I got an e-mail from a friend this morning with the subject line ‘Digg - Revolt,’ and no words in the body of the text.  I immediately Googled the term and was inundated with a number of stories that described how a copyright encryption key for HD-DVD discs was posted to Digg and subsequently pushed to the top of the site by the Digg community.  Shortly thereafter, the Digg management team pulled the story and references to it, fearful of litigation.

The community flipped out and flooded Digg with stories and negative feedback and lo and behold, the Digg management team decided to change their policy on the issue and have posted the key along with the observation that, “You’d rather see Digg go down fighting than bow down to a bigger company.”

So now what happens?

Digg isn’t exactly a light-weight. 

In August 2006, Business Week reported that Digg had an estimated market cap of about $200 million and was the 24th most popular Web site in the US, just a few slots behind the New York Times (No. 19) and far ahead of Fox News (No. 62).   According to Alexa, Digg has actually surpassed the New York Times in traffic:

What are the estimated losses for the DVD industry based on Digg’s publishing of the code?  Are they going to be able to recoup that by suing Digg - a company that still is privately run?  Can you say Chapter 11?

The other issue is the PR nightmare that whoever sues Digg is going to have on their hands.  Is whatever company who plans to sue Digg ready to deal with an online crisis of catastrophic proportions? 

The other issue that has really fascinated me throughout all this is that Digg is the entity that will ultimately deal with the repercussions of the crisis, but the truth of the matter is that it is the Digg community who is responsible for the posting and visibility of the code.  It is also the Digg community who is responsible for the backlash after the code was pulled, and ultimately, the re-posting of the code. 

In my mind, this is something that is truly uncanny about social media - that a community of users can really dictate the public facing of an issue. 

Whatever happens, I have a feeling it will be entertaining to experience.