In the wake of my Web 2.0 business model post yesterday, I’ve been thinking some more about Digg: Digg the cool service vs. Digg the business. To be honest, I’m not a huge Digg user, although I just installed the Digg extension within Firefox so I expect to be Digg-ing more often.
So, the question facing Digg (and the investors who just pumped $8.5-million into it) is how you take a popular, free service, and generate some revenue from it. The most simple route is advertising by running contextual-based ads against the content and/or attracting advertisers who who want exposure to Digg’s user base. Another revenue route is Digg Labs, which currently feature two projects – Swarm and Stack. Perhaps some of all of these projects can be turned into premium services.
Of course, Digg and many other popular Web 2.0 companies may not be in the business of creating sustainable business models. They may simply be in the “build it and they will buy” business where you strike lightning in a bottle, run as fast as you can for as long as you can to get as many users as you can so someone decides to acquire your users and database.