They don't have a scalable revenue model. The corp dev folks at MSN might want to think twice about this one. This is an inside baseball site that will never be much more than they are today.

@sggrf: All that matters are the details of their advertising deal with MS. If there's some kind of out-clause if they're purchased by Google then I don't doubt that MS would find that an unattractive option. Of course they don't have a scalable revenue model, of course they're never going to make hundreds of million dollars a year--but they're a foothold for Microsoft, and in a market they want a piece of where they've been so dominated by Google they are willing to pay out the ass for this. It's the same reason Facebook is now valuated at 15b, it's the same reason they've been spending tons of money on the Xbox. They do not believe in slow growth, they want to either take control of or a gain a significant market share in each sector they enter.

Digg is worth it if they can somehow, SOMEHOW, intersperse some of its features with Yahoo without alienating both user bases (which are vastly different), and if they can somehow tout Digg+Facebook as a big strength in the teenager and early 20s demographic to advertisers.

Microsoft should buy digg in anyway with any value and make it as their search engine. Peoples use google to search because of their cool name. Digg will be a gr8 alternative name for Microsoft. go to digg.com & search it. With Digg, I think this is their only chance to compete with google in search market.

@doshomik: I earnestly hope that you are a gimmick.

$200 million for all of Digg makes infinitely more sense than $280 million or whatever for 1.6 percent of Facebook.

Just sayin'.

@doshomik: Are you taking the piss?

@JG: My thoughts exactly.

I get the feeling that the people who place valuations on these companies are not actually Internet users. We who are Internet users are somewhat a mystery to them and they are hoping that we all go back to watching TV and reading magazines any day now.

We, on the other hand are hoping that they will all enter nursing homes soon so we don't have to spend so much time figuring out how they have trashed their PCs.

@doshomik: So you think someone should buy it for the name? Well I have the domain searchbeotches.com. Do you think I should ask for mabe $2 million?

This explains why Julia A. has been sharing her Milk Shake with Kevin, she's hoping for a big payout =)

@smashface: You should make that the web 2.0 harlot search engine. I think you could go two ways with it--one would be with Julia Allison and her ilk, the other way would involve you contacting Melissa Gira Grant.

@Jordan Golson: Buying Digg this buying pageviews and a limited amount of growth. Investing in Facebook is a bet that they'll do something cool, or a bet that if Google invests, Microsoft will miss out on something cool.

I just don't see a reason for MS or Google to buy Digg. The only thing Digg has to offer is users, and they're very prone to whining.

If Facebook is $15B, it kinda seems like Kevin should be able to get more than a measley $200m. Of course, there's no fundamental analysis that's gonna get 'em to $200 million. Digg is a premier marquis property. It's a starting off point for the internet. It has a fanatical fan base, and a great product. So what if Microsoft only monetizes their pages at a few pennies per thousand. There may be only one buyer that can afford a Yahoo price tag, but there are at least a dozen that can afford the Digg price. Hmm. Let's see: Microsoft, Google, Yahoo, AOL, IAC, Murdoch, CBS, NYTimes, Amazon, Apple, Cisco, eBay. It's a long list.

@jabilk: It's "marquee". Digg is not royalty.

Sorry, but that's a huge pet peeve of mine.