But it’s looking pretty close. The Washington Post is in the process of buying/hiring the news aggregator’s technology team, but isn’t purchasing the business itself, according to multiple people familiar with the negotiations. The Post plans to put the new hires to work alongside the people who built the publisher’s Social Reader Facebook app.

The Next Web initially reported on rumors that the publisher was buying Digg, and TechCrunch later reported that the deal was an “acqhire.” Both the Post and Digg declined to comment.

Once the deal closes, Digg won’t shut down, at least not immediately. The site’s remaining management will try to figure out how to take advantage of its brand name and traffic, according to people familiar with the company.

But given the fact that Digg has been looking for a buyer for months, it’s hard to see how they’ll be able to find another home for the remainder of the company.

Then again, it’s been hard to see how Digg would work for some time. The site was once one of Silicon Valley’s hottest Web 2.0 start-ups, and there was a period when lots of Web publishers spent a lot of time trying to figure out how to court Digg’s hordes of users. But that time is long gone (if you’re looking for a social/traffic kingmaker, head to Reddit, which used to be dismissed as a Digg wannabe).

Its current management team — the old guys are long gone, too — has been gamely trying to broaden the site’s appeal by courting mainstream users. But that always seemed like a tough sell.

Given Digg’s track record — which includes a deal to sell to Google that got pretty far down the road before the search giant walked away — you don’t want to write anything about the company with any certainty. But it doesn’t look good.

(Image courtesy of Shutterstock/Rob Byron)

For instance, how did Reddit emerge and thrive over time? How could Digg have grown without alienating its community? Should the world be scared of 4chan? Can I Can Has Cheezburger turn into viable venture-backed businesses? What’s the next big hit?

We might have just the answer to that last question. 9GAG is a fast-growing user-submitted meme site that Silicon Valley investors have recently been humming about — in part because they might actually get a piece of this one early on.

9GAG had 67 million unique visitors in the past month, and more than two billion page views, according to co-founder Ray Chan. That compares favorably with Reddit’s most recent self-reported traffic.

To try to get more of a fair comparison, I asked comScore to pull a chart of global traffic to this group of sites. By unique visitor count, 9GAG surged in the past year to reach the top spot in February. (And, wow, just look at Digg.)

9GAG posts are generally in the style of comic strips, with lots of cute animals and big captions and teen humor, followed by long comment threads of people riffing on the joke. It’s not often clear where the original material was found or created.

Chan and his four co-founders, who are based in Hong Kong, created 9GAG in 2008. It had been doing just fine as a side project, with about 500,000 page views per month — and was a sort of resume-builder for part of the team to be accepted to work on start-up ideas last summer as part of the 500 Startups accelerator.

During the summer program in Mountain View, Calif., the 9GAG team worked on a group photo-sharing app, and then a karaoke site called Singboard, which I somewhat randomly wrote about at the time.

But then, after 500 Startups wrapped up, 9GAG started to grow like crazy. By October, the team decided to kill its other projects and go all-in on 9GAG.

Chan was tight-lipped about 9GAG’s seed funding, saying it wasn’t finalized, but some investors I’ve heard are involved include Freestyle Capital, True Ventures, First Round Capital and Greycroft Partners (that same investor list has been mentioned elsewhere). Chan did say that 9GAG gave 500 Startups equity as thanks for their help with the other discontinued projects last summer.

Chan — who previously worked at a Hong Kong TV station and on a book community start-up called aNobii — said 9GAG is currently profitable using Google AdSense, which is a pretty impressive feat, considering it is paying Amazon Web Services to support its crazy growth.

The U.S. is 9GAG’s largest audience, but it accounts for only 12 percent of total traffic, according to Chan.

Chan thinks 9GAG’s growth reflects its team’s focus on user experience — the site is simple and visual, without lots of annoying ads. 9GAG is also tightly integrated with Facebook; it uses Facebook’s commenting system, it allows users to embed content directly on Facebook, and its actively updated fan page has 2.8 million “Likes.”

9GAG (the name sounds like “making fun” in Cantonese) is much more than a meme site, Chan said. That’s sort of a touchy distinction, because the folks at Reddit and 4chan have criticized 9GAG for stealing their memes.

“We want to become a place where people will go to whenever they want to kill some time and have a laugh,” Chan said. “We want to make the world a happier place.”

Rose’s mobile app incubator Milk yesterday announced it was shutting down its only product, Oink.

Google is not outright buying or “acqhiring” Milk, the sources explicitly said, but Rose and some others from the company have been hired. It’s not clear what will happen to Milk after Rose joins Google.

UPDATE: More people familiar with the deal said the rest of the Milk team is joining Google, with employees netting $1 million to $2 million each. although I’m still trying to nail down the value of the overall transaction. Milk investors are getting their initial investment money back plus a little extra, sources said.

Google declined to comment, and Rose did not reply to multiple requests.

Rose’s first day at Google is to be this Monday, the sources said.

Rose has an avid online following, stemming from his days as a host on TechTV and the long-running podcast “Diggnation.” Though Oink — which was a local recommendations app — may not have succeeded, it was able to hit 150,000 downloads in its first month.

That kind of ongoing fan engagement could be a boon to Google+, which has been criticized for low engagement and tricky user accounting.

Milk had raised funding from a huge group of angel investors as well as Google Ventures (yup), First Round Capital and True Ventures. The total raised was $1.7 million, so I suppose each of them did not have too much skin in the game.

Google had been very close to buying Digg in 2008, but the deal fell apart at the last minute.

Rose has also had an impressive run as an angel investor, putting money into companies like Fab, Zynga, Ngmoco, Foursquare and Twitter.

Update: Google and Rose confirmed the news.

(Image courtesy of Joi Ito)

Let’s be clear on the much-awaited Asian deal that Yahoo and its Asian partners have been working on: While it is certainly still moving forward, once signed, it will not actually officially close until next year.

Yes, that’s right — 2013!

Still, what everyone and his investor is waiting for is the splashy announcement of the agreement, which involves the Silicon Valley Internet giant, China’s Alibaba Group and SoftBank, a large shareholder in Yahoo Japan.

Yahoo leadership has been hoping that could happen before Feb. 24, an important date after which activist shareholder Daniel Loeb could begin to mount a proxy fight against the current board.

And while the definitive agreement — involving the sale of Yahoo’s 33 percent stake in Alibaba and 35 percent stake in Yahoo Japan — has been moving back and forth among the dealmakers, one source said its completion might take a little longer than that, perhaps even into mid-March.

“It is one of the most complicated cross-border transactions in a long time,” said one person close to the situation. “It’s three different languages, three time zones and three companies that have not always seen eye to eye.”

It’s not that the companies don’t have the top talent on the effort. For Yahoo, it is CFO Tim Morse (who most recently also warmed the CEO seat, until Scott Thompson’s recent appointment); for Alibaba, it’s CEO Jack Ma and CFO Joe Tsai; and, for SoftBank, it is top man Masa Son and his top man Ron Fisher.

To make things even more complex, at the same time as the negotiating is going on, the trio also has to pay mind to how the Internal Revenue Service in the U.S. is going to view the whole deal.

As you can see here from a Wall Street Journal chart, it’s a pretty complicated “cash-rich split-off” to avoid taxes.

While the IRS cannot take an application for a “private letter ruling” until it has an actual agreement in hand, and will not issue one on a hypothetical transaction, the agreement still must be crafted so it is most likely to pass muster.

And only then can anyone move on to the many billions of dollars that Yahoo will instruct Alibaba and SoftBank to pay or contribute in kind for the asset part of the arrangement.

As the Journal noted, in more clarity than I ever could: “A key part of satisfying tax-code requirements is that the company shedding its shares get assets, not just cash, in exchange for them. Cash can’t account for more than two-thirds of the transferred value, tax rules say. This restriction was adopted in 2005 to limit misuse of the provision.”

While Yahoo’s execs have met about the various possibilities, it is more considering now than anything else.

And although a lot of names have been bandied about — Weather Channel, WebMD, as well as Glam Media and even Digg — the more likely direction Yahoo will go in will be different, according to many sources.

First, said sources, the key criteria for the purchase will be to diversify revenue streams, a theme Thompson sounded in his first earnings report recently. That could mean more online commerce, perhaps, rather than advertising or media assets.

Second, said sources, international properties might be more valuable to Yahoo than owning more U.S.-based ones, which opens up a range of interesting possibilities.

This could even include some already held by Alibaba, for example, such as garnering a big stake in its publicly-traded Alibaba.com. That property has become a prime candidate for the deal, said several sources, for a number of reasons.

Technically, via Alibaba, Yahoo already owns some of the e-commerce giant, but not directly. Another possibility is to get back the Yahoo China business, also now owned by Alibaba.

Third, U.S. companies that Yahoo might look at could be unusual and even bold. Two names brought up in recent internal meetings, for example, were Netflix (before its stock revived) and Yelp (which is prepping for an IPO, and which Yahoo once tried to buy already).

And if things were not already needlessly complex in fixing its Asia problem, expect a change in the Yahoo board composition, too, as early as this week.

As I previously reported, at least four directors are expected to move on. More to the point, there will also be replacements announced at the same time.

To stave off Loeb and even give him a perceptible win, sources said the company is considering announcing the changes sooner than later, with the hope that fresh new members will placate other shareholders.

Lastly, with Thompson starting to take the reins after a month there, I would also expect he’ll weigh in on some significant restructuring (his word, not mine!) at Yahoo soon enough, too.

Complicated? Sure is! Perplexing even? And how! But until Asian and board resolutions, the real work of fixing Yahoo can’t really begin.

On the outside app developer front, about 20 lucky partners got to participate in the new open graph, starting in September with some default actions: “Read” (e.g. the Washington Post), “watch” (e.g. Netflix) and “listen” (e.g. Spotify). Here’s the list.

Those early partners have benefited hugely from their early participation, which effectively gave them exclusivity over competitors who didn’t make it into the launch.

For instance, Yahoo has had 12 million Facebook sharing opt-ins so far, and today says it’s extending “read” sharing beyond Yahoo News to 26 of its other sites.

Only a few other sites, such as the Huffington Post (“read”) and Yandex (“listen”), have been allowed to launch their new open -graph apps since September.

Today, news-voting site Digg (yes, that’s a “read”) goes live.

The new Digg Social Reader runs off a toolbar rather than as a Facebook “Canvas” app — which means that when you click on a Digg link from Facebook, you go directly to the link, rather than reading it within Facebook. Like other frictionless apps, after you give Digg permission once, it is allowed to continue to send all your reading activities to Facebook until you tell it to stop.

For context: Despite being further behind the curve than it used to be, Digg still has 17 million unique users.

Digg actually has a tumultuous history with toolbars. At the tail end of its glory days, users got extremely angry about the “Diggbar,” which was a Digg-branded iFrame that wrapped Web pages when users visited them via the Digg site. Last year, when Digg founder Kevin Rose took over as CEO (he’s since left the company), his first act was to kill the Diggbar.

In an interview with AllThingsD, Digg VP of Engineering, Ben Folk-Williams, said toolbars aren’t really so bad anymore. The new Digg toolbar is smarter about knowing what page it’s on, and behaving politely. Plus, other services such as StumbleUpon have used toolbars to great effect, without offending users.

The new Digg toolbar has a big fat button that indicates whether social features are on or off. When they’re on, everything you do on Digg gets shared to Facebook.

Compared with the publishers and content hosts that are already using frictionless sharing, Digg is a bit different. As an aggregator, Digg doesn’t host any content — it’s merely a set of pointers to Web pages that its users and algorithms think are interesting.

The Digg Facebook integration is a social curation layer on top of a larger Digg audience curation layer. Folk-Williams said he thinks that’s an asset, because Digg can offer more diversity of sources.

Plus, Folk-Williams said, Digg-style content — top 10 lists, tabloidy headlines, etc. — already seems to be quite popular on open-graph news apps.

As for app developers that are using custom verbs instead of “read,” “watch” or “listen,” some of them are now telling us that they’ve been cleared to launch in early January. Facebook has said such apps are due “in the coming weeks.”

Please see the disclosure about Facebook in my ethics statement.

Gross, who helped create search advertising at GoTo in the late ’90s, has been trying to recreate that magic on the social Web for the past couple of years with the company that’s now named UberMedia. But various products like syndication, monetization and new Twitter clients have all been too close for comfort to Twitter’s own agenda, and Gross has had to twice rename and more times reformulate his business.

Chime.in, which is a division of UberMedia, plans to sell ads on behalf of users’ posts, giving them 50 percent of the revenue, or will allow them to sell their own ads and keep all the revenue.

“I never thought there would be an opportunity as big as keywords,” Gross said in an interview last week. “But social signals are so much stronger than search terms.”

Brands such as E! Entertainment, Universal Pictures, Bravo TV and Disney have agreed to contribute Chime.in pages. All content on the service is public and users aren’t required to use their real names, though they are encouraged to connect to their Facebook and Twitter accounts. The main interface is a personalized social newsfeed of the latest and most popular posts called a “Chimeline.”

Gross planned to debut Chime.in tomorrow at the Web 2.0 Summit in San Francisco, but the iPhone app accidentally launched early, so people are already taking a look. He said the company — which has also built a Web site and Android and BlackBerry apps — is now scrambling to launch today.

Paying for participation in online communities hasn’t historically worked very well. I asked Gross why he thought Chime.in would be any different.

“The biggest example of success is blogs and Google AdSense and Federated Media,” Gross said — where bloggers build up their own audience and then layer on advertising. “Why it hasn’t expanded to communities is because anyone who has tried to build a standalone place missed the social sharing element, so they had to play the SEO game and that doesn’t work.”

Gross argued that the Chime.in community will police itself against gamers and crappy content — the kind of stuff that’s plagued sites like Digg and content farms like Demand Media — because users won’t recommend Chimes they don’t like.

“The breakthrough that’s happened is if you let people have the flexibility to share, they’ll get the message to the right people and do the dirty work for you,” Gross said.

Rose told NetworkEffect that his first app “will be in social and location aware” and should be ready to show in three to four months.

Milk started operations last week and already has a team of six, including co-founder Daniel Burka, who was creative director at Digg and left his gig as director of design at Stewart Butterfield’s Tiny Speck to join Milk. The company is currently raising funding.

Rose told TechCrunch that Milk will be more agile than Digg and that he intends to keep control of the business rather than ceding it to others as he did at Digg.

Rose said he intends for his ideas to be “big” and “audacious,” but who wouldn’t say that?

Six months ago, Rose stepped down as interim CEO of Digg, the company he founded more than six years ago. His recent track record is mixed, with considerable success as an angel investor but a botched and immensely disliked product overhaul at Digg right before he left.

The publisher would continue to own the site, but it’s talking to investors about selling a stake. Sources tell me it is floating a $200 million valuation.

Reddit, which labored under the “Digg-clone” designation for many years, is now a much hotter version of Digg. Last summer, it was doing more than 400 million page views a month; now it’s up to a billion. The free site has made some forays into advertising, but they’ve been very, very cautious.

The theory: Taking Reddit outside of Condé Nast’s corporate structure would make the site that much more valuable, and would give it a better chance to compete for capital, managers and employees alongside the likes of zippy startups like Quora, StackExchange, etc.

The employee issue is particularly acute for Reddit right now, as most of its original team has left the company and the site is now operating with a bare-bones staff. People familiar with Condé Nast’s thinking say the spin-off was contemplated before the most recent round of departures.

“We love our Reddit asset, and it’s a core asset for us, and it’s getting more valuable every day,” said Steve Newhouse, who runs digital operations for  Advance Publications, Condé’s parent company.

Newhouse, who wouldn’t offer any other comment on Reddit, is also overseeing M&A for Advance. Last year he hired Yahoo dealmaker Andrew Siegel to kickstart Advance’s efforts, and sold off some stock Advance held in Discovery Communications to give Siegel a $500 million starter fund.

[Update: Reddit employee Jeremy Edberg says, among other things, that my report is a "complete fabrication". I stand by my story.]

Exactly what it looks like today (well, with some future improvements), according to CEO Matt Williams, who said that Rose–who founded Digg in 2004–has only acted as an adviser since Williams replaced him as CEO six months ago. Williams disputed reports that Rose had recently resigned from Digg to start a new company, saying Rose has been gone all along.

In an interview, Williams said his team has been in “fire-fighting mode” since he joined six months ago, paying off in 20 percent more user-contributed Diggs, 20 percent more time on site and 50 percent more comments since the end of 2010.

Williams also disclosed that Digg VP of Product and Engineering Keval Desai, a major hire who had joined the company from Google in January 2010, is on the way out. Desai will be replaced by Ben Folk-Williams, who was most recently at Vast. The two are currently both working at Digg in a transitional stage.

Williams has essentially spent his tenure digging himself out of a failed product revamp that left Digg unstable and angered users. That long-delayed, and then ultimately rushed-out launch–known as V4–had also contributed to the departure of Digg’s original CEO, Jay Adelson. Digg has essentially only added back old features, listened to its users and restored stability, with no new features to speak of since Williams joined.

“There have been a lot of comments about Digg being dead or Digg being yesterday’s news and the reality is actually quite different,” Williams said. “We hit a wall six months ago but we’re still a top Web site and the user base is quite vibrant. Users love the direction we’re heading and love what we’re doing.”

Digg now intends to focus on community and personalized news products, said Williams. He said that Digg has never been profitable in the past, but it should be cash-flow positive this year, and has enough money in the bank to last “well into 2012.”

Part of what’s next could include extending Digg’s social ads product to other sites around the Web. Digg’s homemade advertising product, in which user voting changes the price of an ad, now accounts for more revenue than banner ads, said Williams.

After much turnover and multiple rounds of layoffs, Digg now employs about 40 people at its long-occupied office in the Potrero Hill district of San Francisco. The employee with the longest tenure is now community manager Dan Huard, said Williams, who has been at Digg 5.5 years.

TechCrunch reported today that he had resigned and was closing a $1 million round in funding for the venture.

But, so far, no one’s saying what it is.

Let’s hope it turns out better than Digg has.

Because although Rose has had luck as a Web celebrity, calling yourself a “Digg founder” ain’t what it used to be, especially since his stint last year as interim CEO presided over a hugely unpopular launch that the company has been extracting itself from ever since.

Rose said he currently serves on Digg’s board. Sources said he didn’t actually “resign” from Digg, though, but rather pulled back after handing over the CEO role to outside hire Matt Williams. Last year, Rose called serving as interim Digg CEO a “nightmare” that “I would never wish on my worst enemy.”

While Rose would clearly rather be in the spotlight for his own success, he has been able to string together an impressive portfolio for an angel investor, with companies like Ngmoco, Twitter and Zynga. In addition to continuing to appear on Diggnation, Rose also recently launched a video show and newsletter called Foundation.

Update: Williams commented,

When I took over as CEO of Digg 6 months ago, Kevin’s role changed to that of Founder and Board member and nothing has changed since then. Thanks for all the positive comments we’ve been seeing, we’re excited about our direction as well.

The round is from Accel Partners, August Capital, DAG Ventures, First Round Capital and Sherpalo Ventures.

StumbleUpon is on its second run as a start-up. The company raised $1.5 million in angel funding in 2005 and was bought by eBay in 2007 for $75 million in cash. In April 2009 it spun out of eBay with its founders and most of that list of investors providing Series A funding. This new round is being counted as a Series B.

StumbleUpon–which helps users serendipitously find new sites, photos and videos based on recommendations by friends and other users–has become a major traffic provider for blogs. Recent stats put out by the publisher tool provider Lijit had StumbleUpon delivering almost as much traffic as Facebook to sites within its network, and far more than Digg, Twitter and Reddit.

StumbleUpon is now up to 14 million registered users and makes 800 million content recommendations per month.

Yahoo’s Luke Beatty said he is not worried.

“We welcome the change,” he insisted about Google taking aim last Friday at so-called “content farms,” producers of low-quality content that spam up the Web and the search giant’s results. “And we endorse what Google is doing 100 percent.”

That’s ironic, given among those allegedly hit hardest by changing of its famous algorithm–based on early, and perhaps questionable, surveys–is Yahoo’s Associated Content.

But, if true, and traffic at Associated Content–which the Silicon Valley Internet giant bought for $90 million last May–is indeed badly hurt, it’s obviously going to be a problem for Yahoo, which relies on advertising revenue as its core business.

A quick poll by Sistrix, a search engine optimization firm, using one million keywords before and after Google’s changes, showed that Associated Content’s “visibility index”– including keyword and ranking positions ranking and clickthrough rate–was down 93 percent.

So yesterday, Beatty, who founded Associated Content and now works at Yahoo, dialed up BoomTown to talk about what the Google shift will mean to Yahoo.

First off in the wide-ranging interview, he noted, “everything on the Web is changing all the time,” noting that Associated Content used to rely more on the now weakened Digg and RSS for its traffic and distribution.

“Obviously, that has changed and we have still managed to grow,” he said.

Beatty said it is still not clear that the new tweaks in search criteria at Google would mean for Associated Content’s offerings–coming from 400,000 contributors of all kinds.

“Our data will not be reconciled for weeks…but some will be up and some will be down,” he said, adding the overall, “I suspect it will be down, although it’s not accurate by any means in the numbers released so far, since there is no way you can know this early.”

Still, it’s obvious that Google’s latest move has not been not good for Associated Content, although Beatty noted that the Silicon Valley search king is no longer the main source of traffic for Associated Content material.

Instead, that would be the owned-and-operated sites of Yahoo, most of all, and–increasingly–social networking sites such as Facebook.

“When we sold the company, we know that sites of Yahoo itself would be the biggest driver of our growth and that was the plan,” said Beatty. “And, though smaller, social means of distribution are clearly the way people are now finding our content.”

In an email later, Beatty underscored this point:

“Search traffic is not our focus within Yahoo–it hasn’t been for 10
months…traffic sources have changed endlessly over that last six years…search is one, albeit an important one and clearly, [but] now it too is changing and we see the future of our content distribution coming from O&O properties and social networks, as much as anything.”

Still, Beatty said Associated Content will adapt as long as Google does not make its tweaks on a network basis and rather than on a site basis. (Interestingly, that would presumably include Google’s own–and often spammish–Blogger property, which is fueled by its powerful AdSense engine.)

“It appears that changes have been made on an asset-by-asset basis
is good–networkwide cramdown would be inappropriate and uneducated,” he said.

Still, the best way to fight the Google initiative is by delivering higher quality content, which Beatty said was being done at the company via a series of ongoing measures to improve overall submissions.

Those include a Yahoo style guide for content creators, a two-tiered human editor review process, analytical analysis, a featured contributor program and, interesting, an online tutorial process called the Yahoo Contributor Network.

It’s not exactly Harvard University, of course, but Beatty said there is more to come.

“We are committed to supporting and helping our contributors navigate through this and every other change in the crowdsourced content economy,” he said. “We want the best article to get more traffic.”

Of course, with Google’s doubtlessly continuing changes in its criteria for what good content is, presumably, that won’t be Yahoo’s to decide.

Now, five months into the job, Williams is finding a voice of his own, separate from Digg founder Kevin Rose’s, and trying it out on the Digg community; the longtime veteran of Amazon recently participated in a well-received Digg Dialogg video interview, posted on Tuesday, to answer user questions. (It’s viewable here).

“There was a launch that was in violent disagreement with what our community expected out of the Web site,” Williams told Leo Laporte, who facilitated the interview based on Digg users’ questions. “It’s truly a tragedy of the ages, to some extent.”

But Digg is still a “very vibrant Web site,” with close to 20 million monthly unique visitors, Williams said, and the opportunity to hone a focus on social news that other companies may not have.

(Plus, despite layoffs, a perceived lack of relevancy relative to other social start-ups and multiple leadership changes, Digg still has plenty of money in the bank.)

“It is our top priority to rejuvenate the community,” Williams said.

Digg’s latest launch, called V4, was seen by many as a move to devalue the site’s homegrown community. V4 was the most significant in a string of product changes that took power away from the small body of users that set the agenda for the news site and gave a stronger voice to publishers and Digg’s own curators. And V4 was also an overdue, complete technology overhaul that left out many much-loved features.

In the Laporte interview, Williams quickly tackled precise details about previous features the Digg community wants reinstalled, noting, for instance, that the site has already brought back the “bury” button, allowing users to counteract other users’ votes on submitted stories. He said Digg is also planning future features such as a honing of its news-ranking algorithms for slower weekend traffic, when less-worthy stories may make it to the top.

Beyond those tweaks, Digg will make large-scale efforts to become more personalized, said Williams, and to create communities around specific topics. That’s not necessarily something that the old-time crowd will love, but it may make the site more useful for a broader audience.

Williams encouraged users not just to visit the site, but to comment on and vote up stories with Diggs; those participatory behaviors have decreased as a portion of overall traffic since the launch of V4, he said.

Being the voice of Digg is no small task, and it’s not just because of the company’s hypercritical user base. Digg has long been associated with the founding presence of TV and online video host Kevin Rose. And until Williams joined, Rose had been interim CEO after longtime leader Jay Adelson was pushed out of the company in April. Now Rose is occupied with his many angel investments, a new video show and a newsletter called “Foundation.”

Digg users were uncharacteristically positive in the comments section of the Williams interview entry. (The friendly tone makes me wonder if the old crowd has indeed high-tailed it somewhere else!) “Digg is in good hands,” said one. “I must say that Digg is doing a fantastic job listening to the community and implementing new features,” said another. One user even acknowledged, “I realize changes take time to implement.”

With higher-resolution cameras in our smartphones, everyone seemed to be adding social photo posting to their apps.

Hi-res photos hit Facebook, pictures came to Foursquare, and phones filled with apps to crop, stretch, filter, sketch and generally punch up our often marginal photography.

So, in honor of a big year of sharing photos with friends, here is a quick gallery of shots from the holidays, gathered with care from the walls and feeds of a few of tech’s most social shutterbugs.

In late November, Twitter started contributing its DMCA takedown letters to Chilling Effects, the online clearinghouse jointly organized by the Electronic Frontier Foundation and many universities and law schools.

Chilling Effects says it received records of 11,500 total takedown notices in 2010, as of Dec. 15. Major contributors include Google, Yahoo and Digg.

Techdirt’s Mike Masnick flagged the Twitter takedowns, noting that many of them are for tweets that contain links to copyrighted material. Why go to Twitter and not the content host itself? he asks.

Chilling Effects founder Wendy Seltzer said she believes Twitter has been getting the takedown notices for a while but only recently started submitting them for public posting.

Using Twitter to get out the word about content may well be a growing phenomenon. In August, BitTorrent released a tool for more easily tweeting about torrent files. A friend of mine who’s an avid Green Bay Packers fan recently told me about a Twitter account he follows to find streams of football games he doesn’t have access to on TV.

“It’s interesting that they are receiving takedowns, given that most of what they’re hosting is little 140-character bursts of expression,” Seltzer said on a phone call yesterday. “Copyright holders are pushing the complaint out further, not going after the user who hosted, or even the user who pointed, but going after Twitter because it’s made itself a central location for the collection of information.”

Seltzer said that under the U.S. Supreme Court Grokster ruling, it’s possible that users could end up on the wrong side of the law for inducing infringement by posting a link with the intent to encourage their Twitter followers to access or download infringing material. But as long as Twitter complies with takedown requests, it should be within the safe harbor rules of the DMCA, which protect providers of information tools, said Seltzer. “Twitter doesn’t have an intent to infringe, so they would have a solid argument.”

A spokesperson for Twitter declined to comment, citing mellowness in the office over the holidays.

Dave Morin

All three companies make mobile apps (primarily on the iPhone) that allow users to take and immediately share images with friends. It seems kind of simple and mundane, but all these smart people seem to think photo-sharing is the future.

Morin and Path are the most convincing about there being a larger idea behind what they’re doing. San Francisco-based Path is stubbornly focused on close personal connections–a.k.a. real friends.

Unlike every other social site, where there’s an implicit pressure to collect as many friends and followers as you can (and at the same time increase the site’s user numbers), Path is only for the people you really know and trust.

In order to force and foster that kind of sharing, Morin’s team has left out many of the social Web features we’re used to. Users can do only two things on Path: Share photos and view them.

There are no reciprocal friend relationships, no likes or comments, no fun photo-editing filters, no publishing photos to services like Facebook and Flickr, no editing something after you post and no global user search (you have to know the email or phone number for anyone you want to add).

And there are additional restrictions. Users can only ever share with a maximum of 50 people (though they can follow more than 50 people, if invited). Every single post has its own privacy settings–you can share with either only the people tagged in it, or only your share list. If you get sick of someone who’s sharing with you, you can “pause” that person until further notice. Users who don’t have iPhones can view photos on the Web.

The most interesting feature for me is that users see which of their contacts have viewed any one photo. So on Path, you can’t lurk in peace. People know when you’ve seen their posts. This might be a little creepy, but it also could cut down on those annoying awkward conversations that sometimes happen when you’ve seen someone post about something online and then they start telling you about it in person.

Photos are tagged with the location where they’re taken automatically, and users can add people and tags. If someone else takes a picture at that same location, tags that have been previously used near that place recently will be at the top of the list.

The idea is those tags will be used to help users relive their memories stored on the service. So, for instance, someone Morin shares with could retrace his “path” of wine tasting in Napa by zooming in on a map of the pictures he posted from California wine country.

But the thing is, if you want to go try Path (which you’ll be able to do in the U.S. and Canada as of 9 pm PT tonight by going to Apple’s App Store, and in the rest of the world within a few hours), it’s going to seem rather empty at first. You’ll have to seek out friends to share with from scratch–but even worse, nobody will be sharing with you until they decide to add you.

Unlike just about every other social service, Path is not really viral. At all. So even though it’s interesting, its numbers are highly unlikely to correspond favorably to those of competitors like Instagram. And after all, how many mobile photo-sharing apps are you really going to use?

“We really prioritize slow organic growth over hyper-viral growth and going after influencers to build this really steep graph,” said Morin, who formerly helped lead Facebook Platform and Facebook Connect before leaving the company in January. “We are building Path to be a 30-year brand.”

He added, “Many of the photo-sharing apps are photo-blogging apps and popularity contests. On Path, you should always feel comfortable being yourself.”

This antiviral stuff almost seems like overkill, but Morin grounds Path’s feature decisions in the theories of the evolutionary anthropologist Robin Dunbar (known for the oft-cited “Dunbar’s Number” of 150 acquaintances, he also proposes that 40-60 people is the outer bound of our personal networks) and Nobel prize-winning psychologist Daniel Kahneman (who talked about the difference between experience and memory in a well-received TED Talk on happiness).

If this hyper-personal stuff works, I think Path could potentially create a third major category of social network, distinct from the kind of relationships found on the two current giants, Facebook and Twitter. But let’s not get too far ahead of ourselves–and c’mon Dave, you should really let people comment on and like their friends’ photos.

Path was co-founded by Morin, Shawn Fanning and Dustin Mierau, both formerly of Napster. The staff also includes Mallory Paine, who helped engineer the iPhone photo and camera apps for Apple, and Matt Van Horn, who formerly did business development at Digg. Fanning is chairman and landlord of the company but is working on his own other projects day-to-day.

Path has already raised a jumbo seed round with Index Ventures, First Round Capital, Founders Fund and Betaworks. The company also provided us with an extensive list of individual angel investors: Ron Conway, Kevin Rose, Ashton Kutcher, Keith Rabois, Dustin Moskovitz, Marc Benioff, Gary Vaynerchuk, Steve Anderson, Tim Draper, Joi Ito, Fadi Ghandour, Matt Cohler, Sam Lessin, Bill Randuchel, Karl Jacob, Paul Buchheit, Ruchi Sanghvi, John Couch, Michael Parekh, Claudio Chiuchiarelli, Maurice Werdegar, Don Dodge, and Chris Kelly.

Digg has announced it is laying off 25 of its 67 staffers today, part of an attempt by the San Francisco social news discovery site to rationalize its costs.

In an interview with BoomTown this morning, CEO Matt Williams noted that “the burn rate is just too high” for the company.

“We need to reset, in terms of stategy and get back in a start-up mode,” said Williams, referring to the recent turmoil at Digg, related to management upheavals and product snafus. “The cost structure is not in line with our business.”

Earlier today, I reported that Digg’s Publisher and Chief Revenue Officer Chas Edwards was departing to take a similar job at a photo-tagging advertising start-up called Pixazza.

Edwards is just one of many such issues at Digg, where Williams seems to have stepped into a very big mess since he arrived just six weeks ago.

That includes dealing with a new version widely derided by its passionate and opinionated users, for which Williams quickly apologized.

“I knew it was going to be a big job in terms of a product turnaround,” said Williams. “I think the users love Digg and want to see us succeed and we ultimately let them down.”

Williams said his goal was to get to profitability in 2011, which required the employee layoffs.

From there, he said, “We will be on good footing to be more innovative.”

That would be a nice change of pace, given Digg’s fall from Web 2.0′s hottest start-up to one that seems only to falter.

Those stumbles have included a failed sale to Google, previous layoffs and general product drift.

Here is a blog post that Williams just put on the news aggregator’s site:

Just wanted to share an important development at Digg. Here is a copy of an e-mail that I sent to the staff today…

Team,

When I joined Digg six weeks ago, we set an immediate focus on improving the web site. We listened carefully to user feedback and started making changes to generate momentum in our business.

As I mentioned in one of our first all-hands meetings, another top priority was to take a hard look at the entire business, across product, sales, and operations. Through the time I have spent with each of you, I’ve been impressed by the commitment and enthusiasm you’ve shown. I’ve also learned a great deal about what is working well at Digg, and what is broken.

Many things are working well. The team is listening and acting quickly on the feedback from our passionate community. We’ve been able to deliver nimbly on the new platform, with over 100 bug and feature releases to the web site in the past two months. Our Diggable ads product has seen a notable increase in use by advertisers and clicks by users.

Unfortunately, to reach our goals, we have to take some difficult steps. The fact is our business has a burn rate that is too high. We must significantly cut our expenses to achieve profitability in 2011. We’ve considered all of the possible options for reduction, from salaries to fixed costs. The result is that, in addition to lowering many of our operational costs, I’ve made the decision to downsize our staff from 67 to 42 people.

It’s been an incredibly tough decision. I wish it weren’t necessary. However, I know it’s the right choice for Digg’s future success as a business. I’m personally committed to help find new opportunities for everyone affected by the transition. Digg’s Board members have also offered to help find placements within their portfolio companies.

Let’s please use today to show our sincere appreciation for our friends and colleagues who will be moving on. Tomorrow, we’ll go forward with a new strategy for Digg.

Matt

Chas Edwards (pictured here), the publisher and chief revenue officer for Digg, the social news discovery service, is leaving the San Francisco company, according to sources.

The exec, who came to Digg in May of 2009 from Federated Media, will move to a start-up called Pixazza, a photo-tagging site for advertising, “by enabling consumers to simply mouse over images to learn more and see related products.”

Edwards’ title at Pixazza–which confirmed the move–will be as Chief Revenue Officer and Publisher Development.

The Mountain View, Calif.-based company has garnered almost $18 million in funding from Google Ventures, CMEA Ventures, August Capital, Foundation Capital and Shasta Ventures, as well as from angel investors Ron Conway, Gideon Yu and Maynard Webb.

The departure from Digg, sources said, is amicable, and Edwards will remain an adviser to the company, which has been undergoing some turmoil of late.

That’s been due to a much-criticized new version of the once-hot service, as well as some management upheaval.

Digg recently appointed Matt Williams as its new CEO. He quickly apologized for the bungled relaunch of the news aggregator and has promised to fix its problems.

This one comes from Christopher Mascari, a Gawker Media marketing guy, and it illustrates the blog network’s traffic from social media sites. Less than a year ago, Digg was the single most important social site for Gawker, Gizmodo, Jalopnik et al. Now it has been eclipsed by the likes of Facebook, Twitter and, a little surprisingly, StumbleUpon. And note that Reddit, Condé Nast’s “Digg clone,” is catching up as well:

The other big takeaway from the data is the story that many publishers have been telling in the past year or so: Social traffic is becoming as important, or more so, than search traffic from the likes of Google (GOOG) and Yahoo (YHOO). Last fall Gawker was getting 10 million visits a month from social sites; now that number is up to 20 million. And Facebook, at 7.7 million visits, now represents more than a third of that number:

We all want to be something else, don’t we?

And so it is with Google (GOOG), the robotic, algorithmic, black-box search behemoth girding the globe with datacenters stacked up to heaven.

As it turns out, all it really wants is to be our friend.

The big question is when it is going to do that, by introducing a social strategy that actually works, even as perceived rival Facebook barrels ahead.

Sources close to the company, as well as some voluble Silicon Valley players–such as Digg’s Kevin Rose and Quora’s Adam D’Angelo–insist that Google is zeroing in on a plan for a service internally called Google Me–get it?–that it will begin to unveil in the weeks ahead.

Wouldn’t it be nice if it did so today, when Google is holding yet another product feature-fest at its San Francisco offices, as it did recently about its cool Voice Actions mobile offering.

(Memo to Google PR: Digital Daily’s John Paczkowski will be liveblogging the event, but you can’t ask press not to talk about a public company event before it takes place–even if it is invite-only.)

That’s unlikely, but some answer in the social space couldn’t come soon enough, especially because all of Google’s various and sundry efforts have yielded little in the way of any gains and, well, have shown a lot of losses.

Yesterday, for example, it was reported by The Wall Street Journal that Google’s Orkut social networking service had lost primacy in India to Facebook.

Orkut, as is well known, has lagged worldwide, except for inexplicably rocking India and Brazil.

Now, even though Google has added more punch to Orkut of late, it is down to just Brazil.

And then there was Buzz, which Google launched in February to much fanfare, followed by much more confusion.

That’s because, by using Gmail as the central organizing principle for Buzz, it quickly degenerated into an “Animal Planet” episode called “When Email Attacks.”

As for Google’s overhyped-by-bloggers communications and collaboration app Wave, it soon became “Wave Buh-Bye.”

To be fair, it is admirable that a big company like Google, which made its bones from search, has rolled out so many attempts at innovation over the last two years in areas such as apps, cloud computing and especially mobile.

And, in those categories, it is doing well, even as its stabs at social media have fallen so far off the target.

Is it because Google is inherently as social as a digital version of a telephone book, or an encyclopedia or an almanac? Which is to say helpful, but not at all attracting of friendship.

Or, as with its early efforts to find its golden business model, has Google just not yet hit on the social equivalent of AdSense and AdWords?

Meanwhile, over at Facebook HQ in nearby in Silicon Valley, CEO Mark Zuckerberg has his team working all night on a multitude of feature launches, which he described to me at the recent rollout of the social networking powerhouse’s Places geo-location feature as fast and furious.

That’s probably the right tone, although if I were Facebook, I would take it down to Defcon 5 with regard to Google.

At least until Google Me is more than just a clever, rainbow-colored search term, that is.

Until then, let’s all enjoy this music video of the incomparable Lionel Richie singing the classic song “Say You, Say Me”:

Please see this disclosure related to me and Google.

Yesterday, BoomTown drove over to Digg’s San Francisco HQ to pay founder Kevin Rose a visit.

The 33-year-old Rose is one of the iconic entrepreneurs of recent years, since Digg’s founding in 2004, driving the growth of the news discovery service in the early years of Web 2.0 to heights of popularity and, yes, massive hype about what he calls a “Web 1.9″ company.

Inevitably, there came a wall of growing pains that Digg has tried to scale, included a very public failed sale to Google (GOOG), layoffs and the bumpy departure of its CEO, Jay Adelson.

Rose has been in charge since, as interim CEO, working to release a much-needed new version–V4–of the Digg service over the next weeks, even as he searches for someone to take over the leadership and tries to figure out what the future of the company should be.

A lot of the changes in V4, Rose acknowledges, have to do with catching up to what other services are offering and are aimed at making Digg–which has always had a passionate, and sometimes volatile and controversial, community–more easily social and innovative.

Thus, the “New Digg” will be more personal, giving users a “My News” look at Digg first, rather than just shoving the most popular stories forward. The changes also suggest profiles to follow, an ability to find friends, better commenting features and more.

Rose has been managing this product overhaul, even while Digg undergoes tough challenges to morale as it seeks to re-establish itself during massive change in the social media landscape and the entry of more and more heavyweight competitors, such as Twitter and Facebook.

Perhaps the most interesting part of the video interview below is Rose’s assertion that Digg needs to be more than a “big small company,” due to its ever-increasing challenges of helping readers make sense of the social Web and its flood of information.

With all the hype and swirl around Digg over the year, I had forgotten what a thoughtful and smart entrepreneur Rose is, but here it is on display, with him talking about it all, including how to avoid being a Silicon Valley cautionary tale: