Digg founder Kevin Rose said the social news recommendation site is not doing enough to reach people with niche interests, which will be key to keeping users engaged.

Over the next two years or so, Digg's engineers will focus on ways to link users with similar interests and create tools that allow them to share news that's not necessarily of broad general interest.

"We don't really do a good job of servicing the long tail of content," said Rose, who spoke at the Future of Web Apps conference in London on Thursday.

Some 30 million people visit Digg each month to view content, but only 3 million are actually registered, a disparity that shows "there's a space in the middle we are missing," Rose said.

"I don’t believe we are really offering a compelling experience to the user to spend the five minutes to sign up," Rose said. "It's not really a custom experience. We have to do better."

In July, Digg rolled out a recommendation engine, which looks at a person's digging history and compares it to others'. It computes connections between users in different topic areas and identifies strengths between them.

Since introducing the recommendation engine to the "Upcoming" section, Rose said Digg has seen users adding more friends as well as digging more stories. It has also driven more traffic to Digg, Rose said.

Eventually, Rose said he wants a broader taxonomy for Digg. That would allow users to create a better customized page for themselves that hones in on the news they want to keep up with.

Digg also needs to better reward its users and not be "just about the number going up by one,” Rose said. He envisions a way for users to get some notification of exactly how many other Digg users they've shared a particular story with.

Digg is also looking at an API (application programming interface) that would enable publishers to expose data or stories buried in their sites based on interests of the user.

The next horizon for Digg is to expand internationally, Rose said. Digg clones are up and running in countries such as Spain, Germany and Japan, and Rose will said he hopes to start bringing Digg overseas by the latter half of next year.

Digg is now in a three-year deal with Microsoft for banner advertisements. Rose was coy, however, when asked what Digg's plans are to bring more revenue, but he hinted at an idea to let users have more control over advertising.