Yahoo takes aim at Digg with Buzz

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Following in the footsteps of popular ‘social news’ sites like Digg, Yahoo has just launched a new service called Yahoo Buzz which will employ users’ voting to uncover the most popular content from sites across the web and bring them to Yahoo’s massively trafficked front page – putting the fabled “Digg effect” to shame.

That could mean a serious boost for news sites, and a renewed interest in being hot on Yahoo. Initially, however, Buzz will be something of a walled garden taking stories only from about 100 pre-approved news publishers.

This is the first major initiative of CEO Jerry Yang’s turnaround bid. But while Buzz may certainly help make Yahoo a more attractive site for users, publishers, and advertisers, it fails to demonstrate the company’s ability to innovate – something it urgently needs if it wants to forgo Microsoft’s $41 billion offer, or demand a significantly higher bid.

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