Early in the morning today, Kevin Rose announced a major site redesign on digg. The changes include a fluid layout, a top 10 hottest stories list, a podcasting section, and most importantly, a concerted emphasis on video. I’m actually pretty happy about this, since I primarily go to digg for my intake of viral videos.

Nobody can deny the proliferation of online video within the past year. Time magazine has even named “You” as the person of the year, implying that YouTube has allowed everyone of us to easily broadcast ourselves. Watching these videos are millions of bored office workers needing a quick viral video fix during their five minute break. Online video has proven itself to be a huge industry, and, digg’s redesign addresses this.

Digg’s video section was originally located alongside the other categories. Now, it’s been prominently elevated to the top bar right next to News and Podcasts. I’m happy to see this division, because I don’t consider viral videos of your brother singing his rendition of the Backstreet Boys news.

For certain videos, you’re able to view the videos without leaving digg via a lightbox interface. Simply click the play button next to the video thumbnail and watch. The result? Users have easier access to the videos, and, will have a less likely chance of leaving digg.

Digg’s video section is definitely one of the fastest growing sections of the site, and, the redesign is a good response to the demand. I still find digg’s video portal into YouTube to be much more interesting and effective than YouTube’s own featured videos page. And, I’m one of the many people that are consuming YouTube via a third party site.

There’s been a lot of controversy about Digg over the past few months, ranging from cries of secret moderation to condemnations about its worthlessness as a news site. Recently, Jason Clarke of DownloadSquad wrote a scathing article about why Digg is doomed.

For the most part, I tend to agree with Jason about how Digg is more an entertainment site rather than a news site:

Although digg claims to be a news aggregation service, in the scheme of things digg articles skew much further towards the Entertainment side of the online content spectrum than they do to the News side. Therefore, a better analogy to illustrate the problem with the digg community would be to liken it to a rock concert that gets out of control where a riot breaks out. The people in the crowd at the concert weren’t looking for a riot when they showed up at the concert, they were there looking to be entertained. The problem is that when a few idiots in the crowd begin taking part in antisocial behavior, the “wisdom of crowds” tells the people in the crowd (particularly those who feel anonymous) that it’s okay to take part in the nonsense.

A few of my friends and I were at a coffee shop discussing the state of online social media. One of us asked the fabled question, “How do you consume Digg?” All of us agreed that it’s basically the technogeek’s equivalent of reading trashy tabloids on the checkout aisle of the supermarket. I don’t go to Digg for serious news, but rather, for a quick peek at some viral videos and articles.

And, I always have a feeling of guilty pleasure.

However, I think it’s sensationalistic to say that Digg is doomed. There’s a place in the online social ecosystem for entertaining quickie types of links. I’m not sure if this is the vision that Kevin Rose had two years ago when he started Digg, but, it’s the reality at the moment.

So, how do you consume the content on Digg?

Read/Write Web writes about a new service called User/Submitter, which pays people to vote for articles on digg. People who want their article or site dugg can pay $20 plus $1 for each desired digg.

At the heart of this is the big gaming elephant in the social news room. Anyone who uses del.icio.us, digg, Wikipedia or any other site that relies on voting has seen the gamers and trolls that lurk behind the curtains. Indeed, we have even seen it here at BuzzShout. In order for such sites to be successful, the barrier to entry for voting should be low enough so that anyone can easily participate. However, this is at odds with the ideal of removing the junk, since it means people and sites like User/Submitter can disrupt the quality chain.

Currently, they are paying $0.50 for every five stories dugg, which is quite low. However, my fear isn’t that people would do this manually. The User/Submitter revenue model may encourage someone to automate the digging process in order to earn the cash. In fact, I wouldn’t be surprised if someone has already done this.

Is this a dark portent of the future? Will sites like del.icio.us and digg be controlled by the highest bidder? Even though I still hold to the philosophy that people are generally good, I hope User/Submitter isn’t the start of a new trend.

One of my favorite places to find addicting games is at digggames, which aggregates flash games that have made it to the front page of Digg. With Digg’s current interface, it can be difficult to distill these kinds of genres from previous posts. Thus, digggames was really doing a service by filtering out Digg’s content for a niche market. Recently, they were served a cease a desist letter (page 1 and 2) from Digg claiming that they were infringing on Digg’s trademarks.

But, why not stop there? If Digg is going to go after digggames, why don’t they also go after 80% of the sites on the digg tools list? Sites like Diggdot.us, DiggLicious, and Digg vs Dot would also be ripe for a takedown. At the extreme end, mashups would all be considered illegal, squashing all the creative juices that have made web 2.0 innovative and liberating.

Certainly, Digg has the right to enforce its trademarks. But, taking down digggames, a small homebrewed site that isn’t meant to compete with Digg, takes points off of my book for Digg.

Calacanis has finally succeeded in getting a response from Kevin Rose, and it’s not a pretty conversation. After offering to pay $1000 a month to top digg users, the blogosphere is alive with banter about the controversial topic of paying social news users.

Calacanis’s stance is that the reaction from the idea of paying top social news contributors is no different than the reaction from paying bloggers via weblogsinc.com. Of course, Kevin and a good slice of the blogosphere is outraged at the mere thought of it.

Personally, I think that paying top digg (or newsvine or reddit or etc.) users a flat fee per month to do what they’ve been doing is a slippery slope. The problem isn’t because they’ll be paid to provide content–that’s okay. It’s the fact that we’ve now singled out a particular group of people as “top” users who deserved to be paid. By doing this, we’ve trumped the whole idea of democratic reviews. Suddenly, people who are not “top” users get the message that they don’t deserve to be paid, and therefore, their contributions are not as valuable.

But, social news sites rely on everyone’s contributions. The more contributions there are, the stronger the content of the site.

The only options are that no one is paid, or everyone is paid.

A compromise between digg and Calacanis’s flat fee idea is something like Squidoo’s profit sharing. Users should get paid with respect to the amount of value they are adding. This could be done through ads, or simply through counting the number of top digged stories they’ve managed to submit.

In the end, I think that there is space for both digg’s model and other social news models, whether they pay out or not. Social new is still young, and there’s a lot of growing that needs to be done.

Yesterday, Digg version 3 launched, and it’s definitely a great redesign. The interface is much tighter, allowing users to more easily navigate between sections and stories. As expected, they also launched a number of new topical areas, in hopes of expanding their reach.

On the interface level, the redesign is a welcome change. The graphics have been slightly updated, and given a softer and more refined look. It’s also much easier to switch between the upcoming stories in the queue, which is really important, since users are the ones that can digg them up to the front page. The tabbed interface for surfing the different topics is also nicely done, allowing users to quickly jump between topic sections. It’s also much easier to jump between the most popular recent stories, and the most popular stories in the past day, week, month, and year.

The big deal is the addition of new content areas for Science, World & Business, Videos, Entertainment, and Gaming. Some of these topics were originally lumped into Technology, but they’ve since been separated. The new topics are currently in beta, and, you can only view them once you’ve logged in.

Whether or not the new topics such as Celebrities will catch on remains to be seen. Currently, there are relatively few stories in these fledgling categories, although, many people are starting to submit new items for them.

Overall, the redesign was a nicely executed, and made the homepage easier to navigate, and easier on the eye. The new categories have great potential, and we’ll have to wait and see if more people besides techno-geeks will start using digg.