You don’t have to be a genius to see that Digg is struggling. It’s struggling to survive competition in the form of Twitter and Facebook, but it’s also struggling against itself and the community backlash after recent changes.

Here’s the blog post from the new CEO, Matt Williams:

When I joined Digg six weeks ago, we set an immediate focus on improving the web site. We listened carefully to user feedback and started making changes to generate momentum in our business.

As I mentioned in one of our first all-hands meetings, another top priority was to take a hard look at the entire business, across product, sales, and operations. Through the time I have spent with each of you, I’ve been impressed by the commitment and enthusiasm you’ve shown. I’ve also learned a great deal about what is working well at Digg, and what is broken.

Many things are working well. The team is listening and acting quickly on the feedback from our passionate community. We’ve been able to deliver nimbly on the new platform, with over 100 bug and feature releases to the web site in the past two months. Our Diggable ads product has seen a notable increase in use by advertisers and clicks by users.

Unfortunately, to reach our goals, we have to take some difficult steps. The fact is our business has a burn rate that is too high. We must significantly cut our expenses to achieve profitability in 2011. We’ve considered all of the possible options for reduction, from salaries to fixed costs. The result is that, in addition to lowering many of our operational costs, I’ve made the decision to downsize our staff from 67 to 42 people.

It’s been an incredibly tough decision. I wish it weren’t necessary. However, I know it’s the right choice for Digg’s future success as a business. I’m personally committed to help find new opportunities for everyone affected by the transition. Digg’s Board members have also offered to help find placements within their portfolio companies.

Let’s please use today to show our sincere appreciation for our friends and colleagues who will be moving on. Tomorrow, we’ll go forward with a new strategy for Digg.

The recent Digg redesign was controversial to say the least. The site’s new CEO, Matt Williams, hit the ground running his mouth with apologies for removing features, promises to restore those features, and a “please-won’t-you-take-us-back” attitude that frankly, surprised me.

Now I know the redesign scared off a lot of the site’s most loyal fans, but the whole point was to make Digg more appealing to people who had never used it. How frustrating would it be to submit links just to have them downvoted into oblivion by the “bury brigades?” Burying is one of the features the redesign did away with that users most bemoaned, but why give it back? The feature flies in the face of the whole purpose behind Digg – to give airtime to news stories that we otherwise might miss.

As Matthew Ingram points out over at GigaOM, “[Changing the fundamental function of a social site] only works, however, if enough new users arrive to justify the loss of that traditional fan base. By apologizing for and unwinding most of its recent changes, Digg appears to be admitting that it backed the wrong horse.” That’s where the apology comes in. As much as Digg needs to appeal to new audiences, the fact remains that Digg is heavily dependent on the power users that balked at the redesign. Twitter and Facebook have most of the market for this sort of thing locked up, and trying to snatch people away from those services by heavily reworking your own just isn’t a winning strat.