One of the many URL shorteners has announced that it is shutting down in just under three weeks. Cli.gs has announced, via its blog, that it will no longer accept new URLs to be shortened as of October 25. It will also stop logging analytics. Cli.gs will still forward URLs at through November, but no guarantees have been made beyond that. Since Cli.gs has been a one-man show serving tens of millions of forwards a month and the site owner is funding it from his own pocket, it's not too much of a surprise
Back in early August another URL shortener called it quits, Tr.im. The argument Tr.im posted on its page was essentially that there is no way to monetize URL shortening and without money to be made, it's hard to justify further development. Tr.im committed to supporting their Tr.im links through December 31, 2009. However, shortly after that post, Tr.im claimed to be resurrected. Since that announcement, Tr.im has started its progression into an open-source community owned endeavor. Its success is now at the mercy of how much time developers are willing to donate.
Both URL shorteners have, either directly or indirectly, referenced the lack of revenue from their business model, the number of competitors, and the fact that Twitter has standardized on Bit.ly, making it the de facto leader in the Twitterverse, and by extension, much of social media.
URL shorteners work by taking any URL that a user provides and returning a much shorter address that users can paste into a tweet (renowned for the 140 character limit), email messages, or other places where a terribly long link might be cumbersome. Some of them just redirect users right to the target page while some, like the not-so-short Linky.com.au, load the target page into a frame with their brand (and statistics and other link information) sitting at the top of the viewport. In the future, this brand area could be used to serve ads, possibly generating revenue.
The major complaint with URL shorteners is the fact that users cannot always see where the link will take them, which can be a boon for all those fake Twitter accounts trying to link users to porn (sorry, pr0n). This has led to browser add-ons or Twitter applications that can extend the URL as a tool-tip before clicking and being surprised by a screen (and speakers) full of NSFW content.
My additional complaint is that URL shorteners, and specifically their demise, leads to link rot on the web. If any of these services were to shut its doors tomorrow and stop all redirections, the links using those services all become dead-ends. In the case of tweets, we're talking about millions and millions of tweets that will become nonsense (moreso than many of them are now). For emails, articles, or anything else that relies on these URL shorteners, they also become orphaned references without context. If the Mayans had it right, that could be the End of Days we're all expecting in 2012.
Even if you don't believe in the great Linkpocalypse, you should take a few moments to read up on link rot at Wikipedia (an article which is sadly devoid of any mention of URL shorteners).