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Domain appraiser services use domain name length as one of the scoring factors though...however they might have their own reasons of doing so
However, the URL itself, like the title and meta description affect your click-throughs and therefore ranking.
For example, if I am in the UK and searching for blue widgets, which URL do you think I am most likely to click on?
Probably the last one as it tells me that the site is in the UK and the page is about blue widgets.
[edited by: engine at 2:27 pm (utc) on Feb. 29, 2008]
[edit reason] examplified and delinked [/edit]
I hope URI length won't make a difference to ranking. The widgets.com domain would have gone in 1995. green-widgets.com will have gone by 2000. In 2008 it's touch and go whether you can pick up light-green-widgets.com. By 2015 slightly-faded-light-green-widgets.com could be tricky. Bung a directory structure and a page name on top of all that and you are starting to get long in the URI.
IMHO, while it sounds like the sort of thing the government would do, I reckon a hefty price-hike on all .uk and .com addresses would solve a whole load of problems. If it wasn't cost effective for companies or individuals to cybersquat on 1000+ domains, then there would be a lot more domains actually being used for proper websites...
Now I think this is pretty transparent, and as someone has mentioned, there isn't decent content at each level of the hierarchy. Sites that do something like:
generally rank a lot better...