Digg just sold for a mere $200,000–a fraction of its value just a few years ago.

I wouldn’t say that Digg failed “as a platform” for one simple reason: it never was one. Sure, Digg had created an API which, to me, is more or less a prerequisite these days to attaining platform status. In my view, Digg made two fundamental mistakes, one internal and one external. First, it didn’t evolve sufficiently. While the site made additions and improvements, it obviously wasn’t innovative enough. This supports my contention that the costs of inaction almost always exceed the costs of action.

Second, companies like Twitter and Facebook more or less co-opted Digg. In 2004, the idea of doing one thing on one site made sense. But, in the Age of the Platform, as a general rule, people no longer use single-purpose sites as much as all-encompassing platforms.

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