Acquisition rumors swirling around Digg.com quieted with news of an $8.5 million series B round just before the New Year. In the fall they founded Revision3, an IPTV network of tech-oriented shows, with angel funding. Revision3's wildly popular Diggnation podcast, in which Mr. Rose and former Tech TV colleague Alex Albrecht discuss the top Digg stories of the week, is averaging 250,000 to 300,000 downloads a month, according to the company.
Ad Age Digital rang up the duo in December and discussed the delicacies of advertising on Diggnation and how they feel about upstart Digg copycats.
AdAge Digital: Talk to me about the name of your content company: Revision3. From what I understand, you saw cable as being the first revision to TV and PC-based internet video as the second. What do you mean when you say we're in the third revision?
Mr. Adelson: People have been watching the internet for six to seven years [through] Atom Films and iFilm and various forms of internet video. But as a medium, it hasn't had the regularity of audience and predictability of audience that television has had and certainly people haven't thought of it as an economy. ... Now you've got iPod video and RSS technology and TiVo's and Echostar's devices plugging into the internet and ITV soon to hit the street with Apple's product. ... It's the convergence of TV and internet video for the first time.
AdAge Digital:So what inspired the launch of your company?
Mr. Rose: Several of us at Revision3 were working at TechTV when it was acquired by Comcast and turned into G4. We were being pushed to water down our technical segments and go for as wide an audience as possible and were getting away from the in-depth content that we really wanted to do. Television limited us to the number of minutes we could spend on a topic, the types of niche programming we could really get into. For us [Revision3] was an outlet to get back to our roots, do in-depth, niche, undiluted content. ... It was a way to not have to listen to executive producers but create the shows the way we wanted to.
AdAge Digital: What kind of numbers are you doing now?
Mr. Adelson: Diggnation is our largest show and we're seeing close to 250,000 to 350,000 unique viewers for that show each week. Across Revision3's network we're doing 1.5 [million] to 2 million downloads a month, which equates to probably about a half a million unique actual viewers -- that's a little rough estimate. But it's a lot more than most niche cable stations are doing today. Take a show like "Pixel Perfect," one of our newer shows. Since its launch it is doing 100,000 unique viewers a week, again more than a lot of digital cable shows. And "InDigital," a very young show but very polished, is doing 75,000 viewers and growing. These are strong numbers for a company that's not done any marketing. ... Without spending money on acquiring bandwidth like a traditional network, we've beat companies that spend a billion dollars on bandwidth, we've beat their Nielsen numbers.
AdAge Digital: Does advertising need to evolve to fit the "third revision"?
Mr. Adelson: We're very strong on sponsorships vs. traditional advertisements. We can't say we pioneered it because it's similar to the Ed Sullivan model from the '50s and '60s. Essentially what we've done is, without compromising the integrity of our content, we've been able to integrate those sponsors into our shows. At Diggnation, we say upfront it's sponsored by Sony or Microsoft or GoDaddy and later on we'll have a point where we talk about those sponsors in a comfortable, casual way.
AdAge Digital: Recently, Kevin, you and your co-host explained to listeners that you often discuss advertisers on Diggnation because they're in the news, but they have no influence on how you run the show. Why did you do that?
Mr. Rose: Even when we were hosting "The Screen Savers" together [on Tech TV], we always had the separation. In fact, we didn't even watch our commercials. ... With Diggnation we've been lucky enough to accept products from sponsors we believe in. But we also get stories on the Digg site that talk negatively about these products. ... We wanted to make sure it was very clear that we're not going to not take a particular story just because we have a sponsor [in] that story.
AdAge Digital: Do you think podcasters or online-video creators have to work harder to prove church/state because they're not part of mainstream media?
Mr. Adelson: To some extent there's a requirement for us to go the extra mile, make sure people understand this is a new form of advertising. This sponsor has paid me to be here today. I might think their product is horrible and if so, that's a problem and hopefully we'll never be in a position to have to do that. But if that's the case I would say so and we've had cases where one of either Alex or Kevin was not a fan of a particular product that was sponsoring the show and was very open about it on the show. That creates credibility with that audience.
Mr. Rose: A great example is GoDaddy, which has been a sponsor for quite some time. There was an episode where we were on their website, and we said, "GoDaddy, we have to keep it real with you -- your website design sucks. We love your product and your service, but you've got to get a new web design." ... [GoDaddy] wasn't opposed to that because they realized that keeps it real with [our audience]. We're not just saying we love GoDaddy because they're paying us but because we use their products and believe in them.
Alex and I enjoy it most when we can get into a particular product and talk about personal experience with it. At one point we were doing an episode of Diggnation and I'd come down with a cold and I was talking about some tea that I drink when I'm sick ... I mentioned the website and all the sudden the site was getting pounded by tons of orders from our viewers. So [the tea company] came up with the Alex and Kevin Diggnation tea set, which was strangest thing because there was actually a picture of my head on one of the teas -- I never thought I'd see that and neither did my family. But we created that around the holidays and said if you're into tea, want to try it out or want to give up caffeine -- because we know we serve a very coffee-drinking, Jolt cola-drinking geek audience -- try something a little healthier, try some tea. I think we sold about $100,000 worth of tea with them.
AdAge Digital: So you can mention tea on air and sell $100,000 worth of it. When did you guys become such rock stars in the "geek" world?
Mr. Rose: I don't know if you can call a couple of guys who get mobbed at a CompUSA rock stars!
AdAge Digital: How much do you think about the possibility of being acquired?
Mr. Adelson: We can't be distracted by all that speculation, because it really does change the quality of what you produce. Try to imagine what it would be like if everyone around Digg and Revision3, both very promising companies, believed that tomorrow they were going to walk away with millions of dollars.
AdAge Digital: Conde Nast acquired Reddit last fall, and plenty of other sites are styled after Digg. Does that irk you guys?
Mr. Adelson: It's validation. There've been hundreds of websites that have focused on user collaboration, and ... for the votes to be useful, there has to be a lot of them. Digg has 700,000 users that participate. And frankly, if it was all just about counting votes it would be easier. There's a lot more intelligence on the back end to make it work. It's hard to duplicate that intellectual property when you create a clone.