URL address shortening Website tr.im will no longer be providing the service to the public because there's no money to be made. Makes you wonder how other URL shortening companies can survive.

"There is no way for us to monetize URL shortening -- users won't pay for it -- and we just can't justify further development since Twitter has all but anointed bit.ly the market winner," tr.im wrote on its website after stopping the shortening service. "There is simply no point for us to continue operating tr.im, and pay for its upkeep."

URL shortening sites, such as tinyurl.com and is.gd, have become popular as Twitter has become more widely used. A user cuts, typically, a long Website address and pastes it on the shortening site of their choice. Then the service clips down the URL into a smaller chunk that doesn't take up as much room when pasted into Twitter's limited 140-character Tweets or other social networking sites such as Facebook. The smaller URLs won't get chopped when pasted into an e-mail, whereas longer ones might be snipped.

Tr.im shutting down suddenly proves that customers shouldn't rely on URL shortening services, wrote Dan Frommer of Silicon Alley Insider. "Most of today's short URL services are run by small, modestly funded startups that could easily shut them down -- or change the way they work." Digg changed the way its digg.com URL shortener worked, to give digg more exposure, which caused a backlash as many stopped using digg's short URL service. According to Pete Cashmore at Mashable, bit.ly investor Betaworks has offered to keep the mapping of tr.im's small URLs alive and may also offer to buy tr.im for a small amount of money.

The obvious question for the other URL shorteners in business is how will they make money. Nambu, which owns tr.im, wrote, "Users will not pay for URL shortening, and why should they?" Ah, but if users won't pay, will companies pay? Some are willing to pay for the service and to advertise on Web sites as well.

There are some ads on the pages of tinyurl.com or bit.ly, so that's one way such companies are creating revenue. The other way is to create customized small URLs, the way budurl is doing for Coca-Cola (KO). Awe.sm and yourls are also providing the service to other companies, TechCrunch wrote, which may create trust in the small URLs because the brand name is visible as part of the shortened URL.

The most interesting part of tr.im's story may be that no company wanted to buy it before it shut down. "No business we approached wanted to purchase tr.im for even a minor amount," tr.im wrote. That should concern other URL shortening sights and Twitter itself, which is where much of the short URLs are being posted. They have not yet shown the ability to turn steams of Internet traffic into cash.

It's feels like 1999 all over again. Many are using new technology just as there were countless "eyeballs" using Web sites 10 years ago. This time around, potential acquirers may have learned from mistakes of the last decade. So far, at least, they're not offering to pay obscene or even small, amounts of money for companies that have yet to prove they can generate significant revenue.

Anthony Massucci is a senior writer for DailyFinance. You may follow him on Twitter at hianthony.


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