The only reason it's $500k and not $0 is to save a small amount of face. Digg is losing money, and has never made money in its entire history, so it's going to cost Betaworks a lot more than $500k to take it over.
Digg bleeds money because they're overstaffed for what they do. Reddit ate their lunch with five paid people, while Digg was employing dozens. I think they had over 100 people on staff at their peak. Even now, when reddit has an order of magnitude more traffic than Digg ever had (1 billion+ pageviews a month), reddit runs with a staff of about 10 people. Digg probably still has a whole lot of dead weight, even at this point when the whole thing is only worth two and a half good developers salaries.
Absolutely agree. Digg should be run by 3 to 5 people tops at its current size.
It'll still cost more than $500k to transition the service to whatever it is they have in mind. It'll probably cost more than $500k just to trim Digg down to size.
Yeah, but reddit appears to have been staffed with employees who worked all hours of the night and day for a salary; see blog posts from before reddit gold. That's not sustainable and unless you have a line on a set of really smart suckers who want to work way too much for the same money then can get elsewhere working half the hours or on call... you need more employees.
1. I don't think that people, working all hours, are actually significantly more productive than those working regular hours. In fact, in knowledge work, there's good evidence that you only get two or three hours of real productivity per day, no matter how long you keep banging your head on the keyboard.
2. Even if reddit developers and staff were twice as productive as Digg folks, that only indicates that Digg had five times too many people (instead of ten times too many).
If they're not taking on any of the employees, what are their costs? It's not clear that they're even keeping the website up or that it won't be a rather radically different product. All they've said is that it will be a 'cloud-based version of Digg' which means nothing.
It's probably a brand they're slapping onto something they already have in the works. How is it going to cost them a lot more to take it over?
To take over something like Digg? Everything costs.
Legal costs. Infrastructure costs. Clearing out employees and transitioning with new employees to take over and operate it. New product development to change the product into whatever they have in mind.
It's ridiculously easy to blow $500k doing nothing in tech when salaries run $100k with total compensation. And that's just the employee costs.
It'll cost Betaworks several million dollars to get Digg the way they want it, all in, including the purchase price.
