Yesterday, New York-based startup incubator Betaworks raised $2 million in funding for its URL-shortener project, Bit.ly, and spun it out as an independent company. The funding raised some eyebrows, with some speculating if Bit.ly, one of the dozens of link-shortening services, was worth a rumored $8 […]

Yesterday, New York-based startup incubator Betaworks raised $2 million in funding for its URL-shortener project, Bit.ly, and spun it out as an independent company. The funding raised some eyebrows, with some speculating if Bit.ly, one of the dozens of link-shortening services, was worth a rumored $8 million. I fall in the camp of those who think Bit.ly is worth the money.

Here’s why: The most important aspect of Bit.ly is not that it can shorten URLs. Instead its real prowess lies in its ability to track the click-performance of those URLs, and conversations around those links. It doesn’t matter where those URLs are embedded — Facebook, Twitter, blogs, email, instant messages or SMS messages — a click is a click and Bit.ly counts it, in real time. Last week alone, nearly 25 million of these Bit.ly URLs were clicked.

By clicking on these URLs, people are essentially voting on the stories behind these links. Now if Bit.ly collated all these links and ranked them by popularity, you would have a visualization of the top stories across the web. In other words, it would be a highly distributed form of Digg.com, the social news service that depends on people submitting and voting for stories from across the web. Don’t be surprised if Bit.ly formally launches such as an offering real soon. This will help them monetize their service via advertising.

And because it would be much more democratic than Digg, and span across many verticals, it could become a potent competitor. Digg has been trying to expand beyond its tech roots and recently teamed up with Facebook for vertical expansion, but a quick glance at data provided by Compete.com, a web-traffic tracking service, shows that San Francisco-based Digg’s traffic has started to plateau. (Data from Quantcast, another such service, shows that the unique monthly visitors to Digg.com have plateaued as well.)

In comparison, Bit.ly has only started to ramp up, much like Twitter itself. And the fact that it’s the default shortener for Tweetdeck, a desktop client for Twitter, is only helping Bit.ly’s cause. Both Bit.ly and Tweetdeck share common investors. Most importantly, what’s working in favor of Bit.ly is that it personifies a much bigger trend: the complete disaggregation of the web in parallel with the slow decline of the destination web.


Like Bit.ly, another service that could become a challenger to Digg is tr.im. It also provides analytics about your URLs. And it creates a unique URL for every link a user inputs. Tr.im is the default shortener for another Twitter desktop client, Nambu. The reason these URL-shorteners are getting popular is because of limited space — 140 characters — on microblogging services such as Twitter.

I’m pretty sure the rise of short URLs is causing Digg some serious concern. After all, why else would the company be launching its own URL-shortener, perhaps as part of a toolbar or some kind of a browser add-on, as soon as this week.

And just when you were wondering what the damn point of those URL shorteners — which were originally invented to make sure that MS Outlook/Exchange didn’t destroy the links — was anyway…

Update: A couple of points I forgot to add in the original post:

1. Bit.ly will have to keep up its hyper growth and attract a lot more URLs in order to ultimately become an authoritative resource for top links on the web.

2. By submitting a link and then sending it to friends or followers, I am actually acting as an editor, thus replicating the role of folks who submit stories on Digg. In other words, I am doing a kind of validation. Similarly when I email or IM a Bit.ly link involves pre-sorting thus making Bit.ly data more valid.

  1. I understand the logical connection that a click should be considered a vote, similar to how Google’s PageRank and Techmeme consider a link a vote. But I think one could also make the argument that Digg’s “vote” data is much cleaner than that of bit.ly.

    Using Digg, the user has the opportunity to read the article (or at least the headline) before digging. However, with bit.ly, the user clicking the link often doesn’t know the actual site behind the shortened URL and rarely, if ever, knows the quality of the content on that site. So, I think bit.ly clicks tell you more about the influence of the person disseminating the link, than the quality of the content behind the link itself.

    And, if I’ve read the article correctly, this would benefit tr.im the most, as it creates a unique URL for each user/underlying URL pair.

    1. Eddie

      Great points. Just to elaborate – I think when say I tweet an article, I am doing some kind of validation for you and acting as an editor for you. Similarly when I email or IM you an article with a Bit.ly link, I am already doing the pre-sorting for you and tell you that this article is worth reading. So from that perspective, Bit.ly data is cleaner.

      I am pretty sure Bit.ly has some innovations coming vis-a-vis Tr.im.

      Thanks for your thoughtful comment.

      1. If you are acting as the editor, than the click that is tracked isnt predicated on the content since I dont know what hides behind the link; I open it because you sent it. It seems to follow twitter’s model that it is not what is said but who says it that matters. The comment” By clicking on these URLs, people are essentially voting on the stories behind these links” therefore isnt accurate; people will be voting on the popularity of the original ‘editor not on the article.

        1. Yes, You are right about this – twitter model of who says it matters. Is it that offensive? After all you do click on emails/urls recommended by friends/co-workers and family. Why would you trust me as an editor if I kept feeding you crap links. Someday you are going to say – to hell with this guy and not click on anything me (aka the editor) recommends!

    2. I like your points Eddie.

      However, I think links that lack valuable content won’t get as much of the network effect.

      For example, if someone posts a Bit.ly link and I click it, if I think it sucks, then I’m not going to share it.

      Just a thought.


    3. This may be true for the first time someone posts a bit.ly link. However, once people start re-tweeting or sending it to others, thereby leading to greater clicks, you can assume the link is popular for its content and not for its author.


  2. Cli.gs has always been around, even before Bit.ly and has analytics better than that of bit.ly, along with other features. I just think Bit.ly was in the lucky bucket at the time Tweetdeck dev was looking for a shortener.

    1. sure that might be the case, but i really do believe that now the wind is behind their back and as a result bit.ly is going to get some serious traction. as a result, we can expect them to build some value added services out of the aggregated data.

      now that said, it is a market with incredibly low barrier to entry and can be a frothy place to be. One thing is for sure – Digg is in some deep trouble.

  3. MSO and Telcos have been looking at Voting/Rating/Sharing systems for their video middlewares. I cannot say about this Bit.ly because while I use it (with Tweetdeck) and I have not had a chance to play with it.

    Digg, may be able to innovate & expand by integrating itself with platforms such as Verizon FiOS and AT&T U-Verse (MSFT Mediaroom). One could “Digg” shows with the added advantages of it may be able to act as a “Nielson” type rating systems.

    Then again, it may be possible with Bit.ly as well…. time to go look at the Bit.ly API to see if it can fit in as well as Digg for a demo application!

  4. How is this a business? Where would they even run the ads, and who would click one? Let’s see, I go to bit.ly to shorten a link I want to send to someone…I see an ad… I’m going to stop in the middle of what I’m doing and click it?

    What am I missing?

    1. Peter

      I think the best way to think is bit.ly/topstories or bit.ly/politics as pages for getting top/hot stories around the web. these are destination sites and they can attract contextual advertising. It is all predicated on bit.ly growing real fast though.

      1. Was there any mention of semantic analysis here Om? That’s a big part of it too, I think. I would pay for a feed of fast rising tech links updated in real time.

      2. True, Marshall — I could see folks in the media and news business paying for this data.

        I’m doubtful when it comes to regular consumers, though.

  5. I put up this poll to see what people think of this: (linkback) Believe or Doubt? Why Bit.ly Will Upstage Digg [VOTE] – http://www.pikk.com/40821

  6. Om,

    I completely agree that Twitter and URL shorteners will have a big impact on sites such as Digg.

    My question here is what is going to be the catalyst to drive users to a particular service? I have been using BudURL for a while now and don’t see a real reason to change to another service.



  7. I agree with you OM! Very insightful piece as usual.

  8. Unless this service has a way to distinguish between real human clicks and bot-clicks, there is a high chance for gaming the system if it tries to become Digg-like.

    1. Well, I am betting that since this would involve a high degree of human touch, the service will have good value. Of course, you are raising a valid and important point. I don’t have any answers :-)

    2. Compared to digg bit.ly is still small. When spamers will realize that people go to bit.ly to find stories and not use it just as an url shortner they will start gaming the system.
      Now digg knows a lot more about their users/voters then bit.ly will know about those that click the links so detecting the gaming might be harder for bit.ly

  9. Marshall

    I am not sure I quite understand your point. You would be so kind to elaborate please. I think you might be onto something, but I don’t want to presume anything for sure.

  10. What does bitly do if you create a short URL out of a link thats already been shortened? Does it give you back the one that its already got in the database? Or does it create a new one anyway? Seems like it would be harder to get metrics based on clicks if it is always creating a new one. That is something that Digg excels at, alerting you when a story has already been submitted.


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