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Digg Lays Off 25, Accused of Creating Fake Accounts to Game Its Own System

DiggLogo.jpgThis has not been a good week for Digg, and it’s only Tuesday.

First, the content-sharing site announced Monday that it would slash its staff from 67 to 42. Then, later that day, Digg user LtGenPanda published a long, detailed blog post titled, “Did Digg game its own system to benefit publisher partners?” and accusing Digg of creating fake accounts to boost the Digg referrals of its publishing partners.

Recently named Digg CEO Matt Williams on the layoffs, from the Digg Blog:

When I joined Digg six weeks ago, we set an immediate focus on improving the Web site. We listened carefully to user feedback and started making changes to generate momentum in our business.

As I mentioned in one of our first all-hands meetings, another top priority was to take a hard look at the entire business, across product, sales, and operations. Through the time I have spent with each of you, I’ve been impressed by the commitment and enthusiasm you’ve shown. I’ve also learned a great deal about what is working well at Digg, and what is broken.

Many things are working well. The team is listening and acting quickly on the feedback from our passionate community. We’ve been able to deliver nimbly on the new platform, with over 100 bug and feature releases to the web site in the past two months. Our Diggable ads product has seen a notable increase in use by advertisers and clicks by users.

Unfortunately, to reach our goals, we have to take some difficult steps. The fact is our business has a burn rate that is too high. We must significantly cut our expenses to achieve profitability in 2011. We’ve considered all of the possible options for reduction, from salaries to fixed costs. The result is that, in addition to lowering many of our operational costs, I’ve made the decision to downsize our staff from 67 to 42 people.

It’s been an incredibly tough decision. I wish it weren’t necessary. However, I know it’s the right choice for Digg’s future success as a business. I’m personally committed to help find new opportunities for everyone affected by the transition. Digg’s board members have also offered to help find placements within their portfolio companies.

Let’s please use today to show our sincere appreciation for our friends and colleagues who will be moving on. Tomorrow, we’ll go forward with a new strategy for Digg.

The introduction to the post from LtGenPanda, which goes into pages of vivid detail:

Digg recently published a blog post titled “Digg’s Algorithmic Mystery Tour” Oct. 15. While a Digg blog post is a normal thing, a post about the algorithm was very surprising to me. Why did Digg — which never bothers to blog about very visible changes, numerous bugs, and issues — decided to blog about its secret “algorithm?” They never even verbally discussed it in public.

Since the announcement, the front-page stories have changed. A lot of sites not found much on the front page of Digg since the v4 fiasco started to resurface frequently. Many Diggers noticed this, and there has been a lot of chatter about this. Many Diggers wondered, how did such a small “tweak” to the algorithm cause so much change to the front page? I wondered this, as well.

Because I found this so strange, I wanted to find an answer, at least for my own edification. The main reason for my curiosity was that most of these sites never got enough Diggs prior to the “algo” change to make it anywhere close to “top news.” I play all the time with the various social network APIs (Digg, Twitter, Google, Facebook, etc). This is more of a hobby to me. What started as a casual search for an answer has now turned out to be what I think is a major revelation — big enough for me to go public about it. Essentially what I think I have discovered is that someone has created dozens of accounts in order to make sure that Digg’s publishing partners get front pages on the site, so that those sites get Digg referrals. They certainly had not been getting many Digg referrals in the last several weeks before the recent “algo” change.

If you’re really curious, here’s a link to interactive data from LtGenPanda.

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