yfrog-logoTo capture more of the growing photo- and video-sharing space on Twitter, ImageShack’s media hosting service Yfrog is partnering with the leading URL shortener Bit.ly this month.

In the next few weeks, Bit.ly will launch a media-sharing service powered by Yfrog while the image-sharing service will make Bit.ly shortened links available through its site.

The two companies are trying to make use of their strengths: Bit.ly dominates the URL shortener market, making up nearly 80 percent of all shortened links that pass through the microblogging network, according to Tweetmeme. A URL shortener compresses web addresses so links are easier to share on services like Twitter, which limits users to 140-character tweets. Twitter made Bit.ly its default URL shortener earlier this year after switching over from TinyURL, which didn’t have comparable analytics. Reinforcing Bit.ly’s lead, Google Reader also started using the shortener this month.

Yfrog is one of several players in the media-sharing space that try to make it dead-simple for people to instantaneously send out photos and videos to hundreds of followers while tracking click-through rates. It was developed by ImageShack, a Los Gatos-based company co-founded by early Googler Jack Levin almost five years ago. The company earns revenue through a combination of advertising and premium services and has been working with other developers to create media experiences through Twitter clients, while encouraging them to pay Imageshack to host their images and videos. While Yfrog has grown in concert with Twitter’s rising traffic, it’s still lagging behind rival TwitPic, according to Compete.com.

On top of its own revenues, the company has raised $11.5 million from Sequoia Capital.