Will Diggers dig a corporate overlord?

Update at 3:35 p.m. PST: Digg CEO Jay Adelson has posted a blog that seems to be saying talk of a Digg sale is much ado about nothing. My colleague Caroline McCarthy has written about what Adelson had to say on News.com's The Social.

Are we nearing the end of Digg independence?

Michael Arrington over at TechCrunch is reporting Friday that Google, Microsoft, and two media companies may be preparing to make an offer on Digg. Just how much Digg could fetch isn't quite clear: Arrington reports it's likely to be in the range of $200 million to $225 million. If those figures are accurate, that's well below the $300 million price a bank working for Digg was floating a year ago. Interestingly, it's the exact value BusinessWeek put on Digg in a controversial August 2006 cover story.

But here's a question lots of these prospective buyers must be asking themselves: if they buy Digg, will users rebel?

Digg founder Kevin Rose

(Credit: Digg)

The Digg community has never seemed terribly fond of corporate types. Let's not forget the Great Digg Rebellion of May 2007. A story was posted to Digg that contained a decryption key that allowed Linux users to decode and play HD DVDs. Digg execs received a request to pull the story down and did so, believing they were following the law and the site's own terms of use that ban posting infringing content.

Then all hell broke loose. Digg users posted hundreds of stories with links to the decryption key. Not surprisingly, those stories were dugg up until the site was blanketed with the content they had tried to pull down. Digg reversed course after users made it clear who really runs the company.

Rose wrote in a blog"...after seeing hundreds of stories and reading thousands of comments, you've made it clear. You'd rather see Digg go down fighting than bow down to a bigger company. We hear you, and effective immediately we won't delete stories or comments containing the code and will deal with whatever the consequences might be. If we lose, then what the hell, at least we died trying."

Just last week, my colleague Caroline McCarthy asked Rose at a conference in Miami how the Digg community would react if his company got acquired. He had some very interesting comments:

For us, we have a fully funded business model, and we have a great ad relationship with Microsoft, and it feels really good to be able to react quickly and not have to worry about some of the problems that come with working with a larger company.

I've had several friends that have been acquired by the Yahoos and Googles of the world, and while there is some upside in certain things, for the most part, it slows things down. You can't get a product out the door fast enough.

OK, whether Rose is thrilled about working for The Man isn't as important as what users think. Early returns on the Digg boards aren't promising. Just a sampling of the first page of comments on the thoroughly dugg TechCrunch post includes:

•  "Don't sell Digg Kevin! Digg this story he needs to know how we feel!"

•  "DO NOT WANT!!!!!"

•  "NNOOOOOOOOOOO!!!!!!!!"

•  "Crap !!!"

The sentiment among Diggers who accept that selling little companies to big companies is the way capitalism often works is, above all: Don't sell to Microsoft. "If google gets digg. I'm ok with that. If Microsoft gets digg, I'm not and won't be coming back to dig," wrote another user.

No doubt, if a sale does go through, it will be the community that decides if it's money well spent. A Digger, not surprisingly, perfectly summarizes the dilemma for any corporate suitor. Here's a slightly condensed version:

1. msft has spent enough time on this site to realize they are hated, why would they buy a community that hates them?

2. google has lost a few billion the last few months. while a digg purchase is still a drop in the bucket for them, i assume social website acquisitions can't be a high priority for them and will be frowned upon by the market

3. after hd-dvd, i wouldn't want digg if i had to buy it. why drop a couple hundred mil for a group that will turn on and shut the site down (on) you in a second?

Good points. I suspect a few M&A types are asking themselves those questions right now.