The biggest question on the minds of people who are interested in the Web 2.0 world (i.e. 0.01% of the population) is which of the new companies is the next Amazon and which is the next pets.com? Their are multiple contenders for both crowns in video hosting, photo sharing, social networking, blogging tools and "memediggers" such as Digg and Reddit. While each of these fields seems to have one front runner, several possible winners and a bunch of also-rans, there's clear evidence that Digg has already won the race among the memediggers.
When arguing which site is going to win in any field, the common metrics used to measure success are the number of users, the number of page views, the amount of time users spend on the sites and whether or not a site has a significant first mover advantage. All of these are useful for measuring what is happening *now* but events over the last ten years have shown repeatedly that none of these, or even all of these combined, is a sure indicator of success. This habit of focusing on the moment and pretending nothing else exists and nothing will ever change is the IT world's biggest problem and it doesn't seem to be getting any better. Netscape had absolute market domination in the web browser market for years but Microsoft crushed them. Google came to market years after other search engines but wiped the floor with them.
Digg itself is a direct competitor to long-time geek favourite Slashdot. For years, people had talked about the "Slashdot effect" - namely, that if your site was featured there you could expect to be overwhelmed with visitors. Digg took a perceived weakness in Slashdot, that it was controlled by a group of editors and was "undemocratic", and created a site that provided essentially the same service (links to interesting stories) that had the difference of proclaiming to be totally democratic with no editorial interference. Whatever users voted for went to the front page no matter what the site owners thought of it.
The rapid rise and overwhelming dominance of Digg must have surprised even its founders. In short order, being "Dugg" made the Slashdot effect look like child's play. Digg's success emboldened others to try the same thing and many similar site rose up; some with distinct differences but many outright clones. And so the game was on - who would win? Once serious VC money gets involved people tend to take the game rather seriously and as "user controlled" memediggers were arguably a new type of site with a big future, there is a distinct possibility of becoming the next Google.
Those closely involved in the business of Web 2.0 (whether site users, commentators, entrepreneurs or investors) spend a lot of time focussing on the users of various sites and obsessing over who has the most users or even the "best" users. An understandable vanity that has absolutely no value in objective reality. The rest of the world does not care how many people use your site, even if it's in the millions (a million is a very small number in world population terms). The rest of the world cares what your site can do for them. And this is why Digg has already won this particular competition - the rest of the world has decided that Digg is more useful to them than competing sites.
The dotcom boom was a wild and crazy time where all of us geeks and nerds spent billions of dollars changing the world. Except the world didn't care. To non-IT folk, the dotcom era was a sideshow - the actual technology had almost no direct impact. The technology did in fact change everything but very few companies made explicit decisions that revolved around any specific technology in and of itself. IT people spend their lives obsessing over programming languages, operating systems, applications and infrastructure. Nobody else does. Its a common failing that techies think the technology is important. It isn't - the result is what's important. Users don't care how clunky the code is, how "ugly" (a dubious term open to interpretation, personal prejudice and changing fashion) the interface is or how outdated the infrastructure is.
And they don't care whether or not a site that promotes links uses editorial control or not. A lot of people got up in arms as it became obvious Digg was exerting some control over how stories were promoted to its front page. This is after all not democratic - a founding principle of Digg. It may not be totally democratic but it sure as hell makes sense. There are two big things that could kill Digg: one is if it became unusable because it was flooded in crap and two is if people stopped using it (either because of the flood of crap or if they became disenchanted). There was a lot of talk that introducing controls would lead to massive user exodus which would mean the end of Digg. I have two words for that:
Digg proved to be absurdly easy to game. About 30 user accounts acting in concert (not necessarily individual users) could pretty much guarantee prominent placement for stories which undermined Digg's objectivity in a way the owners could not control without making changes. So they made changes that reduced the ability of a small number of users to have a disproportionate effect on the front page. This led to several hissy fits and proclamations of doom. At least one of the "top Diggers" made a melodramatic statement that they were leaving because they had been "mistreated" and anyone who wanted to be treated the same way was welcome to take his place. Dork. If you want to add something to the list of the things that make me angry, you can add "be a whiny little self-important dork."
There were hundreds if not thousands of other users who couldn't wait to shovel the dirt on his grave and scrabble for some recognition of their own. Plus, the moves made by Digg were FAIR. A very small number of users had what they perceived as their power lessened to the vast benefit of everybody else. Individual users of web services need to understand that no matter how important you think you are to the success of a site you don't own, NOBODY CARES ABOUT YOU. Not other users (who probably see you as competition) and not the rest of the world (who neither know nor care that you exist).
A second reason Digg was wise to make this move and would be wise to move further down this road is that people generally trust an editorial voice (or at least they gravitate to an editorial voice they can trust). If pure democracy was the answer then none of the precursors to Digg that have editorial control (e.g. BoingBoing, Fark) would still be around. They're still around and they're still going strong. At a certain point, online communities simply become unmanageable unless there are controls in place. I've said it before, online democracy doesn't work except in the purest sense: if you don't like what's happening, go off and start an alternative.
In short, Digg has won their race not because they were some revolution in online democracy but because external parties have decided Digg provides a service they actually want. When mainstream media outlets in somewhere as out of touch with Silicon Valley as Australia are adding "Digg this" to their stories you've really achieved something.