It costs me nothing to run because it uses next to no resources on a server that I already pay for and I got the domain for free.
//Sidenote, if anyone is interested in using the service, we have a really simple api (as all the services do) http://urli.ca/api note: the urls auto-increment (ie. ab/ac/ad/ etc.)
I'm turned off the ads-during-the-redirect thing, but I can see where it might be an effective money-maker.
I like what cli.gs is doing.
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/ :)
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!
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.
Never seen a url service require a captcha. Especially not on first use.
For our service, we make money indirectly by mentioning our other services/sites as friendly as possible. We've seen stellar response from that.
It helps that our URL shrinker is new/cute/silly and something people like to show-off on Twitter "the shortest URLs on earth".
But our plan isn't to make any money off of the URL shrinking-- it's simply a toy we want to share because it's a really inexpensive project and a good way to promote our other sites.
I've had a service like this in mind for a while and haven't pulled the trigger because I'm a chronic procrastinator.
I guess what I'm getting at is... some data is valuable, but doesn't, at least to ignorant me, seem to have a market for it.
(Edit: BTW, I'd be happy to be proven wrong... for instance, I have this site where the data might be worth something, and the ads aren't worth much:
The way I would build a business model around a URL shortener would be through those types of value add services which would draw users back to the site (ad-revenue, or potentially in-depth "pay" analytics), in addition to the already-mentioned resultant data insights.
I think you mean http://cli.gs ? :)
wouldn't be surprised if some of the shorteners start doing this at some point.
I know because of SEO a lot of urls are now more human readable but it wold be an interesting idea if it hasn't been done yet (too lazy to google).
Now, it may get annoying, but having a "You are redirecting to http://somelongurl.com" sort of page, would not only be safer for all, but would also provide another spot for ads. (I know one of the services does this already, but I dont' remember which one)
(For the record I know TinyURL.com was not, but i'm pointing out that a newer/similar service could be.)
So definitely not $0, perhaps a couple hundred bucks which is made up with google ads.
(edit: i'm referencing this: http://www.nbc.com/Saturday_Night_Live/video/clips/first-cit...)