I have to admit when I first read that a URL shortening service managed to get $2M in funding I was bewildered. How on earth will the investors get any return on that I wondered? But the article (on ReadWriteWeb) goes on to explain why very convincingly (although most of the people commenting on it totally miss the point).
You see, doing the shortening bit is the easy part. The real value is in analysing all the URLs that people are shortening. There’s a massive amount of information that can be gleaned in terms of trends, hot topics and overall traffic. And the kicker is that bit.ly are aiming to provide this in real time. That’s very powerful and very valuable.
The ability to adapt quickly is going to be a key differentiator for companies. And by adapt quickly we mean within minutes. No more waiting days to study analytics. Companies – especially media companies – will be wanting to adapt immediately to behaviours on social networking sites, and the Twitter impact is only going to get larger. This is just the start.
I’d be surprised if Google isn’t already implementing some kind of reverse algorithm against URL shortening services. If millions of people (for example) were all linking to a single page using a shortened URL I think Google would consider that an important factor in the pages’ favour.
UPDATE: My misunderstanding here. Most of the shorteners (bit.ly included) do 301 redirects (see this excellent article from Danny Sullivan for a full rundown), so this last point is moot.
$2M. I think they’re worth it.