We still don’t know what to think of Bit.ly, the popular URL shortener that was spun out of Betaworks and has raised $3.5 million in venture funding.Some people think it’s preposterous that anyone could ever think that Bit.ly could be a successful business, given that anyone can hack together a URL shortener with a few lines of code and that there are basically no barriers to entry to the market.
Others — mostly Bit.ly’s investors, sure — point to Bit.ly’s stupendous growth and the wealth of data that comes through Bit.ly’s servers about what links people are sharing in real time.
The bull’s case:
Bit.ly’s path has certainly been impressive. The company has over 50% marketshare, despite competition from everyone from Digg to Google to Microsoft to StumbleUpon. It shortened over a billion links last month. Its Pro service which includes a custom domain and detailed analytics has over 6,000 corporate clients (though most are not paying anything, that’s still impressive). There may be no single other company or service that has such a wealth of real-time data about what people share online, even Google, and that’s certainly very valuable.
We also think that it’s possible to build a defensible position with network effects and simply by being the top of mind service for shortening URLs. Each time someone posts a Bit.ly link, that’s a subtle ad for bit.ly and increases the chances that people who see that link will use bit.ly next time they want to shorten a link.
The bear’s case:
On the other hand, Bit.ly’s strong position comes in large part from being Twitter’s default URL shortener, and Twitter has plans to come up with its own URL shortener service.
As we exclusively reported, Bit.ly turned down acquisition overtures from both Google and Twitter. Can they maintain a large marketshare after Twitter pushes them out? Even if they do, can they build a valuable business model on top of user adoption and troves of data?
We just don’t know. But we think it’ll be interesting to find out. And we want to know what you think. What’s Bit.ly’s future going to be like?
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