Interesting report over at Business Insider that details a failed attempt by Twitter to buy bit.ly in January.

Why? Price, of course. Bit.ly’s was too high for Twitter. One source tells us Bit.ly’s asking price was under $100 million, but still a “big f—ing number.”

Twitter and Bit.ly were far apart on price in part because the people running Bit.ly view it as a service that extends beyond Twitter. One source close to Bit.ly tells us that of the 3.5 billion clicks on Bit.ly links in March, 100 million went to Facebook.com. This source tells us that only 30% to 40% of Bit.ly’s traffic is Twitter related.

Another reason Bit.ly probably felt like it could demand a high asking price is that four months prior to its talks with Twitter, it turned down an acquisition offer from Google.

Read more.

Bit.ly remains the network’s default shortened URL, but now Twitter has bought its own URL shortener, acquired Tweetie and made an official Blackberry app, turning down this acquisition might prove to be incredibly short-sighted.

I’m a huge fan of bit.ly, and would hate to see them disappear into the ether. But given that Twitter’s own shortener will inevitably have access to all the internal goodness (most of which one assumes Twitter keeps under wraps), it doesn’t look all that promising.