YouTube Sold, Is Digg Next?

Now that Google has snapped up YouTube for $1.65 billion, one has to wonder how long before they set their eyes on Digg. Digg is a very good target for Google, or any other big media company, to acquire.

Digg is one of the Internet’s biggest success stories. Started by Kevin Rose with just $1,000, Digg has grown to become one of the biggest news sites on the Internet. With over 400,000 members and over 200 million page views per month, Digg has a readership that is nearly as big as the New York Times.

Google would make a perfect buyer for Digg. No doubt, they will get into a bidding war with Yahoo over it, but this will benefit the Digg owners. If AOL hadn’t created their own Digg clone, they would most likely be in the running as well.

A buyout by Google or Yahoo would give Digg access to many resources they would need to improve the site and to keep Netscape at bay. Netscape has been gaining ground on Digg ever since they offered $1000 a month income to the top 50 Digg users to switch over. Digg is in no position to compensate their users but with a big parent like Google, they would have a lot more options open to them.

Digg is a private company that accepted VC money. Venture capitalists don’t stay with a company forever. They cash out by taking the company public or by selling it. With the current wave of high dollar acquisitions, Digg and their investors has to be looking at the site and seeing huge dollar signs.

While Digg will never publicly state that they are for sale, I got even money that says they are open to offers. Back in January there was a rumor that Yahoo offer $40 million for Digg. According to this Business article, Digg is worth at least $200 million, even though they are only breaking even right now. Is a company with just $3 million a year income worth $200 million? I doubt it, but we are in the middle of Dot Com Bubble 2.0, where pricing a website makes absolutely no sense. With these kinds of crazy valuations, the question isn’t whether Digg is for sale, the question is when Digg will be sold.