Digg is sold for $500k having missed out on $200m deal in 2008

Social news aggregator site Digg has been sold for a reported $500,000 to New York-based technology group Betaworks, which will use it to try and boost its own news-sharing site News.me.

Launched in 2004, the sale of Digg brings to an end one of the roller coaster early stories of the early social web. Its co-founder Kevin Rose sold his latest start-up to Milk to Google earlier this year and joined the search giant.

Rose almost joined Google four years earlier as the two held talks about the sale of Digg. At the time the price being talked about for Digg was between $160m and $200m, but the deal fell through and its fortunes subsequent declined.

In the intervening years the news aggregator saw its fortunes wane and traffic fall leading to its final sale at a fraction of its former value.

As well as its founder many of its staff have already left.  In May, the Washington Post hired 15 members of Digg’s engineering team for its SocialCode digital media subsidiary. That accounted for more than half of the company’s overall staff.

Techcrunch is reporting that the Washington Post ended up paying $12m for the Digg team — although that figure sounds very high.

It is also reporting that LinkedIn paid between $3.75m and $4m for as many as 15 different Digg patents including the patent on “click a button to vote up a story”. This would mean the total price paid for Digg could be as high as $16m — although there is no confirmation of that.

Talk of substantially more being paid for Digg is, however, supported by comments made by Digg CEO Matt Williams who disputed the $500,000  sum first reported by The Wall Street Journal. Williams said that “the overall consideration is significantly larger” and that it was a combination of cash and equity.

According to Williams, who will be leaving the business after the sale Digg will live on with the team from Betaworks.

“Betaworks is combining Digg with News.me, a Betaworks company with an iPad app, iPhone app and daily email that delivers the best stories shared by your friends on Facebook and Twitter. Digg will join a portfolio of products developed by Betaworks designed to improve the way people find and talk about the news. Betaworks founder John Borthwick will be the CEO of the new Digg.”

He added that Betaworks will shortly unveil a new cloud-based version of Digg to complement the current News.me iPhone and iPad apps.

Williams said that after the Betaworks transition is complete, he’ll be joining venture capital firm Andreessen Horowitz as Entrepreneur in Residence, where he will be working with many other visionary tech startups.

Rose added: “I’ve always been a fan of John’s product vision and the companies he builds, funds, and advises. John understands the real-time nature of the web and how to capture and surface trends as they occur. Given his experience with bit.ly, news.me, and Chartbeat I can’t wait to see what he does with Digg.”

While Digg has lost much of its traffic it had been staging a comeback of late following the launch of a Facebook app. It currently racks up around 16 million monthly unique visitors.

On its blog Digg said it had since its launch ini 2004 has received more than 28 million story submissions, 350 million article votes and 40 million comments.

Near its height in 2006 Rose famously appeared on the cover of Businessweek magazine (above) alongside a headline saying “how this kid made $60m in 18 months”.

It was then in 2008 when Google and Digg held talks and apparently came very close to a sale as some at Google saw it as a “way to improve the quality of Google News by using Digg’s voting mechanisms as social signals”.

However, the deal foundered and Google thought it could launch its own project and went on to launch the now long forgotten Google Buzz, which put it on its long slow road to Google+.