Digg and Twitter.

Kevin Rose gave a interview today

Are you concerned that if economic conditions get tougher and the ad market tightens up, that you’ll feel forced to sell?

Rose: Digg has 25 million people a month coming to the Web site. We’re not going anywhere. We have very strong financials, we have a very clear path to profitability, we have a small team. We’re 50 employees.

What about hardware and R&D costs?
Rose: Digg’s very lightweight. We don’t serve, you know, YouTube videos. So for us it’s not like we have some crazy bandwidth bill at the end of the month. I mean, it’s crazy, but it’s not YouTube crazy.

*************
Ok so digg has 300-500M pageviews a month, probably 20k/month in hardware/bandwidth servers etc, no real work for their 50 employees to do, “25 million” users coming to the site a month they can’t make any money yet somehow. 50 employees * $7000 salary/month = $350,000/month + 70k random expenses gets you at 420k/month in expenses. That means diggs revenue is far below that… How on earth do they expect to sell themselves for $300 Million ? The site is nothing more then a collection of links to news stories that are indexed by google and thereby get a massive amount of referrals from google.

Twitter.

Yahoo Finance Google finance etc all their postings in the forums are nothing more than short twitter messages. I don’t see why twitter doesn’t enter this space and own it. The CPM’s are among the highest paying on the internet and users would use the system religiously because it would provide utility. I think this is where the real money is and if twitter doesn’t own this space someone else will, and earn 10’s of millions a year because of it.

19 Responses to “Digg and Twitter.”

  1. Digg Loather Says:

    Kevin Rose should sell as soon as he can because his users are a bunch of anti-advertising wiseasses who have no value whatsoever to advertisers.

    Digg will NEVER be profitable. Get out while you can, Kevin.

  2. Jim Says:

    All that traffic and they still cant make money…. Digg doesnt seem like a site that needs 10 people to run, much less 50. They are wasting money somewhere, probably in salaries and other infrastructure.

  3. Mayo Says:

    Still no profit?!?…

    BTW just read that Facebook is bringing it’s interactive music station, with their negative financial gearing this will put them in further negative because the internet radio today is the biggest money looser. Yahoo officials stated that their online radio is the biggest looser and with licensing spike they would loose cca 24 million dollars per year.

  4. /pd Says:

    not sure what you mean when you say “Yahoo Finance Google finance etc all their postings in the forums are nothing more than short twitter message”
    can you clarify ??

    The posts to the discussion forums on Google Finance has the same limits as groups. So I am not seeing the value of 140 char doing any good in that space

  5. Markus Says:

    Just saying messages in finance forums are extremely short for the most part. Most day traders tend to use IRC anyways, I think that twitter would be a far better and more effective means for day traders to communicate.

  6. Max Says:

    I don’t think Twitter would go well with finance.

    I totally agree with you that “messages in finance forums are extremely short”. But if you actually check out these messages, you will quickly see why.

    Actual Google AAPL board:
    “Selloff to $115 tomorrow”
    “On the road to 300 in 12 months”
    “For the Bulls Chugga, Chugga”

    99.9% of messages on Yahoo and Google Finance are absolute garbage. And these are exactly the same messages that are under 140 chars. All of these types of messages are just trying to pump up or down play the stock in an idiotic attempt to influence readers.

    The very few useful messages are good because they contain a bit of analysis and actual facts which takes definitely more than 140 characters.

    Day traders will stick to their tried and true IRC channels as they have since ’95.

  7. Simon Says:

    I don’t see why Digg needs 50 employees either, Craigslist runs on 25 and they are a lot more profitable.

  8. John Says:

    50 people can mean alot of things.

    If they are using 50 to simply keeping the site online, and slowly making improvements, then yes it is foolish and they are doomed.

    Google’s search with 50 people looked identical to how it did with 5. But the 45 extra people were working on the next generation of google projects that launched them to where they are today.

    It is safe to assume a large percentage of the developers are working on new projects/features with the goal of boosting the bottom line. Whether it works is another story.

    Whether these projects work is another story.

  9. Marc Says:

    Hahaha… I am right with you guys. As soon as I read the line “clear path to profitability”, I was thinking WTF??? How on god’s green earth could they still be unprofitable?

    I also have to laugh at a question of ad market tightening up because of the economy. He hasn’t even been in the workforce for a complete business cycle yet, never mind running a company. WTF does he know about tightening ad markets?

  10. taualex Says:

    Traffic from Dogg has the worst CTR…. so, i doubt they are profitable as well

  11. Dave Says:

    Digg is already *owned* by Fox News, MSNBC and all the other big news entities so why would any of them want to buy Digg when they already have it for free ??

    In my opinion Digg is just a mash-up of stories that you already hear on the network news. It’s not a true “independent news source” like it claims to be and Digg is very unfriendly to bloggers who are submitting their own stories. Plus, they have the most horrid user base of fanatics and lunatics.

    As far as the comment on Twitter, I have to agree with Markus on the comparison between micro-blogging (Twitter) and Yahoo’s Financial Message Boards. Jeez, I’ve been on those Yahoo Finance boards since the late 90’s and it’s gone downhill but Twitter is pretty dumb and the site is horribly designed. I wouldn’t use it.

    Funny thing about the Yahoo Finance boards… for people who are supposedly trading securities for a living, I’ve seen the worst spelling, grammar and writing on those boards (especially GOOG’s boards). Makes me wonder how any of those people could possible pass a NASD 7 or 63 license to become a broker.

  12. Sebbi Says:

    thanks for the post. i hope to listen some more.
    Best regards from Sebbi

  13. Is advertising-supported the magic potion? at MuSMo - Free Music Says:

    […] Google Adsense, one known official full-time employee and maybe 2 hours of work per week, recently blogged about his rough estimate on the running operational cost for Digg to be around USD$ 420k per…. Markus was also highlighted that Digg is nothing more than a collection of links to news stories […]

  14. Nicholas Says:

    I’ve met with the Digg guys. Most of the 50 are not engineers, a lot are Biz Dev/Marketing/Legal, etc. dealing with expanding Digg through non-technical methods as well as building the brand name.

    There are only 10-15 engineers. Additionally, you have to remember that Digg has things such as APIs where people are building off of this platform.. so you need the manpower to make sure this is scalable and runs properly.

    Also, they are building future uses/applications of Digg. Digg is more than just Digg.com, it is also a screensaver, etc.

    It is not that surprising that Digg is not profitable, most Web 2.0s are not profitable — Facebook isn’t even profitable yet. Once their deal with MSFT is up they are on their own again.

  15. Nicholas Says:

    As far as Twitter for finance goes.. . The key is getting people who are actively in the mix of it all for real people to want to use this (meaning traders, and they are too busy and wouldn’t want to use this).

    All of my grad school friends at Stanford say they turn off anything that distracts them from the market (including cellphones so no twittering) while they are trading.

  16. Michael Stevens Says:

    I signed up at facebook for a couple of reasons. One is to see the website since it is so popular. two. I wanted to see if I could promote my website. I did create an ad campaign but it is complicated to run and renew. I think I have to create a completely new campaign each time i want to run one. Does anyone have any help to give on this topic……Thanks, Mike/ezdate123

  17. Travis Says:

    Agree with Markus on Finance Twitter! I was using Twitter to communicate with other investors, but quickly found out that my regular friends got sick of my stock tweets. A group of us got together and created Finkker (http://www.finkker.com) to connect directly with other investors. We have live stock data and the ability to “follow” companies so that real-time news shows up in your feed as well. We’re also doing some advanced data mining to build some cool stock trending charts. Check it out and let me know what you think.

  18. Shawn Says:

    Twitter is a very well run company, its not going anywhere in near future.

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