Business Week ran a cover story last week for their August 14th issue that covered one of the most successful sites, about which many either know so much or so little, Digg.com. Ask almost any Internet technology person, walk over to their desk even, and you might see Digg.com loaded on their screen. IT types make up more than 90% of the active user base finding stories and voting on them. The site is Google News but with a human touch; it’s a platform for collaborative filtering by people not by computers. And, Digg is on fire with people valuing the company between $60 million and $200 million even though it looks to make not much over $3 million this year. The valuations numbers are part, its estimated one million daily readers, part, its user base that has been doubling every three months, and part hype.
Other sites too have received healthy valuations even though their numbers seem to suggest otherwise. Del.icio.us, purchased by Yahoo not that long ago comes too mind, and then of course there was MySpace. Just over a year ago when News Corp bought the site via its acquisition of parent Intermix, many thought they had over paid. Today, student focused Facebook, which commands a fraction of the market share, reportedly turned down an offer that eclipsed the price MySpace received. With its sustained hockey stick growth and ever increasing share of display impressions, MySpace has proven most skeptics incorrect. That MySpace has a viable, sustainable, profitable business was further enforced with news this week that Google will pay $900 million over 39 months, or a little more than $23 million per month, for the right to serve and monetize MySpace and other Fox Interactive search inventory.
Several people had speculated that instead of inking a deal with one of Google, Yahoo, or MSN that MySpace might want to build its own search engine. With 100 million users and more of them leaving the site to go to Google, they had the most realistic chance of creating a viable engine. This is why, in a way, Google’s deal with MySpace only shows the threat that the site posed. The deal not only adds revenue but more importantly legitimacy to a site that seemed to constantly need to defend itself. It’s a shifting of the guards if you will. For years, the talk was of AOL. That site epitomized community and what the Internet offered. Today, it symbolizes a company lost and looking for its identity as users flee to other services.
While certainly a coincidence, MySpace’s most recent success seemed to coincide with AOL’s most recent struggle. The one time king of the ISP made many search marketers dreams come true when they posted publicly approximately 20 million search queries performed by more than 600,000 users over a three month time. The data has turned into all sorts of mainstream news and blogosphere fodder, containing everything from the mundane to queries uncovering the deep, dark psyche of humanity.
As Jon Battelle of Federated Media says, "It’s only by these kinds of screw-ups and unintended behind-the-curtain views that we can push this dialogue along,” He adds, “As unhappy as I am to see this data on people leaked, I’m heartened that we will have this conversation as a culture, which is long overdue.” And he is right. Our search data is so valuable that Google has paid close to $2 billion dollars in order to secure access to it from two of the largest sites. Our search data is, in my opinion, the new credit data. It contains our most intimate details, provides a great deal of insight into who we are, is used in ways we have little insight and control over, and in the end we have very little say even though it’s our data.
We have entered the beginning of a new phase. We have entered the era of MySpace and the era of a new type of data. Without meaning to, AOL’s slip showed just how powerful the data that Google controls is, and Google’s deal with MySpace shows the commitment by Google to control it – the new form of credit bureau. MySpace deserves credit in this too, as Google’s move puts a stake in the ground and proclaims it a long-term player in the Internet ecosystem. Not that any had doubts. Then again, the question on everyone’s mind isn’t data, new-age credit bureau’s, and/or the legitimacy of MySpace. What people really want to know is just how impactful the deal is on those that have made their living off the MySpace traffic! There are, without a doubt, some ad networks and individual advertisers which currently soak up billions of impressions monthly and pay out millions in revenue that would like to see their inventory still available.
Digg 
