Fix Digg’s Miserable Business Contest

By Ben Schaechter on 1/4/08schaechter@creighton.edu

AbstractAs Nicholas Carlson states on Alley Insider, “Digg’s revenue blows.” Despitemillions of unique visitors impressing Digg’s pages every day, such tech friendly usersoften are not as keen on clicking on advertisements compared with the “typical” internetsurfer. Thus, Digg’s problem is not

entirely

one of advertisement revenue, but one of cutting costs. To combat such a problem I am proposing a three-pronged attack: 1)Reduce the employee workforce, 2) Implement a bandwidth compression system and 3)Redesign the structure of the website to better serve targeted advertisements.Basic Information

This information will be referenced throughout the paper and is here for your reference.2008 Projected Revenue $8,500,0002008 Projected Losses$5,300,0002008 Projected Total Operating Costs $13,800,000Prong One: Taking into Account Employee WagesAccording to Digg’s “About Us” website, they currently employ 80 people.Below is a [very] rough estimate for maintaining such a robust workforce:Upper-level management:5 employees @ $150,000Senior programmers/designers/IT.20 employees @ $80,000Entry programmers/designers/IT.45 employees @ $60,000Receptionists/support staff10 employees @ $35,000

$5,400,000

So employee wages account for roughly 39% of Digg’s total operating costs. Asmost everyone who views Digg from the outside, 80 employees for a rather static websiteseems quite hefty. Thus, to tout what hundreds of people have already said, letting go of some employees and retaining a few highly productive ones at a slightly higher pay gradewill definitely trim some costs off of their deficit.Besides, the Digg community arguably drives itself. It is user-submitted contentand advertisements are being served by a third party (Microsoft). In that case, what is theneed for lugging around 80 employees when the same work could be done by perhapsless than half of that number? Reduce the size of the team and keep the entrepreneurialspirit of Digg alive. We have witnessed enormously popular sites (i.e. Pirate Bay) beingrun by sometimes less than 5 employees.

According to TechCrunch, http://www.techcrunch.com/2008/12/20/diggs-sorry-revenue-stream-and-rumors-of-an-experimental-ad-product/

Prong Two: Data Compression SystemTraditional SystemMy SystemIn the case that Digg believes that they must retain a high number of employees toaccomplish their programming goals, other systems must be considered. Since Digg’s page-flow seems to be quite redundant (consisting of either lots of links or lots of comments) a revolutionary data compression system may be worthwhile.The system that I am proposing is simply a compression system for internet fileserving. We have witnessed this on a smaller scale for downloading certain files such as.zip or .tar.gz. By applying the same logic to Digg’s very redundantly coded pages,usually consisting of hundreds of comment strings, the amount of data being sent could be reduced dramatically.More than likely you now realize that this requires a buy-in on either the part of the user or the browser to decrypt and uncompress the entangled preprocessed code fromthe server. Therefore, implementation of such a large-scale project may seem daunting.However, a noticeably large percentage of Digg users have some background in the ITfield. Thus I believe implementation could be done one of two ways:Implementation OneImplementation Two- Digg develops and releases a compression- Digg develops and releasessystem that can be added in as a Firefoxa data compression systemadd-on.that anyone is free to use.- Digg makes the source code available as- Digg encourages other an open source project where anyone mayprominent companies tocollaborate.collaborate on the project.- Digg community realizes potential of - Companies rally together such a data compression system and ralliesto have compression engineto have it incorporated as a feature of futureincorporated in futureFirefox distributions.browser distributions.With Firefox being the predominant browser of choice for Digg users, (roughly70%) buy-in on a project could be monumental in terms of cost savings. For example,assume that all users accessing Digg’s website cost an equal share of bandwidth. If the70% of Digg users who browse with Firefox all adopted the compression program (or if

Server-side code (php,RoR, perl) executesand outputs htmlCompression enginecondenses file size andserves file.Client browser interprets and decryptscondensed file.Html code is renderednormally by user’s browser.Server-side code (php,RoR, perl) executesand outputs htmlHtml code is renderednormally by user’s browser.