$60-million — can you Digg that?

Plenty of people have had a kick at the recent Business Week article on Kevin Rose and Digg — in some cases a Chuck Norris-style roundhouse kick, such as the one delivered by Jason at 37signals — and it seems to me that (as with so many articles in the media) one of the big problems is the headline, and it boils down to the use of the word “made.” As in Kevin Rose, the guy who “made” $60-million in 18 months.

In reality, of course, Kevin hasn’t really “made” anything, regardless of how Chris Pirillo wants to define the word. Or rather, he has made something — a tremendously useful and popular social-networking tool — but he certainly hasn’t made $60-million. It’s possible that the “people in the know” quoted in the article are right about the value of Digg, but that still doesn’t mean Kevin Rose has “made” $60-million. Even if you assume that venture capitalists put enough money into the company to give it a value of $200-million, he still wouldn’t come close to having actually “made” $60-million.

No offence meant to the authors, but articles like the one in Business Week are not difficult to write — just find someone who has valued MySpace at $3-billion or Facebook.com at $1-billion or whatever, and then divide that number by the percentage held by the subject of your piece. Or find someone who has valued users of (enter social-networking service here) at x dollars each, and then multiply by the number of users at MySpace or Facebook or Digg or whatever you want to write about.

Awhile back, everyone was having a pile of fun taking what Jason Calacanis sold Weblogs Inc. for and dividing by the number of readers, and then multiplying by the number of readers on their own blogs (I’ve got a couple of valuation widgets on the left-hand side of my blog, but I wouldn’t believe either one of them). The Business Week article on Digg is no different. It makes for a great cover line, and it probably gets people to read, but it should be taken with a giant block of salt.

Rafat is right — better not to have done it at all. And my friend Rob Hyndman is right too — the lines between journalists and bloggers are blurring, and not necessarily in a good way.


As I suspected, editing changes and a desire for a snappy cover line seem to be the cause of much of the hoopla. And Stephen Baker of Business Week tries his best to argue that “value” is a nebulous concept, and therefore the story and the number were justified. That’s a nice try, Steve — but all it really means is that the rankings of rich people done by business magazines are also highly suspect. And regardless of valuation, it still doesn’t mean Kevin Rose has “made” $60-million. Period. Which Kevin himself freely admits.

Could Netscape deal be a win-win-win?

The Netscape-Digg story is the gift that just keeps on giving. First there was the offer from Jason Calacanis, formerly of Weblogs Inc., to pay the top submitters on Digg, Newsvine and Reddit if they started submitting stories to the new Digg-style Netscape site. That led to a mild flame-war between Jason and Digg founder Kevin Rose. And now Jason has updated everyone on the results of his little strategy (which some applauded and some — okay it was Mike Arrington at TechCrunch — criticized as an act of desperation) in a recent post.

According to Jason, Netscape has hired three of the top 12 Digg submitters and the top submitter from both Newsvine and Reddit. He also has some stats on how active the top Diggers are (I’d be interested in hearing Kevin’s take on those stats at some point), and expresses them in his typically restrained fashion:

“The top 10 users on DIGG are responsible for 30% of the front page stories on DIGG. That’s 3% of total front page stories each!!! Think about that for a second… the top 10 users of DIGG do 3% of the work each–that is stunning. They get paid nothing but they are responsible for 3% of the total content on the home page. Wow. Like WOW, WOW, WOW!”

Despite all the sturm und drang about the payment offer from Netscape, it’s possible that this deal could turn out to be good for everyone: Netscape has gotten lots of publicity and will get some motivated submitters, and the loss of a few people from Digg and one each from Newsvine and Reddit isn’t likely to hurt them. In fact, the Newsvine member who accepted the deal has a post up about his decision, which is well worth reading. He remains committed to Newsvine as a community, even though he will be paid to submit to Netscape.

Erick Schonfeld of Business 2.0’s blog also has an interesting post that jumps off from the Netscape issue. He says Derek Powazek — whose wife writes the Flickr blog — is publishing a print magazine that contains user-submitted photos, and plans to launch a series of magazines that contain user-submitted content and photos. He said he plans to pay contributors if the magazines start to actually make money.

AOL joins the party five years late

If nothing else, the much-discussed decision to make America Online’s software and services completely free will result in a great laboratory experiment on a truly grand scale, an experiment that will hopefully answer this compelling question: Can a moribund online service — one whose very name has become synonymous with the word “lame,” one whose services are notoriously difficult to cancel, and one which has remained steadfastly a “walled garden” while all around it the benefits of advertising have become abundantly obvious — suddenly undergo a deathbed conversion and become an ad-driven online colossus after years of appearing to not really give a crap?

Time Warner is obviously hoping the answer is yes. The business case is somewhat easier to make than it appeared at first, since the media and entertainment conglomerate will be giving up a billion dollars or so in revenue from customers who currently pay for the luxury of having an aol.com email , but will also save the truckloads of dough it spends on marketing costs, including those billions of sign-up CDs that litter the planet (hint: they make a nice wind-chime style mobile for over the baby’s crib). And online ad revenues are growing strongly at AOL, which no doubt gives TW hope. Staci has a great breakdown of the conference call at PaidContent.

But the bigger question is how many people will decide to use AOL’s services when they are free, and no longer attached to the company’s dial-up software. Is it too late, or can the company make some kind of prodigal son-type comeback?

Enquisite launches — deep site analysis

I meant to blog about this yesterday, but being on dial-up in the middle of a thunderstorm kind of put the kibosh on that idea. A blog search-analysis tool called Enquisite — which I have been testing for a little while now on this blog — launched on August 1, and is well worth a look if you want to drill down into the details of where your site shows up on the various search engines and why. As my friend Mark Evans notes, it isn’t the type of tool you’re likely to use if you just run the average blog. But if you are running a business site and want to fine-tune your search placement, my sense is that Enquisite could definitely help.

There are plenty of search-analysis tools out there that will tell you what keywords people typed in to get to your site and that sort of thing, but Enquisite (which is based in Victoria) gives you an incredible amount of detail about everything related to search and your site, including what page of results your site turned up on for various terms, and allows you to compare the positioning on different search engines from a bunch of different perspectives. Enquisite also says that it is able to do this without actually querying the various search engine indexes, as many tools do (something the search companies frown on). How it does this is a closely-guarded secret, and the subject of several patent applications.

YouTube vs Revver — Revver should win

Amid the news that YouTube has beaten MySpace when it comes to Web traffic (a stat that we should all be somewhat skeptical about, since it is based on Alexa data, as Pete Cashmore points out over at Mashable) there is increasing attention being paid to the fact that YouTube’s success is based largely on two things: copyright violations, and “user-generated content” from which the users in question see absolutely no return whatsoevers.

Obviously, some of those posting their skateboard tricks or a buddy’s lip-synching routine to YouTube get such a huge charge out of seeing their stuff on a website that they don’t really need any more compensation for their efforts — but for those who would like to see a little something in return for all those millions of downloads, there is always Revver. As Scott Karp points out, the guys at Eepybird who did the Diet Coke and Mentos video got $30,000 because their video clip was posted on Revver, but lost out on that much or more because it was also posted to YouTube. Amanda Congdon and Ze Frank have both asked downloaders to post their stuff to Revver instead of YouTube.

It’s possible that the Mentos guys wouldn’t have gotten quite as many downloads from Revver if people hadn’t seen it first on YouTube, but even assuming that’s true, they still deserve some compensation for their work, and the best way to accomplish that seems to be Revver. Why haven’t YouTube or Google Video tried to build the same kind of model that Revver uses? Maybe they’d much rather keep the cash for themselves. In YouTube’s case, they probably need it to pay their gigantic bandwidth bills. (Lulu.tv, Eefoof and Flixya also pay submitters of video).