AOL has admitted defeat with its social news venture but has announced plans to replace the Digg-rival with a similar site.

Netscape is now being refashoned as a ‘traditional’ news service – a move AOL said would allow it to fit in better with perceptions of the historic Netscape brand.

Hmmm, doesn’t sound quite right, does it? AOL must have had an inkling about this sort of thing 15 months ago, when it was preparing to relaunch Netscape as - give or take - a Digg clone.

AOL only repositioned Netscape as a user-organised news site last summer, but it quickly became known as a sort of capitalist version of Digg.

Shortly after it launched, a row ensued as to whether these sites should have a level of payment for users. Netscape had editors, and paid top contributors, while Digg offered no financial incentives to users.

Outspoken boss Jason Calacanis then resigned in November, seemingly upset at the firing of AOL chief executive Jonathan Miller.

In a statement, AOL said it had “received some feedback that people really do associate the Netscape brand with providing mainstream news that is editorially controlled”.

It added:

“In fact, we specifically heard that our users do have a desire for a social news experience, but simply didn’t expect to find it on

“The decision to redirect the current site is based on that feedback and our desire to better serve our community.”

That user feedback started a few hours after Netscape 2.0 was unveiled last summer. What took them so long?

Digg’s Kevin Rose should be one of the happier people in the internet industry today…