Tr.im is a URL shortening services that converts your URL from http://aleembawany.com/2009/08/17/tr-im-goes-open-bad-move-or-marketing-ploy/ to something like http://tr.im/wzz0. It’s useful for services like Twitter where the length of posts is restricted to around 140 letters.

In a seemingly abrupt move, tr.im recently announced the decision to shut down at the end of this year blaming the bit.ly and Twitter partnership for driving them out of business. I have not used either service other than for test driving so I don’t have a bias either way but it makes sense for Twitter to go with best of the breed so it is unclear why tr.im needs to place the blame with either bit.ly or Twitter. The situation was pareto efficient and one or the other had to lose out. It makes sense for Twitter to partner with or acquire such a service because it is complimentary to their business (tiny posts with tiny URLs).

Soon after announcing their intent to go out of business, tr.im reversed their position and Eric Woodward offered to bear the costs of operations out of his own pocket if donations fell short–a move that is even worse than going out of business.

Revenue Model

The revenue model suggests that for the most part, such a service is very difficult to sustain. The revenue model for URL shortening services would depend either on showing disruptive advertisements or tracking user patterns and selling intelligence.

In the former case, users would probably stop using the service if they saw an ad before being redirect to long URL. In the latter case, tr.im would need considerable market share to track behavioural data.

Tr.im shot itself in the foot by claiming it will simply go belly up because the business is bad. There goes their chance of getting acquired for a good price.

All this is offset by the fact that it allowed tr.im to receive a lot of media attention and might drive up usage but smart users will shy away from a service that’s on life support and business continuity is of utmost importance. The smarter strategy was to get acquired much like bit.ly did.

Why go open?

The technical challenge of converting long URLs to short ones is trivial so the value-proposition to the community is not that great but let’s assume that since it’s free it’s good. The problem then again is that it will encourage users to create their own competing services to bit.ly and since the revenue model for the most part does not have a compelling monetization strategy, these services will eventually go out of business and intensify the link-rot problem.

The primary motivation for going open seems to be the move toward donations where the community would donate code as well as money to keep the servers running for the millions of links that will accumulate over time. This works well for Wikipedia because it is a natural monopoly and can fall back on ads if needed. And again, Wikipedia has completely different dynamics compared to tr.im which functions simply to shorten the length of links with equal or better services already available that pose a lesser risk of going bust.

A Nasty Time Bomb

When Eric Woodward proposes that he will fund this from his own pocket if donations fall short, the community should be concerned. What is something happens to Eric? Does he leave behind a trust fund? Not only that but the costs are ever-increasing because all links will need to be supported for all of time or thousands if not millions of links will break.

The longer the service stays in operation, the greater the risk it poses. If it goes out of business 2 years from now it might end taking out a couple million URLs with it which will be even worse than if it went out of business today.

So the costs will be ever-increasing, the risks will also be ever-increasing and there is no good revenue model to sustain the service. In fact if it becomes community owned, all data will be free so tr.im cannot depend on behavioural tracking data as a revenue strategy. Tr.im will continue to be a burden on the community and not only that, but if other unsustainable services come up replicating its code, the link rot problem will get compounded. And all those people who make donations will see their money go to waste when they realize the tr.im will need piles of cash, month after month with no other source of cash flow.

I hope I am wrong about this.