To find a Web page you wanted in the pre-Google era, you often had to guess at its address. Was General Motors generalmotors.com, general-motors.com, or gm.com? This led to all kinds of trouble—a speculative bubble in domain names, huge legal battles over valuable addresses, and unseemly attempts to benefit from the confusion. (Accidentally visiting whitehouse.com would bring up stuff that was much less safe for work than the Starr Report.)
In 1997, an entrepreneur named Keith Teare came up with what he considered a simple solution to the problem. His company, RealNames, sold natural-language keywords that would work as Web addresses. General Motors, for instance, could buy "General Motors," "GM," "Chevy," "Chevrolet," and so on. RealNames signed a deal with Microsoft to build its keywords into Internet Explorer, and RealNames became a dot-com darling. Microsoft bought a 20 percent stake in the firm, and there was talk of an IPO. But even though it espoused simplicity, RealNames was a bit kludgy; it didn't work across browsers, and it created a single point of failure on the Web (if RealNames went down, all keyword-based addresses would stop working). Soon Google came along with a much handier way to find things online. In 2002, Microsoft dropped RealNames from IE. Just like that, the company was toast.
I got to thinking about RealNames as I was looking into the recent boom in URL shorteners—sites that turn unwieldy links like www.slate.com/id/2220818/ into digestible strings like bit.ly/zfFbA. Thanks to the popularity of status updates—not just on Twitter but also on Facebook, Gmail, and other sites—shortened URLs are increasingly prevalent. By some counts, there are more than 100 shortening services online. In March, Bit.ly, the most popular URL shortener, raised $2 million in venture funding. The news earned its investors some derision, because URL shorteners have a big problem—none of them has figured out a way to make much money.
Shortened URLs also don't sit well with people who worry about the health of the Web. In a much-cited blog post, Joshua Schachter, the founder of Delicious, recently accused these services of disguising spam and phishing sites and littering the Web with loads of perishable links—if Bit.ly goes under, for example, all of the links it ever generated will stop working. Schachter echoes the criticisms that people once hurled at RealNames, and I think he makes a good case. URL shorteners seem like a hack, a short-term solution to a problem that could likely be addressed in better ways. The most obvious fix: Twitter could change its system to allow for links of any length. If it did that, URL shorteners would meet the same fate as RealNames—they'd be rendered unnecessary overnight. But Bit.ly, the URL shortener with the biggest dreams, doesn't see that as much of a danger. The firm says it has gone to great lengths to address its critics and that it has ways to crush spam and create tiny links that won't rot over time. Bit.ly also has a few plans to turn small links into big money. The ideas don't sound too crazy, either.
Shrinking Web addresses isn't a new practice. TinyURL, the first shortener, hit the Web early in 2002; its creator, Kevin Gilbertson, is a unicycle enthusiast who came up with the idea after many frustrated attempts to pass around unicycling links. (Early e-mail clients and newsgroup readers would break up very long links.) Several upstarts have tried to take on TinyURL over the years, but shorteners have never been seen as a hot business. TinyURL makes money from Google ads, which yield enough to cover the costs of the site; so far, no shortener has come up with a more lucrative revenue stream. Eric Woodward, the CEO of Nambu, says his firm created the popular shortener Tr.im mainly as an adjunct to Nambu's main business goal—building a great desktop Twitter program. The company has just one developer working on Tr.im, and Woodward doesn't have any brilliant plans to turn a profit from the site. "If you want to tell me how to make money from it, I'd be happy to listen," he told me.
Tr.im is among a new generation of shorteners that do more than just squish links—they also give you statistics about who's clicking on the URLs you generate. Bit.ly does something similar, and it's in these stats that the firm sees its fortunes. Bit.ly was created last summer by developers at Betaworks, a tech "incubator" in New York that has deep business connections to Twitter. A representative for Bit.ly—which has since been spun out of Betaworks—declined to speak to me on the record but was willing to talk at length about the company and its plans if I agreed not to quote him.