Baron VC

Now that I’ve had the time to spend some time experimenting with the various social media sites, I think now is a good time to give it a rest and share some observations on what I learned. I don’t claim to be an expert on the subject and I’ve only had real success with one and that was Digg. I’m sure I could do better if I invested the effort but I’ll have to take a more long-term approach.

However, my limited success did give me some insights.

Currently, on the social media scene we have three major players: Digg, Netscape, and Reddit. Although Digg is the biggest and most visible so far, both Netscape and Reddit not only have their strengths but are gaining ground too. One blogger summed it up nicely:

• reddit: for computer science students


• digg: for computer science drop-outs


• Slashdot: for computer science graduates, circa 1980

Kevin Marsh

Here’s my take on the three.

Digg

Overview:
This is the first site to show the real power of social media by mobilizing legions of loyal users that act as both editor and consumer. Many sites that made the front page were put on the map by the surge of traffic and sudden recognition. Users are known to be unruly on the site and off the site.

Demographics:
12 and up

Target Audience:
Anybody from IT professionals to gamers with an attitude.

Traffic:
Like a sugar high. Sometimes sweet to the taste but the empty calories can kill.

System:
A fast-paced cycle of submitting stories and voting (Digging). Submissions consist of a link, title, and blurb. Categories are mostly tech with a recent expansion into other areas (including videos and podcasts).

Voting consists of making “diggs”. There are no negative votes just red flags, disqualification and ultimately banning (much like the yellow card/red card in soccer). Once banished there is no reinstatement although it only takes a malicious minority to accomplish.

Despite some of the algorithmic tweaking, the process of breaking a story is straightforward and 50 plus or minus 10 votes will usually get a story to the front page (with some allowance for velocity) unless buried. Stories under the 200 Digg mark still run the risk of getting buried but beyond that it’s nearly impossible to kill.

There is some rudimentary social networking functions built in that allow you to create a network of friends. However, all direct communication between members take place in the trenches of the comments section for the submissions or even off site.

Self-promotion (real and imagined) of any kind is frowned upon. In such cases, the URL submitted is penalized and not the submitter.

Weaknesses:
Performance has to be the biggest issue. Pages load very slow for certain areas and the submission process hangs occasionally. There are also some concerns about the blogging functionality being used as a foil for spammers.

It’s also easy for a relative newcomer to gain ground quickly. Not sure if it’s a flaw but the power of a front page story might make it a target for gaming.

The aversion held by a disgruntled minority against up and coming sites (especially blogs that are geared toward business or show any kind of initiative in self-promotion), the front page is becoming more and more conservative. To put it another way, it’s quickly becoming a reseller for large media outlets and established blogs (Cnet, Engadget, TechCrunch, etc.). Incidentally, these are probably the only sites with a URL that can’t be easily banned (plus they have direct access to Kevin Rose if it does happen).

Digg remains a very important site for overall TechCrunch traffic.

CrunchNotes » TechCrunch Referral Traffic

The biggest risk is that Digg can easily become a communal feed reader with point-based ranking. Without any fundamental improvements they would run the risk of being overtaken by a similar service that has mass appeal (cool design), low barrier to entry, and better performance (page-loading etc.).

Strengths:
The design is first-class and sets the standard for many startups. The high-paced atmosphere and instant gratification of the site stands out above the rest.

Reddit

Overview:
Don’t let the fact that it looks like unix terminal message board turn you off. This is the Craig’s List of social news sites. What they lack in design is made up for with simplicity and a sophisticated algorithm to ensure the quality of content.

Demographics:
20s to early 40s

Target Audience:
Well-educated hacker-ish crowd disregard for fanciness.

Traffic:
At one point estimated to be 1/3 of Digg (probably much more now). If the content is good enough, a story can remain on the front page for a full day or more (however, their algorithm also provides users with a front page tailored to their tastes as determined by their system).

Since all the readers only have a title and link to go by, they are more likely to visit your site and digest the content. Unlike Digg’s sugar high, the traffic is more like pasta (complex carbohydrates that deliver a sustained source of energy).

System:

Reddit’s system is probably the most mysterious. They’re similar to Google in that they try to take an algorithmic approach that prevents human tampering or gaming. Another noteworthy feature is that users are not only rating the stories but getting rated themselves with every submission and this builds their karma.

When a particular item is promoted or demoted, the user who posted it is either rewarded or punished—a system of editorial karma. In the same way that popular submissions are voted to the top, the individuals who post them get increases in karma. Every redditor affects one another’s karma equally, regardless of his/her karma. Although democracy isn’t perfect, this experiment should supply the public with the information they demand while also rewarding those who provide it.

reddit.com: what’s new online

All submissions are simply the title and link. There is no blurb so in addition to the content, the title matters more than anything. All the more so because of the spare design (no graphics or user avatars). New submissions by users with low karma fall quicker than those with a high karma.

I’d venture to guess that they’re using a sophisticated Bayes filter for the ranking that scores both users and stories along with other statistical techniques to weed out bad apples. So far as I know they don’t ban or filter any URLs.

Also has a personal messaging system.

Weaknesses:
The spare design is probably a turn off for most casual visitors (but actually a selling point for programming types with an affinity for unix). There seems to be a high barrier to entry in order to become a recognized participant. Of course, this serves to filter out users that don’t fit the community.

It’s probably hard to shake up the ranks of established users so that hinder community growth over the long-term. This is pure speculation.

The biggest drawback is probably the lack of a mass appeal. However, this is also what keeps the community in tact.

Strengths:
Since Reddit takes a sophisticated algorithmic approach, much like Google does with search, the operation is highly scalable, low cost (until recently, three guys with garage startup funding), and the content is more or less fresh. Despite significant growth in recent times, the variety of links found on the front page are quite diverse.

The fact that they are able to maintain quality over growth will probably translate into good long-term prospects because quality is all that counts in the end and it’s trivial for a design guru to come and add some visual love.

Netscape

Overview:
This is none other than the brainchild of Jason Calcanis during his all too brief stint at AOL. He saw the potential offered by Digg and so rejigged the Netscape.com URL (still a surprisingly high trafficked site after the fall of Netscape the browser for news and web mail) as a social news site.

The most controversial aspect is that he introduced a system of compensation to recruit top contributors to Digg. This also coincided with disillusionment among a small minority of top users with Digg itself.

Netscape tries to balance the dynamics of a social news service with oversight by news savvy moderators (or navigators as they call it) who are paid a modest salary.

As a matter of personal taste, the design (the visuals and not the system) isn’t too inspiring. In fact, it made me misty eyed by reminding me of the good old days when Netscape used to be the number one browser. The color scheme screams early 90s.

It also uses frames on the left-side for viewing submitted sites (you can easily remove it permanently). This took me aback at first (since current designers shy away from it, thinking it’s intrusive) but once you get used to it, it’s actually convenient and keeps on the site.

Demographics:
Probably the most mature of the three.

Target Audience:
People who casually surf the net. Non-early adopter types.

Traffic:
Like Reddit, the traffic is quite sustained over time. Stories gradually work their way up and stay up quite a while. There is a significant boost in RSS subscriptions if a story hits the front page.

System:
According to the faq it is a combination of editorial oversight and user-driven content along with some algorithmic controls. Also has a pretty full-function messaging system.

Weaknesses:
The greatest challenge is probably balancing the amount of editorial control while maintaining an element of excitement. Also the content tends to be more on the conservative side as well. Of all three it is the most editor-driven so there’s probably a lot that weighs on the shoulders of navigators.

Strengths:
Despite the controversy over headhunting prominent Digg users and accusations of being a cheap clone to Digg, the target audience is completely different from Reddit or Digg. It’s more of a traditional news site only with a very high diversity of sources.

The backing of AOL ensures that it will not be going anywhere and that it will continue to be developed actively and scale pretty well. It is driven by passionate news junkies.

The issue of compensation is one of controversy for some but I don’t see the problem with paying people to do work unless the system takes a more algorithmic approach like Reddit. You need to hang on to that talent.

Observations and Stuff

I think the three sites are very well-differentiated. In fact, the emergence of Netscape split people in two camps: that either it will be a miserable failure or that it would leach all of Digg’s best talent. Guess what? All three are prospering.

For the time being Digg rules the roost. Will Netscape or Reddit make inroads into Digg’s market? I doubt it. There is no way any single site be the be all and end all of social news and none of the services are in direct competition.

However, I don’t think Digg’s position is impermeable. They have scaling issues in terms of the system performance (which is quite costly and something some experts think overly so) and probably the most prone to gaming (due to their size and also due to the low barrier to entry). Even today, the front page of Digg is becoming more and more of a link site to established news services and blogs.

The dream social news site would probably be an enticing combination of the three: Digg’s design and low barrier to entry, Reddit’s sophisticated algorithm and low cost infrastructure, and Netscapes revenue-sharing and deep pockets.

The Rise of Social News Arbitrage

I think one thing that will become more and more prevalent (if it isn’t being done on the side already) is a form of social news arbitrage. It already happens organically when a major story hits the web. However, for marketers doing this on behalf of clients they might try a strategy where they try to get on one social news site in the hopes of getting exposure or being legitimized for other sites. Getting featured on one of the social news site is sure to open doors and make it easier for the submitted site to get covered by other big outlets.

The most common pattern I see is, you guessed it, something gets on Digg, then travels to any combination of Slashdot, Reddit, Netscape, BoingBoing, etc.

Another rising star not included in this comparison is StumbleUpon because it’s more of a browser plugin that gives you random links based on voting up or down the sites they throw you (although they do have a nice homepage with interesting info, it’s not a news site per se). This has an even lower barrier to entry and can provide a good source of organic traffic.

So basically, someone with the right focus and skills would be able to launch a site or service out of nowhere and leverage a traffic from one social news site into another.

Although it is ultimately the quality of content offered, many times popularity legitimizes the content. Will social media be able to remain fresh and open when more and more businesses become aware of the gold mine of opportunities presented by social news sites? Will social media sites simply become a cheap source of traffic spikes to established media partners (essentially becoming an unpaid affiliate for larger and more profitable sites and services)?

I think roles and relationships are still evolving. However, in some cases social media sites may be able to strike some kind of a de facto financial partnership by sharing some of the revenue generated by traffic. I think it could work as long as there is no interference in the community.

This entry was posted on Wednesday, January 31st, 2007 at 3:00 am and is filed under social media. You can follow any comments to this entry through the RSS 2.0 feed. You can leave a comment, or trackback from your own site.