the j. botter weblog

Kevin Burton says he’s heard from two sources close to Yahoo that the company is going to buy Digg for roughly $30M, with an announcement to come early next week.

I’d heard the same thing from my source, but didn’t want to throw any more fuel on the fire by speculating more than I did by posting the news in the first place. The Digg guys are absolutely right in accepting this offer, because as I said previously, Digg is never going to be worth more than they are right now. The $30M offer means they are getting upwards of $200 per registered users, which is only going to go down over time as more people sign up and companies like NewsVine invade the space that Digg created.

Why doesn’t Yahoo just create a Digg? Surely it would be a lot cheaper than $30M, right? The thing is, Yahoo is obviously trying to become known as the next big one-stop social networking site; it’s why they’ve made the purchases they’ve made. They’ve got the market cornered on social photosharing with Flickr, they’ve got Delicious, and now they’re supposedly going to have Digg under the umbrella. For Yahoo, it’s not about building apps that copy popular technology that’s out there; they could do that in a heartbeat. It’s about getting the installed userbases and also, more importantly, about credibility. Yahoo’s credibility would go down the drain if they simply copied popular apps; instead, they’re buying them, which in turn nets them a little more street cred every time they do it. For Yahoo, making these purchases is a tiny price to pay for the recognition they get for not simply building their own, but recognizing that others have already done it better and bringing them under the Yahoo name instead of just copying the software.

From Om Malik:

I am wondering why would Yahoo do this deal so soon after Del.icio.us acquisition? If there is any truth, and I mean a really big “if,” then why didn’t they buy Digg.com in the first place?

They’re two very different animals. Digg is about social news, where the articles that make it to the front page for everyone to read are only there because lots of people thought they were good enough for the rest of the world to read. That’s how it’s SUPPOSED to be, at least. Del.icio.us is link-sharing, and the two of them combined will make for a nearly unstoppable powerhouse once Yahoo gets the infrastructure going.

Update: Several people have pointed out that TagWorld is around 500,000 thousand users strong right now.  While still being dwarfed by the astronomical MySpace numbers, 500,000 users is nothing to sneeze at.  After all, Digg reportedly is running just shy of 200,000 users, and Yahoo’s willing to part with significant money to get them in the fold, so TagWorld might be worth a bit more, especially if you’re looking at the purchase price being set because of the amount of users.