I'll jump to the punchline first: What's the one thing that's wrong with social content sites like digg? The content!
Social content sites have really grown recently and the top ones get a significant volume of web visitors on a daily basis. Odds are, if you are a regular reader of OnStartups.com you found this site originally through one of the social content sites like digg, reddit or Netscape.
I'm a regular user of both digg and reddit and have submitted, voted and read articles on both sites on a relatively regular basis. I met the founders of reddit when they first announced their product/company in Cambridge, MA and have been following the company ever since.
I really only have one major issue with the social content sites out there right now. The content sucks. Though this may seem like a relatively strong statement to make, I'm confident that if you visited any of these sites right now and looked at the top 5-10 stories/links, you'd find that the noise to signal ratio is really, really high. There's a reason for this. Most of these sites are not really designed for you. If you're like me (and chances are you're more like me than you are the average digg user), and you took a critical look at the content on digg.com at any given time, you'd find the relevancy pretty low.
So, why does the most popular social content site on the Internet have content that sucks? Clearly, the whole point of the site is that the content should not suck. The reason is very simple: The content is really not focused on you or your needs. It's not meant to be. It's meant to rank the most popular content based on the opinion of a bunch of random people you don't know or care about whereas what you're probably really interested in is content based on the opinion of a very small number of people you do care about. These are the people with whom you share some interests and or/or have some respect for.
Digg has categories (and sub-categories), but that doesn't really help. The content that gets submitted in the first place (and then gets voted on) is primarily a function of the user-base and the user-base is broad and diffuse.
My co-founder at HubSpot wrote on an article on this very topic a little while ago. The title of the article is "Let A Million Diggs and Reddits Bloom". If you're interested in an analytical look at the social content industry (with comparsions to the publishing industry), it's well worth the read. The basic point of the article is similar to the one I'm going to make here: Social content should be about relevancy and the best way to improve relevancy is to narrow the focus.
For the past few months, I've been working on a small project to test this theory. The project has resulted in a small experimental site called DailyHub.com. DailyHub is basically a social content site targeted at business geeks. The idea here is to start with a specific target audience (business geeks), and then build content around that audience. This is not unlike the whole blog phenomenon. Blogs were largely successful because they were mostly targeted at a specific topic or group of people. The whole idea was to create very focused content that catered to the needs of a specific audience. I think the same idea will work for social content sites.
So, if you're a business geek, I'd appreciate it if you could wander by DailyHub.com and see if the content is relevant. If you're a registered and approved member of OnStartups.com, your existing username/password will work there too and you can login immediately and submit content and vote on links. As with all things, this is an experiment to see if a more narrowly focused audience can aggregate content that is fundamentally more useful. The software that powers DailyHub has been developed internally, but the long-term intent is to make it a platform and let others build their own topic-focused social content sites.
If you get a chance to try it out, let me know what you think. I'm more interested in feedback on the idea than the software (as the software is still very early). If the software is bad, I can fix that. If the idea is bad, that's a different matter. Please leave a comment with your thoughts.