Digg's Miserable Business Model, Losing Millions of Dollars

Digg raised $40mm in VC. VCs don't give you money to put in the bank... they give you money to hire people and invest in things that might be profitable in the future.<p>Yes, Digg could probably have bootstrapped. But they didn't, they raised money, and once they did that, the money that the VCs gave them was meant to invest, which is guaranteed to mean that the company shows a loss.

As far as I see Digg has about 10 times the staff of Reddit. That seems a bit excessive to me. What are all these people doing?

On those numbers Digg has revenues of approx 3 US cents per unique visitor. Not too bad, surely? How much could they charge for advertising?<p>It costs Digg about 5 cents per visitor. Where is that going? Seems excessive for bandwith + servers. The content is user generated, I cannot believe that they are spending much of that $14m on development or administration.

they have too many employees, my guess its an inferiority complex....big site? means you need to have big company to back it up...meanwhile 1 person sites like plentyoffish are raking it in w/o huge costs

1. Collect an audience of rabidly anti-commercial poor adolescents.<p>2. Put up banner advertising.<p>3. ???<p>4. Profit

The advice in the article seems good.. digg.com/movies ads related to movies/blockbusters digg.com/music music ads .... ads targeted according to categories...

If you're going to editorialize in the link title, at least spell properly. Or did you mean they're just taking the money to the park and setting it free?

Misleading title. The article actually compares digg to sites with a <i>similar</i> model and points out how much more profitable they are. Titles matter...<p>Also, digg's design is poor. It has too much space spent on borders. With a cleaner interface, it would have more add space to monetize.