Peter Kafka

Recent Posts by Peter Kafka

The New York Times Gets a Bite of Bit.ly

Here’s a quick follow-up to News.Me, the sort-of mysterious social news project that the New York Times (NYT) is developing alongside Betaworks. An interesting deal point, really: As part of the partnership between the two companies, the Times has taken an equity stake in bit.ly, the URL-shortening service that Betaworks built up and spun out last year.

That’s the second time the paper has picked up a piece of Betaworks in the last year. In March, the Times invested in the the New York-based holding company/incubator/investor itself, as part of a $20 million funding round alongside investors like AOL (AOL) and Intel (INTC).

Betaworks CEO John Borthwick wouldn’t disclose the value of the Times’ stake in bit.ly, which has raised about $4 million so far. But the equity represents payment for the initial work the Times R&D group has put into the project, which they handed over to Betaworks this summer. Betaworks also paid out some cash as part of the transaction. No comment from the Times on the deal.

So what is News.Me, anyway? Borthwick won’t elaborate beyond what he told the, um, Times yesterday: It will be social and newsy and cool and it will start out as an app for Apple’s (AAPL) iPad when it debuts later this year.

But the bit.ly connection is an important and obvious clue here: Since Web surfers use bit.ly to shorten a gazillion links a year in order to pass them on–technically, it’s some 30 billion so far in 2010–the bit.ly guys can mine all sorts of data about which Web surfers are interested in a certain story, and which stories a Web surfer’s friends may be paying attention to. You can connect the dots from there.

And assuming bit.ly is a core part of News.Me, it makes it a little less likely that Betaworks will sell off bit.ly anytime soon. But plenty of people think Betaworks has entertained thoughts of selling, though Borthwick insists that the company is not for sale. At one point Google was said to have kicked the tires on the service, and executives at Yahoo have thought hard about the service as well, sources say.

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I think the NSA has a job to do and we need the NSA. But as (physicist) Robert Oppenheimer said, “When you see something that is technically sweet, you go ahead and do it and argue about what to do about it only after you’ve had your technical success. That is the way it was with the atomic bomb.”

— Phil Zimmerman, PGP inventor and Silent Circle co-founder, in an interview with Om Malik