Building a business on mob rule is dangerous.
Digg.com, a website that lets anyone post and rank news stories and blogs, found that out when its members staged a revolt over what they saw as an effort to censor them.
It began this week when Digg started banning members from posting a software code that helps online pirates make bootlegged copies of movies. Digg took action because the entertainment industry had threatened to sue.
The ban set the masses off. Scores of Digg's 1.2 million registered users deluged the site, breaking traffic records and making sure that every one of the top 10 stories on the front page either included the software code, attacked Digg's ethics or both.
Many posted links to videos on YouTube that included the code's 32-character string of numbers and letters, including one song called "Oh Nine Eff Nine" (after the code's first four characters). Others tried to get around Digg's text filters by linking to photographs, drawings and electronic greeting cards containing the code.
One member digitally altered a church sign to spell out the code after the words "Jesus says." Another promised to tattoo it on the back of his neck if 10,000 people joined an online protest group he created.
Digg backed down -- opening it up to a legal battle with Hollywood.
"You'd rather see Digg go down fighting than bow down to a bigger company. We hear you," co-founder Kevin Rose blogged, acknowledging that a lawsuit could wipe out the 3-year-old San Francisco company. "If we lose, then what the hell, at least we died trying."
The handling of the uprising is being closely watched. Digg's method for letting users decide what's important is being mimicked or considered by dozens of other websites, including major news organizations and social-networking giant MySpace.
"They're stuck because their community, which is their biggest asset, is the one putting them in this position," Forrester Research analyst Josh Bernoff said of privately held Digg Inc. "When you hand the keys over to the mob, they'll drive wherever they want to go."
Early this week, a Digg user posted a link to a story that referenced the so-called hex code, which had already been used to circumvent the anti-piracy software that prevents people from watching unauthorized copies of some high-definition DVDs. Dozens of movies in the new HD DVD format have been circulating on peer-to-peer networks.
Lawyers for a consortium of entertainment companies warned that posting the code violated their intellectual property rights. So Digg, which generates revenue by selling ads, began removing any mention of the code and deleting the accounts of members who posted it.
"In order for Digg to survive, it must abide by the law," Digg Chief Executive Jay Adelson wrote on the site Tuesday afternoon, adding, "We all need to work together to protect Digg from exposure to lawsuits that could very quickly shut us down."
That didn't sit well with Digg's libertarian-leaning users, who fill the site each day with commentary and links to stories about new technology, politics and a wide range of other topics. One particularly hot topic on the site has been the media industry's practice of wrapping movies, TV shows and songs in anti-piracy software.
Members accused Digg of kowtowing to Hollywood.
Digg cultivated a culture of free exchange among its members and then it betrayed those ideals by ripping down posts and deleting accounts, frequent user Ryan McGuire said.
"Certainly it's their website," said the 27-year-old computer programmer from Cedar City, Utah, "but it's contrary to how I feel it was designed in the first place, which is to be an open forum."
Late Tuesday, Digg reversed course. Soon other news stories started making it back into Digg's front page top-10 list.
Bernoff, the analyst, said that the 25-person company might be appeasing its members in the short run by capitulating, but that it risked a larger legal battle that could financially wipe out the company down the road.
But once the site gave in, even some of the executives who support the encryption code said they had little appetite for a suit.
"The law says they have to take it down when they're told about it," said one technology executive who declined to be identified. "But no one ever envisioned that the users would lock the system to stop it from getting taken down."
Michael Avery, a Toshiba Corp. attorney who manages the encryption consortium, declined to discuss his next move. But he acknowledged that the legal threats had spread the offending sequence and that a suit might do more of the same.
"If you try to stick up for what you have a legal right to do, and you're somewhat worse off because of it, that's an interesting concept," Avery said.
Rose defended Digg's turnabout during the OnHollywood digital media conference Wednesday morning in Los Angeles. He said that Digg's administrators would continue to remove links to pornography, hate speech and pirated software, but that they would look the other way when it came to the code that might help people crack HD DVDs.
"We always look to the community to provide direction for us," he said in an interview. "It was clear they didn't want us to back down."
That stance perplexed movie studio executives, who wondered how Rose could allow the code to be posted but block links to pirated versions of Photoshop.
"What the heck is the difference?" said Alan E. Bell, executive vice president and chief technical officer for Paramount Pictures. "These are very profound issues that are just as important as the ones the users of Digg.com voiced in their e-mails."
Other studio executives played down the importance of the code's spread, noting that it has been bouncing around the Internet for months.
Avery's software group can disable security keys that have been compromised and distribute new ones, preventing people from using them to make more unauthorized copies of movies.
Still, the entertainment industry's efforts to wipe the code off the Web clearly backfired.
One Digg member, Grant Robertson, said the incident reminded him of a quote from "NewsRadio," the 1990s TV show: "You can't take something off the Internet. That's like trying to take pee out of a swimming pool."
Times staff writer Dawn C. Chmielewski contributed to this report.
Begin text of infobox
What it does: Digg is a website that displays links to popular stories or postings based on how highly its members rank them.
Headquarters: San Francisco
Chief executive: Jay Adelson
Members: 1.2 million registered users
Traffic: 15.5 million visitors (April)
Funding: $11.3 million raised from Greylock Partners, Omidyar Network and private investors
Source: The company