Deals.com, a social site created by Demand Media, has launched in beta (in fact, the site went live on Thanksgiving, but they've kept it on the down low while they build up activity on the site). Deals.com is, quite simply, Digg for deals - it lets users create a profile, submit deals on the site itself or via a bookmarklet, vote on deals, leave comments and track their Dealer Rank. It's simple, well-designed and could easily make money through ads and affiliate relationships. Rivals include Dealplumber, Clipfire and Crowdstorm, to name a few.
That's great, but you'll be excused for thinking this isn't breaking any new ground. To understand the bigger picture, you need the back story on Deals.com owner Demand Media...
Demand Media Overview
eHow, WeHow and SEO
The same modular philosophy of the Grab.com code, meanwhile - writing the code once and deploying it across an entire network of sites - was also applied to Deals.com. If they ever want to add Digg-like voting to their other sites, they can. What's more, they're able to connect all these niche sites together into a network: Answerbag users, for instance, will also have accounts on the other Demand Media properties.
Domain Names + Social Networking = User Retention + Free Content
Deals.com is a classic example. You can criticize it for being an unoriginal idea, but the simple fact is that social sites need a critical mass of users before they become useful: do people join MySpace because it's the best social network, or because all their friends are on it already? What about YouTube, the video site that achieved critical mass through players on MySpace and blogs, among other factors? Facebook, too, built a user base around the top universities before those crucial network effects kicked in. With that in mind, what could be a better starting point than a domain that already attracts masses of traffic?
That said, another recent attempt to convert a popular domain into a Digg-like site hasn't taken off in a massive way: Netscape.com faced an issue when it's non-techie user base was confronted by a whole new paradigm of social news. Anyone who types "deals.com" into their address bar when looking for deals is unlikely to be a tech guru, so it'll be interesting to see whether they can convert that traffic.
I could go on, but Demand Media's plan for world domination is so nebulous that it takes some time to digest. Meanwhile, I'll wait for someone from Demand Media to drop by and point out everything I got wrong. The short story is that DM has a radically different approach to this space than everyone else: rather than buying social startups, start off with domain names and content sites that already have significant amounts of traffic, then plug in social networking. You gotta give it to them: it's a smart idea.