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When Online Communities Kill Businesses

Like with Digg the community itself had a big effect in what happened – Image Courtesy Digg

The social news aggregation site Digg recently sold for the ridiculously low price of $500,000 to some little known company. Quite an epitaph for a previously high flying superstar of the web 2.0 age. The most obvious question to ask is what happened? The real story is that the usual suspects behind the death of Digg may not have delivered the final blow that did the service in. While Twitter and Facebook get a lot of credit for diverting Digg’s traffic base, the truth of the matter is that Digg’s main traffic core used Twitter for tweeting and Facebook for conversing with friends. In essence, they were using them for what those services are meant for. They were not using them for the features and services that Digg was doing. That is the real answer to the question of what killed Digg. The evidence points to Reddit. Reddit operates along the same format and formula as Digg. Users submit news item and other users vote it up or down. Users comment on a news item and other people comment on their comments and vote on their comments as well. It is a pretty straightforward formula.

What Digg brought to the table, however, is more of the right attitude according to this core community. Digg ever since it got big had bigger goals of becoming a large media company powered by its community. While this is commendable because Digg’s initial backers had to at least get their money back and its founders are entitled to some profit, it rubbed the core community the wrong way. You have to really look at Digg as a glorified forum and to really understand this dynamic. Whenever a forum decides to go to a paid model, the most common complaint heard among the user base is along the lines of, “We create the content, we provide the traffic, we provide the loyalty, and we even promote this place to our friends and family. Why are you going to try to make money on our backs?” That is a very common complaint because in the forum content creation model, the community looks at itself as a co-equal partner with the site’s operators when it comes to content creation. On many levels, they are correct. Forum members do generate the content. Forum members even post links to other forums. Forum members tweet about their posts. This has a large mushroom effect and it drives traffic, it drives discussions and it drives activity. It also generates a lot of content in a very short period of time.

The problem is when the forum owners move in such a way that the unpaid psychological benefits that the community views as its wages are minimized, trivialized, under appreciated or in some way diminished. This is where the problem begins. Many forums fail because of this. The only ones that survive the transition to a paid forum model are those that already have a huge traffic base and deal with specialized content. Some of these forums are adult content forums. Others are highly technical or highly esoteric forums. Regardless, there is a very real danger of community members voting with their feet whenever a forum seeks to transform itself into a much more commercialized entity. This is what happened to Digg.

Reddit did not win out over Digg because it had better technology. It did not win out because it was better promoted or it was better structured. In fact, during Digg’s heyday, Reddit was just one of the many news aggregator sites that were in Digg’s category. What happened? Reddit’s secret is in editorial control. Reddit early on recognized that what powered and fueled Digg was its user base. You do not piss off your user base and expect it to be forgiven and taken lightly. That is why when you look at Reddit’s configuration and its decidedly anti-commercial orientation, you can see how it appeals to Digg’s former core community. When you look at the front page of Reddit, it is very simple, just one relatively small ad on the side and the rest is just purely community driven content. This is in stark opposition to Digg’s redesigned look and features. No wonder Reddit won because they got it. They focused on the community and maintaining the community’s loyalty and the community has rewarded them by making sure that Reddit has a high traffic base. When it comes to making money off of a website, it all boils down to a numbers game. Either you have a small amount of traffic but a very focused and targeted traffic that would click and buy from your ads immediately or you have a lot of traffic and you just play a conversion game. This means that of 100,000 people that visit your web page everyday, 1,000 would click on the link and of that 1,000 maybe 10% would buy something. There is enough calculation here that Reddit is able to pay the bills and at the same time keep its community loyal. Reddit is what killed Digg. In effect, community is what killed Digg. It is not technological evolution and not changing tastes, but the power of a ticked off community.

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