According to various reports from the last Digg Townhall/meetup this week, Digg's CEO Jay Adelson announced that Digg will soon let its users create and manage their own 'sub-Diggs.' Digg's main competitors like reddit and Mixx have already given their users this ability, and Digg has been rumored to start adding this feature for a while.

According to Adelson, these sub-diggs will allow Digg to expand into new verticals and give niche publishers a chance to have their content featured on digg, even though they would never meet the threshold for promotion to the Digg homepage.

Maybe one of the most interesting features of these sub-diggs will be that those users who manage them will be able to control how and when newly submitted stories will be promoted to the front page.

A reliable source just confirmed the company's plans, noting the company has hired Allen & Company, a tiny but influential private investment firm, to help broker a deal. The asking price is still $300 million, the source said.

This will come as no surprise. Rumors of a sale have been rampant for months, although until now we hear co-founder Jay Adelson has been trying to muster up interest in a sale. This is the first time Digg has hired a bank to shop the deal, we're told.

Valleywag reported the $300 million rumor last month. Separately, it reported Digg chief executive Jay Adelson's attendance at Allen & Company's annual Sun Valley, Idaho get-together of the rich and famous, noting the company might be looking to find a buyer among one of the many media company executives in attendance.

Gloomy news indeed--if any of it were substantiated. As the head of the non-freaked-out editorial department, let me say a few things. AOL did just launch a Netscape-branded portal, designed to accommodate those members who don't wish to participate in a social news site. (Those members also have the option of using a personalized portal over at My.Netscape, not to mention the regular AOL portal itself.) No doubt some members will jump ship. But since the social news version of Netscape launched more than a year ago, most of the people with a yen for an old-fashioned portal have already left. Certainly the 323,589 individuals (as of this moment) who have joined the community didn't do so simply to check the weather and headlines.

Our director, Tom Drapeau, already responded to Arrington's post on TechCrunch itself. So did Marcien Jenckes, identified by TC as an "AOL spokesman" but actually a senior vice president in charge of some of the company's premiere properties, including AIM and Userplane.

"I want to echo Tom's post," noted Jenckes. "Community has been a core element of both AOL and Netscape since their inception and will continue to be. As the text on the site explains, we wanted to give a more traditional portal alternative to the Netscape users who requested it. You can rest assured that social news will continue to be an important part of what we do."

It's now been more than two years since the first story was submitted and dugg on Digg. Since then you guys have helped Digg move from a personal project amongst a group of friends to a huge online community. Now, your contributions in submitting, digging, and commenting on content have propelled Digg to a point I never dreamed of - as of today Digg has one million registered users.

I'd like to let this post serve as a thank you from me to you - the Digg community faithful. You've not only made it possible for the Digg team to continue the Digg concept in new and exciting ways, but you've also driven us, with a sense of pride and excitement that genuinely makes going to work a lot of fun.

Four and a half hours later, I was the only person who had dugg my story. That's when I hired a Digg-gaming service called User/Submitter, or U/S. This enterprise, run by one or more zealously anonymous individuals, advertises that it can help "submitters" get Digg stories noticed by paying "users" to digg them. There's a $20 sign-up fee and each digg costs $1, which gets split evenly between the service and the digger. U/S refunds money paid for any diggs the submitter doesn't get in a 48-hour period. I put down $450 for 430 diggs, but wound up getting refunded all but roughly $100 of that. (Wired News is owned by CondéNet, which also owns Digg competitor reddit.)

If the corporate brass at Digg were right, this would be a complete waste of my money. CEO Jay Adelson told me before I conducted this experiment that all the groups trying to manipulate Digg "have failed," and that Digg "can tell when there are paid users." Adelson added, "When we identify a (Digg user) who is part of a scam, we don't remove their account so they don't realize they've been identified. Then we let them continue voting, but their votes may count a lot less. Then the scam doesn't work."

Ten hours after hiring U/S, I had 40 diggs. The vast majority of them had also dugg the Photoshop tutorial or the $35 offer. This was the moment when I reached a tipping point, and I began to get a lot of organic diggs and comments. The crowd on Digg is drawn to what's popular, and many of them second-guessed themselves when they checked out my blog and saw how crappy it was. Quomen commented, "None of those photographs really appeal to me. Am I defective? or just a loner."

Despite their doubts, Diggers kept digging my blog. There's a perverse incentive here: Diggers who vote early on stories that become wildly popular become more "reputable" in the Digg system. If you're trying to move up the Digg ranks, it's in your best interest to vote on anything that looks like it's gaining popularity. And my blog, with its flurry of paid votes, fit the pattern.

When I woke up in the morning, my story had been awarded the "became popular" tag and had 121 diggs. U/S had done what it promised: The company had helped me buy my way into Digg popularity, and my site traffic had gone way up -- overnight, I'd been hammered with so many hits that the diggers had to set up a mirror.

Ultimately, however, my story did get buried. If you search for it on Digg, you won't find it unless you check the box that says "also search for buried stories." This didn't happen because the Digg operators have brilliant algorithms, however -- it happened because many people in the Digg community recognized that my blog was stupid. Despite the fact that it was rapidly becoming popular, many commenters questioned my story's legitimacy. Digg's system works only so long as the crowds on Digg can be trusted.

The reason? Based on a conversation I had with Digg founder Kevin Rose recently, Digg thinks they are winning the war over the problem of "grouping" behavior (where groups of Digg accounts are controlled or effectively controlled by a person or group and can push stories to the home page). The changes they've made to Digg over the last few months, Rose says, allow them to monitor grouping behavior and stop it before it can drive a story to the home page. Thus, there is no real need to ban any particular site from Digg. They are confident that if a story from a previously banned site makes it to the home page, it deserves to be there.

Since the dawn of the Internet, one site has reigned over all others as the Web's official rounder-upper of the day's news: the Drudge Report. As anyone who works at a news website can tell you, the best driver of viewers to one of your stories is a link on Drudge. The second-best way is — there is no second-best way. For years, if a news story broke in the woods and Drudge didn't link to it, it didn't break.

Many, including such otherwise favored Web tycoons as Arianna Huffington and Gawker media's Nick Denton, have launched sites positioned as rivals to Drudge, but none has made a dent - until now. Welcome to Digg.com, the czar of social news - a kind of cross-pollination of Drudge and MySpace. The site's main function is fairly straightforward: Users post links on the Digg site to news stories. Other users look at the story and vote to either raise it up to the top of the site or bury it at the bottom.

So what does this all mean? After considerable internal debate and discussion with many of those who make up the Top Digger list, we've decided to remove the list beginning tomorrow. As for what's next, we're currently working on designing and refining the technologies required that will help enable our nearly 900,000 registered users to make real connections that we believe will greatly enhance the Digg experience – whether you're brand new to the site or have been on Digg since the beginning. We plan on rolling this out in the coming months along with features and programs that do a better job of rewarding positive contributions to the Digg community.

It's an exercise in futility. A competent programmer could easily throw together a page scraper to determine the top submitters, so when the dust settles, Digg will still have problems with pay-for-play, but the most prolific users will no longer be recognized by Digg for their work that makes the site so successful.

Now, the hard truth: digg is never going to go beyond this group on the digg.com domain name. Now, this isn't a digg to digg, this is just a fact of life and some friendly advice to Jay and Kevin. When you build a huge, passionate community like digg has (and Fark, Slashdot, Engadget, iVillage, and the Well have), you live and die with that group. If digg wants to go big they should start a second digg for women, and one for politics--they shouldn't do it as part of digg.

Videos Enhancements
Aside from giving Videos their own position in the top navigation, we have added a couple cool features: Top 10 hottest videos, and on-Digg video previews. Simply click any video with a play icon to get lightbox window in which you can preview and Digg the video.

Podcasting
Now you can Digg your favorite podcast series and individual podcast episodes. Not only can you see a list of the most popular podcasts by section, you can also dive into any individual podcasts to see the most Dugg individual episodes. And don't forget - every time you Digg a podcast or podcast episode that is bookmarked in your profile and shared with your friends.

While addition of video digging is understandable - watching online video is one of the fastest growing activities on the Internet - it is hard to fathom Digg's efforts when it comes to podcasting. Despite lot of hype, podcasting hasn't gone mainstream. Listening to a podcasts takes a lot more time than reading a story, or watching a 120-second video.

"Digg is about sharing, and if people want to share podcasts, we want to give the ability to do that," says Adelson, and adds that it was one of the most requested features by Digg users. We don't give it much of a chance, but then we might be wrong. However, the podcast digging could eventually result in Digg expanding to say - music or photos. Now that could be fun!

Some marketers offer "content generation services," where they sell stories to Web sites for the sole purpose of getting them submitted to Digg and other sites. This combination of spam and blogs is called "splogs." The stories often feature topics and keywords in headlines that are likely to appeal to the Digg crowd, such as "geeks" and "Apple."

Lazier but still tricky marketers merely scrape content off legitimate sites to put up on their own sites in a technique called "link jacking." In essence, they are hijacking the links that should go back to the original site, experts say.

In a posting last week titled "The Spam Farms of the Social Web," blogger Niall Kennedy detailed how a suspicious item recently made it among the top five stories on Digg before the community "buried" it. The Digg user submission links to a story entitled "Geek's Guide to Getting in Shape: 13 Surefire Tips" written by "Dental Geek" for the i-Dental Resources blog. The blog site has links to other pages with ads that offer content creation marketing services and which collect money for dental plans sold, Kennedy said.

Digg isn't alone in these problems. News aggregator Reddit and Delicious, where users swap Internet bookmarks, are also susceptible, Kennedy said.

The following story made it to the front-page of Digg.com within 2 and a half hours of being submitted, and as I am writing this piece (3 and a half hours after being on the front-page), the story is still on the front-page of Digg:

"We just can't compete with The XBOX, it's cheaper and techologically more advanced than the Playstation, I think this might be the Playstations final year."

That should be more than enough to tip people off that this is a fake. What is problematic is that people continue to Digg the article even after Diggers pointed out more problems in the article

This isn't the first time this has happened and it's not limited to socially driven news sites like digg. The blogosphere widely reported last week that Yahoo had acquired mybloglog after Techcrunch broke the story. An formal announcement has yet to be made.

All of this points to a real problem in the social media world. The only yardsticks we use to measure the trustworthiness of a source are purely based on popularity - e.g. in-bound links, votes, etc. Now often popularity and quality are closely aligned. However, both of these incidents demonstrate that the current system isn't working. We need more.

All four reddit employees will relocate from Boston to Wired's San Francisco office and become part of Wired Digital. Reddit, founded and funded in 2005, is a YCombinator company (see our interview with YCombinator founder Paul Graham here). The two original founders are Steve Huffman and Alexis Ohanian, and they were later joined by Christopher Slowe and Aaron Swartz.