The social news site Digg.com is to regress to start-up status after it was purchased by Betaworks. The company, which also owns bit.ly, news.me and Chartbeat, has plans for Digg.com, but it involves working with low budgets, a small team and fast update cycles. Employees of Digg.com are to be let go as a result of this acquisition. Instead, the News.me team will take over the management of the site.

The cost of the deal has not been formally revealed yet. Initial reports suggested that the site was bought for just $500,000, but the total according to Digg CEO Matt Williams is “significantly larger” and includes a combination of cash and equity. Either way, this is a far cry from a site which was once valued at more than $160 million. At one point in 2008, Google was interested in acquiring the site for approximately $200 million, but ultimately walked away from the deal.

Digg.com was founded in 2004 as a way for consumers to put together their own collections of news and other Internet content. However, it has struggled in recent years with users choosing to share content on sites such as Twitter, Facebook and Reddit instead. A number of redesigns did not go down well with the site’s audience and even a relaunch in 2010 drove users away.

The site will become part of news.me, which sends users links to news articles that their connections on Twitter and Facebook are reading and talking about. Betaworks, says Digg, will soon unveil a new “cloud-based version of Digg” that will complement News.me’s iPhone and iPad apps.