I've seen a ton of url shorteners (like tinyurl.com) out there but haven't seen any real business model behind them... but they seem to survive. Are they doing it from donations, advertising or do they have other techniques?
They don't. To be honest the majority of url shorteners don't make any money at all. I know because I run one. http://urli.ca
It costs me nothing to run because it uses next to no resources on a server that I already pay for and I got the domain for free.
//Sidenote, if anyone is interested in using the service, we have a really simple api (as all the services do) http://urli.ca/apinote: the urls auto-increment (ie. ab/ac/ad/ etc.)
I run DecentURL.com, and have had basically the same experience. I made a few dollars off some "$7 premium services" for a while, but recently stopped running those as there just wasn't enough demand. Not that I made "selling" DecentURL a priority -- so I shouldn't say too much.
I'm turned off the ads-during-the-redirect thing, but I can see where it might be an effective money-maker.
I think I can answer this one, as I own the URL shortener Cligs ( http://cli.gs/ ).
There are two main approaches to running a URL shortener: a "basic" approach that simply does a redirect and a more advanced approach with value added services (like analytics).
A basic redirect comes in two types:
1. A proper HTTP redirect (a 30x code, of which only 301 is of proven SEO value).
2.a. A cloaked redirect in which you redirect to a page on the shortening service's website that displays two frames with one frame being the destination page and the other frame being a page you control.
2.b. An interstial redirect in which the initial landing is a page on the service's website that "refreshes" after a few seconds to the destination.
If you do option 1, then you can't make money off the redirects. You can try to make money off the people using your site. If you look at tinyurl.com, that's exactly what they do: find the AdSense block on the right hand side edge of the site.
Both of options 2 offer you a real chance to display advertising. Adjix does that and I have no idea about the kind of revenue they're seeing, but you can see their payout rates at http://web.adjix.com/AdjixLinkerInfo.html .
Option 2b is very interesting but the most annoying for the user IMHO. Linkbee allows you put interstial ads (see http://www.linkbee.com/create.php ).
The value add services on top of redirection are very valuable. There are two kinds:
a. Services that add value to the short URL creator (i.e. the service user). A great example is analytics which tells you a lot about who's clicking through. Competing on analytics is an effective business strategy ;) There are other kinds of value add services, some of which tie back to options 2a and 2b above (i.e. get the user to earn money from their links).
b. Services that are unrelated to URL shortening per se, but are valuable. I've seen a few comments in this thread about the value of the data gained from tracking traffic. I'll leave this one to your imagination - run wild!
There is a third way to make money: white-label services. I won't explain the business logic behind this, so I'll just point you to my recent announcement on the Cligs blog: http://cli.gs/MvDp1s . Cligs is offering for-pay fully branded short URLs with the analytics built right in. I know of at least one other service that will launch with a similar product soon (they're in testing!).
So how can you make money? It's a very competitive market, and the cost of entry is tiny, the user loyalty is almost non-existent, and the traffic can be huge requiring good service architecture. My point from the above is that you will be able to make money as there are ways to create value for your users you can charge for, but expect to get a few bruises on the way.
Finally, a personal note: It's a great market to learn business skills in because it's so competitive and the popular services are run by some really smart people. Can you really value the lessons you learn from competing in this market? It beats any MBA you care to point to.
And yes, you should use Cligs as it's the best around: http://cli.gs/ :)
Thanks Pierre for your insightful & open response.
I was considering building a business-class url shortener this week (mostly to learn Metal which comes with Rails 2.3 & Sinatra) and what I had in mind was something very similar to cligs. I was thinking of monetizing it exactly the same way with analytics. Looks like you guys have done a fantastic job with it. Congrats on some solid execution!
Thanks :) There is a lot more coming with Cligs soon that will enable me to roll out services to compete more aggressively or respond faster. As I said, it's a competitive market!
But the existence of Cligs or the many other great (and some not so good) alternatives is no reason that you shouldn't create your own. It's a matter of what you want from the project and how it fits with your business/life/CV strategy.
They can make some money indirectly. As background, we made http://tinyarro.ws.
For our service, we make money indirectly by mentioning our other services/sites as friendly as possible. We've seen stellar response from that.
It helps that our URL shrinker is new/cute/silly and something people like to show-off on Twitter "the shortest URLs on earth".
But our plan isn't to make any money off of the URL shrinking-- it's simply a toy we want to share because it's a really inexpensive project and a good way to promote our other sites.
Think: pulling that data into a techmeme.com style aggregator/ranking site for the most popular urls people are linking to. Imagine how dynamic it would be - things that got linked to the most would percolate up to the top. you could watch in near real time as news breaks and gains traction.
I've had a service like this in mind for a while and haven't pulled the trigger because I'm a chronic procrastinator.
That's a cool idea. However, it's still basically an advertising business unless you're charging for access to that site. And all of a sudden you have introduced a big incentive for people to spam/game your service.
I guess what I'm getting at is... some data is valuable, but doesn't, at least to ignorant me, seem to have a market for it.
(Edit: BTW, I'd be happy to be proven wrong... for instance, I have this site where the data might be worth something, and the ads aren't worth much:
There's an important distinction to make between "advertising business" and "data business." Data can be useful for advertising, but can also be useful for tons of other stuff--news, filtering, etc.
I am awfully new to this game, but I do recall seeing a url shortener which enabled additional tracking to the initiating user. For example, showing the time distribution of the clicks along with originating sites. I may be stretching this a bit far, but just for the heck of it, if I wanted to figure out which social networking website had a larger pull for me in distributing information, this type of service would allow me to do that. (don't ask me why? :) )
The way I would build a business model around a URL shortener would be through those types of value add services which would draw users back to the site (ad-revenue, or potentially in-depth "pay" analytics), in addition to the already-mentioned resultant data insights.
well an evil strategy I wouldn't rule out is to make sure that you have loads of links in your system - you now own these links- then after a while insert an advertised page into the flow after a user clicks on one of the links.
wouldn't be surprised if some of the shorteners start doing this at some point.
I don't know if I have seen it or not: is there a kind of the opposite service?; a 'de-obfuscator' that takes a meaningless url like someblog.com?p=245 or one of the long corporate url full of numbers and translates it into abetterurl.com/someblog/the_title_of_the_article ?
I know because of SEO a lot of urls are now more human readable but it wold be an interesting idea if it hasn't been done yet (too lazy to google).
I thought about the same thing the other day, because url shorteners are really only useful for applications like Twitter or Mobile devices where size matters, but for anywhere else a more readable URL is much more useful if the destination website doesn't have it already.
I don't know about most of them, but since Twitter is gaining more people with each passing day, a lot of website marketplaces have buyers interested in URL shortening services. Maybe they want to put ads on it, maybe Affiliate stuff, but selling your service is definitely a money maker.
Tinyurl has ads, but I wonder how effective it is. People can avoid going there altogether since they provide an API. As do most other services. Simply making use of that API in your own services, software means that their number of page views doesn't increase.
Now, it may get annoying, but having a "You are redirecting to http://somelongurl.com" sort of page, would not only be safer for all, but would also provide another spot for ads. (I know one of the services does this already, but I dont' remember which one)
There's a lot of tinyurl clones that basically do the same job, only focusing on providing redirects for long urls, but one that does more and that I've liked a lot recently is http://tr.im - it got me to switch after years of using tinyurl, mainly because it carries a history of links you've previously shortened and shows some cool traffic stats for each one. So I can see them adding even more features for a paid pro account.
How? It may need little CPU or bandwidth, but at the end of the day it's hardware, it needs to be somewhere, be powered and cooled, etc etc. The cost may be low enough to be paid by the owner personally, but it's not going to be $0.
Like someone else said, the load is low enough to run on dirt cheap shared hosting like Dreamhost. So even if the cost isn't zero, it's less than what most people spend on snacks.
It costs a bit more than $0. So many people use the service, every long url on twitter is automatically shortened with the service. I think they have at least a single dedicated server, if not more.
So definitely not $0, perhaps a couple hundred bucks which is made up with google ads.
simple. they dont have to make much money. They can run of a shared server as it just has redirects. Also, they get money from paid advertising on their website. DONE!
It costs me nothing to run because it uses next to no resources on a server that I already pay for and I got the domain for free.
//Sidenote, if anyone is interested in using the service, we have a really simple api (as all the services do) http://urli.ca/api note: the urls auto-increment (ie. ab/ac/ad/ etc.)