Digg website loses over half its revenue in expenses

As a quintessential Web 2.0 icon, the website -- which allows users to vote up aggregated content -- receives an estimated 16.3 million monthly unique visitors according to metrix company Comscore. According to web-ranking site, Alexa, that puts digg on par with major news sites such as The Wall Street Journal or Reuters.com.

In addition to traffic, the site reaches a highly coveted demographic of young, tech-savvy men, supposedly with more disposable income than other groups.

Those type of stats could mean huge fortunes for the owners and investors of the private firm.

However digg has only been able to muster $4.8 million in revenue last year, according to business magazine, Businessweek. Of that, the company lost $2.8 million. During the first 3 quarters of this year, the firm lost $4 million on 6.4 million of revenue.

Part of the problem is high costs, estimated at nearly $14 million a year. The team has put a number of projects into development as it increases the sites social aspects, and makes the site more user friendly.

Another reason is mis-targeted advertising littered through out the website. With ads hosted by Microsoft, users can find irrelevant advertising through the site -- finding ads for stay-at-home mothers inside the sports pages, for example.

Despite the woes of running the site, it has no problem gathering funding however. Earlier this month the firm raised funding and shifted its focus to raising revenue.

"Now I am pressured to keep costs reasonable and focus more on the top-line revenue, which we really haven't done ever," CEO Jay Adelson told the magazine.