24/7 Wall St.

Digg.com was once so important to web 2.0, the spread of information and social media behavior that its executives were often interviewed about the future of news on the internet. Jay Adelson, who founded Digg, once had a status similar to the founders of Groupon and MySpace.

Digg’s best days are behind it and its future days may be numbered at a level which will not allow the company to survive another year. Digg has just cut 37% of its staff and has only 42 people left. Its recently appointed CEO said the company needed to make the reductions to reach budget goals for 2011, but as he made the announcement, many of the firm’s key managers left. A company with a bright future does not have to deal with either the problems or indignities of this sort of exodus.

Digg was once in the top 25 most visited websites in America, but that was nearly four years ago.

A look at the top 50 website in the US now shows that unsuccessful MySpace still makes the list. Facebook is in the No.4 spot with 148.4 million unique visitors in September. The largest social network company says it has 500 million members worldwide. The odd micro-blogging site Twitter even makes the list with 23.9 million unique visitors.

The press is full of analysis about which web 2.0 firm will be the next Digg or MySpace. It used to be that the concern was that a more popular website would come along and replace the more mature social destinations. That is no longer the case. The trouble these companies face now is that the media and their members realize the sites collect personal data and sell it to marketers for the highest bid. In theory,  they are supposed to be web destinations where personal information is supposed to be kept confidential.  The reality is that they are commercial enterprises meant to milk their visitors of whatever they can to make a buck.

The privacy issue was always a bogus one that the social networks hoped would not emerge as part of the debate about the relationship between social media companies and their members. It was also something that most “members” of social networks knew they could not ignore. Corporations need to make money. They are not charities no matter how much their visitors wish they were. People cannot go to a “free” Facebook indefinitely and exchange pleasantries and secrets with their friends. Someone has to pay to keep the lights on.

Privacy has never really existed in any form of media. Newspaper publishers always knew the names of their subscribers and where they lived. The same was true with cable TV subscribers and the subscribers to new video services like Hulu. The media is built on a simple bargain. It will give you content or a place to “live” with friend or associates, but in exchange it will use who you are and what you do as payment.

Douglas A. McIntyre