The overall number of referrals from social media sites has grown at an accelerated pace in the past few months, but fading powerhowse Digg has seen a steep decline in a short period of time.
Looking at this graphic paints an incredibly ugly picture of the future for Digg. Whilst everyone is talking about Reddit's gains in the social bookmarking space, the real story is about Facebook. Although Reddit has enjoyed a respectable increase, and displayed impressive numbers, their referral count is only a fraction Facebook's total. So by yet another metric, Facebook is absolutely killing the competition.
Ultimately Digg was a victim of its own desperate bad version 4 re-design. Their fanatical user base generally shunned Facebook and Twitter, so it was their market share to lose. They plowed ahead with an oft delayed redesign demanded only by Digg shareholders. As expected, it fell flat and fixed something that was never really broken.
Although it is true that the once ultra-innovative site was starting to look like a one trick pony, and could have certainly used a infusion of exciting new features, it brought no such thing. It seems to be a bad Twitter clone with Facebook envy that rolled in a boring RSS reader that pollutes the front page with low quality content.
To make matters worse it doubled down on bad functionality from Digg v3: for example, favoring certain users. It also removed the bury button, probably because Facebook doesn't have one (although they blamed the bury brigades).
So ultimately, Reddit gained a little by staying true to the original social bookmarking formula, but Digg was pushed over the edge by its foolish desire to compete with Facebook. Reddit probably did steal a few users aways directly, but it was pressure from Facebook that forced Digg's bad hand; and ultimately cause much greater losses.
