(FORTUNE Magazine) -- Looking to spot the next MySpace? Consider Digg.com, a "social news" site caught up just now in a scrappy battle with AOL. "Social news," you ask?

Digg is edited by its readers: Much as they would e-mail a story link to friends, "Diggers" post stories to the site by inputting the web address and adding a headline and synopsis.

The readership then registers its interest -or lack thereof - by clicking on a button next to the headline. The more "diggs," the higher the story creeps in the headline list.

"Diggers" can also comment on stories, creating conversations around each article. Headlines are presented in a stripped-down style only an engineer could love. It's unattractive but extremely popular.

Launched in 2004 in San Francisco and backed by heavies like eBay's Pierre Omidyar and VC firm Greylock Partners, the site drew 1.6 million visitors in June, according to Nielsen, up fourfold in 12 months.

Until recently the site focused on tech news and sparred quietly with smaller rivals like Reddit and Newsvine and social-bookmarking site del.icio.us. Then, last month, AOL (like FORTUNE, part of Time Warner) jumped into the game, relaunching the aging Netscape.com in an effort to apply the social-news model to a general-interest, mass-market site.

The ensuing battle has web watchers riveted. Digg has quickly expanded its coverage beyond tech, while Netscape.com boss Jason Calacanis offered, on his blog, to pay top Diggers $1,000 a month to jump to Netscape.

It's a playground skirmish with potentially high stakes. Social news is young, but if the model breaks into the mainstream, the payoff to the early leader could be big.