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Why Google Isn't Spending $200 Million On Digg

howard-cash.jpgThe price is wrong.

Digg is truly the most useless of the big Web 2.0 sites. It won’t make you money and it can’t make money. Its early investors and founder will make money, and if they pull off a sale, management and the founders will have done their job.

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Digg has tried to Digg their ‘acquisition’ for almost two years. TechCrunch usually delivers the news. Yawn. The whole strategy is not horrible as the media companies don’t budge until they hear that someone else has shown interest. If it does not work the first few times though, you end up stale.

The latest rumor is Google buying Digg for $200 million. That would imply that Google (GOOG) needs traffic from the lunatic fringe. They don’t.

So far, the media companies have not liked what they see, be it price and/or opportunity. No surprise to me.

If they are truly up for sale and they have not gotten a deal done during this web 2.0 binge, they are on their way to smaller founder returns. Not horrible at all, and I think it’s smart for Kevin Rose to be trying everything he can do.

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He, of course, knows more than anybody how little influence his site really has for everyone but him.

Phoenix-based venture capitalist and entrepreneur Howard Lindzon has run a hedge fund for more than a decade and is a partner in Knight's Bridge Capital Partners; he is also an investor in SAI parent company Silicon Alley Media. He blogs at howardlindzon.com, where this was originally posted.

See Also:
Zune Tries Buying Digg Love, Gets Squat
Digg Meetup NYC: Kevin Rose Meets His Sweatiest Male Fans
Digg's New Recommendation Tool A Big Help Already

 

On February 28, Axel Springer, Business Insider's parent company, joined 31 other media groups and filed a $2.3 billion suit against Google in Dutch court, alleging losses suffered due to the company's advertising practices.

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