• by Mark Walsh  @markfwal, September 20, 2011

In a bid to regain relevance, social news site Digg has revamped how it filters and presents news items by drawing on other social-media properties to rank stories. The struggling site is also organizing news more clearly by topic and using virtual badges to reward key contributors.

With the launch of Digg Newsrooms in private beta Tuesday, the company introduces a new three-pronged approach for surfacing content on the site beyond users "Digging" or "burying" stories. Here's how the company explains it in a blog post today by Digg CEO Matt Williams:

*Sourcing: We locate great content for each topic and display in a real-time feed called "Newswire."

*Signals: Stories are ranked automatically by an algorithm that looks at recency and popularity including Likes on Facebook, Tweets and LinkedIn sharing, to name a few.

*Curation: The news is then filtered by the Diggs and Comments of passionate users who have gained reputation as top influencers in each Newsroom topic.

The company says topics can be as broad or narrow as technology or Lady Gaga, but will also include existing news categories on Digg, such as politics, entertainment, gaming and sports. (The main Top News front page will remain as is.)

While the new filtering system taps outside social networks to gauge popular opinion, the company emphasized that input from Digg users will still be crucial to separating merely popular stories from the most "valuable" stories.

In that vein, Digg is making all reading, Digging and burying activity visible through a real-time activity feed within each Newsroom. It has also developed a way to track and reward people who are the most active and influential in a given Newsroom.

Those rewards take the form of a series of badges. For example, a user who has the first story promoted to the front page of a Newsroom is labeled an "Ace Reporter," while someone who racks up 25 promoted stories is a "Trendsetter."

"Sifting out the most relevant and meaningful news each day is a hard problem to solve. Creating the best experience for every topic is a long road," wrote Williams. "Today's launch is an important first step toward making it easier to discover the news you care about most."

Whether the latest changes will help Digg rebuild its traffic and usage is far from assured. The monthly audience of the once high-flying social site has dropped by nearly half to 3.5 million in August, from 6.5 million last October.

At the same time, rival social media like Twitter, Tumblr and StumbleUpon have continued to grow and fill the niche for socially driven news and Web discovery once owned by Digg. Williams, who was brought on as chief executive last summer to help turn things around, has not been able to right the ship.

Digg's most recent launch last year, called V4, was initially viewed as diminishing the role of the site's diehard users by giving more influence to publishers and Digg editors. With the introduction of Newsrooms, Digg appears to be striking a balance between the voice of its homegrown community with input from outside sources, including other social networks.

But whether the latest initiative will satisfy longtime Digg users while attracting new ones looks like a long shot, given how far the site has fallen from 2006, when founder Kevin Rose landed on the cover of BusinessWeek.