When a popular website falls from grace, recovery can be nearly impossible. In social media, it can be doubly challenging as people tend to spend more time on the sites and therefore are able to notice deterioration more acutely. Look at MySpace, Propeller (formerly Netscape), Mixx (even though they've been reborn as Chime.in), Delicious, and hundreds of other dominant or promising social media sites that took a turn for the worse and never recovered.
Digg has a chance to be the exception. After a disastrous decision over a year ago to redesign the site and change the promotion algorithm to favor "influencers" (who subsequently abandoned them once the users fought back), the former-darling of social news has seen dramatic drops in traffic and onsite engagement. The fabled "Digg Effect" that would crash servers within minutes of hitting the front page is gone. On a good day, the most popular stories on the site have trouble sending the traffic that an average story once did.
If a Digg front page story breaks 30K views, it's almost a miracle.
The possibility of becoming the exception to the rule that has reigned over foul-turning social media sites rests in the potential for renewed buzz. Digg has suffered from radio silence for a long time now with a few exceptions surrounding feature updates such as Newsrooms and Newswire. Now that the site is stabilized and the userbase seems to be leveling off (in most cases, one wouldn't want to "level off" but the traffic has been going down for over a year, so for Digg it's a good thing), Digg has an opportunity to turn things around for 2012.
All they need is buzz.
Reddit and StumbleUpon have made tremendous gains over the last year. Social news was once an overcrowded arena, but today people are looking for alternatives to mainstream media and newsfeeds. Facebook and Twitter have emerged as useful tools for news, but they are equally rife with spam and bad links that need vetting.
Social news sites can do the vetting for the people. 2012 will see the growth of social news continue. Reddit shows no signs of slowing. StumbleUpon is filling their niche nicely. Digg is the only question mark. Will they generate the sort of buzz that Kevin Rose once brought to the site? Can they build up a new generation of Digg users by getting mentioned in articles the way that they once were? Will tech journalists and bloggers be willing to take another look at the new Digg, which frankly is a now a much-improved beast compared to what it was a year ago?
Can they build buzz? If they can, they can be the exception. If they do not, they'll continue to die the slow death that has been chasing them down since V4 launched.