos at a time when there were only about 10 competing sites, recognizing it as a display-advertising opportunity, Sterling said. But Digg is not YouTube.
"Digg is not a mainstream site like YouTube has become. Digg has also been surpassed in traffic by Yahoo Buzz, according to comScore. So it's not the leader. But Google isn't going to be able to buy Yahoo Buzz," Sterling said. "So maybe they have a range of motivations here potentially and they want to buy the property and $200 million is a lot of money, but not for Google."
Neither Google nor Digg could immediately be reached for comment.
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