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.
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/ :)