July 19th, 2009

Gaming bit.ly: A New Kind of Domain Speculation?

If you believe that bit.ly – Twitter’s default domain shortener – is going to re-organize and re-curate the web, there’s got to be an arbitrage opportunity there, right?

I missed the first round of really juicy domain squatting because I was 11 years old when all the good, generic domain names were registered. For you non-internet-lovers: registering a good domain name like travel.com in the mid-1990s and then holding it would likely yield millions if you still owned it today. So I’m keeping my eyes out for round two.

Could bit.ly have some potential?

Here is my thinking:  There are several reasons why people pay so much for generic domain names, like fund.com, which was the highest domain transaction in 2008 and sold for just under $10m.

One is direct traffic. Yes, there are those people that decide they want some clothes, so they go to their browser and type in clothes.com. I don’t know who those people are, but apparently lots of them exist.

Second, supposedly Google’s search algorithm favors domain names with the searched term in the title, though this is completely unverified.

Finally, there’s credibility.  Some people, unfamiliar with the fact that any know-nothing hack can go register a domain name, believe that if you own digitalcamera.com you’re somehow a credible authority on the subject (“on the internet, nobody knows your a dog”).

When you shorten a URL using bit.ly, there used to be the option to pick a “custom name” for your shortened link, a feature they disabled as of Monday July 20 a feature that you must be signed-in to access as of the homepage update from July 20. This custom name can’t be changed, and once the name is used that’s it. I was playing around with this feature quite a bit over the weekend.

The Plan

So I decided to make some bets. This has so far cost me nothing because bit.ly is a free service (remember – in the very early days of the web it was free to register domains as well). I took some generic terms and am having bit.ly forward them to a website I own. The terms I got are:

http://bit.ly/planetickets
http://bit.ly/sneakers
http://bit.ly/creditcard
http://bit.ly/yellowpages
http://bit.ly/domainnames

This, I believe, places me squarely in the category of “know-nothing hack” that I mentioned above. Regardless, I plan to make landing pages with ads and see what happens.  To me, this is a long-term bet. If the internet is really going to be re-curated by services like bit.ly, then this is good real estate to squat on, though it will take some time and additional structure like an improved bit.ly search and the introduction of real-time search added to major engines.

I think this could go either way.

Potential for jackpot:  As bit.ly links become more ubiquitous, they gain credibility.  Now when you see a bit.ly link, you know that it is a human-curated link to something. Throw a keyword in there and it adds extra credibility.  http://bit.ly/promdresses?  Well gosh!  This must be the best site on the web about prom dresses! Additionally, if there is a more robust bit.ly search in our future, throwing a sponsored ad on the side with the keyword in the domain will I bet yield significantly more click-throughs than the typical letters and numbers ending.

Additionally, bit.ly’s got volume.  As of June, this was on the order of about 150 million clicks a week (source here).  Bit.ly is essentially prime domain real-estate, v 2.0.  There’s enough attention around bit.ly links that I believe it’s only a matter of time before the system-gamers pounce.  Just ask Digg.

The crux of the argument is this: custom names on some URL shortening services are free, but good keywords are scarce. The supply and the demand aren’t aligned. If you wanted to, you could write a script that would assign ALL good keywords to your ad-filled landing page of choice, just to test the theory. I’m afraid I don’t have that much patience.

Potential for nothing:  You don’t own your bit.ly links.  Yes, you can assign the keywords, but the company could go back at any time and change where the forwarding links are pointing. Additionally, since there’s currently no search engine that favors such keywords, for now there’s just the potential for direct traffic.

What does this mean for brands and public figures?

Yet another opportunity for “reputation management” by the masses. I figured surely the publicists would be on to this by now. Nope.  Instead, the current service functions as a kind of stumble-upon for keywords. What is bit.ly/michaeljackson?  A random blog post about a staph infection Jackson had back in February. Bit.ly/generalmotors? An article about the GM bankruptcy.

I see bit.ly as the next-generation of crowd-powered content curation. Personally, I have pointed bit.ly/wellsfargo to Get Satisfaction’s Wells Fargo page, because man their customer service is BAD.  And bit.ly/janetjackson goes to Rhythm Nation. Natch.

Because no one except for bit.ly owns the links, it’s likely tough to make changes once the keyword has been assigned. So bit.ly/tomcruise will forever point to his crazy Scientology video.  Sorry Tom.

The future of SEO

What does this mean for the future of SEO? Tough to say.  Real-time search is coming, that’s for sure. Because of bit.ly’s real-time tracking stats and analytics I have little doubt that it will dominate, at least for a while.  There is no indication that using a bit.ly custom keyword will have any effect at all on future real-time search algorithms, but that’s not where I see the potential.  I think it’s on the consumer side. Essentially: if the average web user starts noticing bit.ly links everywhere they will be more willing to click on targeted bit.ly links.  For example, if I was searching for “headphones” and I saw google.com/headphones would I click on it?  ABSOLUTELY. Google is a trusted brand because it is absolutely everywhere.  Bit.ly is heading in that direction.

Ownership + Moneymaking for bit.ly

Bit.ly hasn’t stated what their revenue plans are.  Do they have a top-secret revenue model?  Probably.  For what it’s worth, here’s my suggestion:

I see the future of bit.ly as both a search engine and a registrar. They can employ a standard search setup with organic results in the center and sponsored links on the side, except that ALL the results will be bit.ly links, a move that I believe is called “branding genius”.  Start charging for the custom keywords – which will create a market where there wasn’t one before. Let brands, public figures, and anyone with a trademark own their bit.ly domain (similar to Twitter’s “verified accounts”). Allow users to put their custom-keyword-sponsored-link on the side of bit.ly search.  The problem with that, of course, is that once a keyword is assigned it can’t really ever be changed. I would say a few years into the future the way to solve that problem is to spin-off a second keyword-only shortener that somehow allows for tradability.

Assumptions

This argument rests on several assumptions:

1. Bit.ly will dominate the URL shortener market

This is really a baseless assumption that rests only the fact that I like bit.ly the best, they are the default shortener for Twitter, and bit.ly has approx $2m in the bank. Money = power, no?

2. Ubiquity = Credibility

This is how I first got turned on to Yelp.  Every restaurant I searched had a Yelp result that would come up first or second for whatever I was searching.  It was seemingly everywhere, so it gained my trust.  The fact that I’m seeing bit.ly’s everywhere now is building serious trust in the brand.  And I’m sure that’s completely intentional.

3. The number of letter/number combinations for URL shorteners is essentially limitless, the number of keywords is fixed/scarce.

This is true for any URL shortener – there are only so many good keywords to squat on.  When you have a free product, you need seemingly limitless resources, otherwise you’ll attract arbitrageurs (and haven’t I always wanted the opportunity to call myself an arbitrageur).

Conclusion

Sure, this entire master scheme rests on the continued growth of Twitter, the move to real-time search, and the continued dominance of bit.ly as the link shortener of choice.  But so?

And I know I’m not the only one scheming (check out bit.ly/cocacola)…

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