Digg sold, will merge with News.me

Social news site Digg has been sold to tech development firm Betaworks for a price rumored to be just $500,000 – despite once having been valued at more than $160 million.

The deal draws a line under what’s not been a great investment for Digg’s backers, who are believed to have pumped in as much as $45 million during the site’s seven-year life.

While Digg has been very popular with its users, it’s failed to compete effectively with rivals such as Reddit and Slashdot, as well as social networking sites such as Facebook. It currently receives about seven million visitors a month.

Betaworks says it wants to take Digg back to the basics and absorb it into News.me, which delivers news that a user’s friends are reading on social networking sites.

“Betaworks is combining Digg with News.me, a Betaworks company with an iPad app, iPhone app and daily email that delivers the best stories shared by your friends on Facebook and Twitter,” says Digg’s current chief executive Matt Williams.

“Digg will join a portfolio of products developed by Betaworks designed to improve the way people find and talk about the news.”

Williams is now moving to venture capital firm Andreessen Horowitz as an entrepreneur-in-residence, and the rest of Digg’s staff are also leaving.

“Digg is one of the great internet brands, and it has meant a great deal to millions of users over the years. It was a pioneer in community-driven news,” says Betaworks founder John Borthwick, who will become Digg’s new CEO.

“The News.me team will take Digg back to its essence: the best place to find, read and share the stories the internet is talking about. Right now.”