This post has been corrected from the original. See fifth paragraph.
For users who want to create easy short links to images they upload from their computers, this will be a bit of a time-saver. Also, users will get the real-time click through data from their images on the Bitly site.
Imageshack CEO Jack Levin says that his 11-person company services 3 billion images a day. That's the highest hit-per-employee ratio in Silicon Valley, he boasts. He also says that Imageshack has, due to its tenure, a larger and more stable infrastructure than competitors.
I find it interesting that a service that I thought treated all sites equally--I'm talking about Bitly here--would make a deal clearly favoring a particular source. Of course, Twitter itself gave Bitly its big break when it baked the URL shortener into Twitter itself, replacing TinyURL. Benevolence, or favoritism, depending on how you look at it, flows downhill.
Levin agrees that deals like this are "Web politics" but is happy to have what is for now unique placement on the Bitly service. This post has been corrected from the original, in which it was stated that the Yfrog arrangement was an exclusive deal. Bitly CEO John Borthwick sent in this correction: "If users like it, other photo sites will be included."
The image-upload feature should go live on the Bitly page at the end of the month.
Bitly also announced on its blog that Google Reader and Typepad now generate Bitly links natively.
Disclosure: Bitly and CBS, CNET's parent company, have partnered to create branded short links for CBS News. CNET itself has no partnership with Bitly.