api business models

API

John  Musser,  ProgrammableWeb  @johnmusser  

API  Strategy  Conference,  2013      

20 models in 20 minutes

Business Models

7  years  

8,000  APIs  

3,000  news  sto

ries  

why, why, why?

Why API? Many reasons…

Extend product

BizDev / LeadGen Marketing channel

Upsell opportunity

Content acquisition

Device and mobile support

API as Product Distribution channel

Increase stickiness

New line of business

Accelerate internal projects

Drive innovation

User acquisition

Partner opportunities Drive traffic

Increase footprint

An API strategy is not

an API business model

API SECRET #1

A very brief history of API business models…

API Business Models, 2005

API Business Models, 2013

Most APIs have > 1

type of ROI

API SECRET #2

Free

Developer Pays

Pay as You Go

“Pay  only  for  what  you  use.  There  is  no  minimum  fee.”  

Tiered Pricing

Freemium

Unit-based Pricing

Unit-based Pricing

Beware complex pricing

Transaction Fee

2.9%  +  30¢  per  transacDon  

Developer Gets Paid

Affiliate Revenue Share: CPA

+   =  $  

Revenue Share: CPC

APIs, now a billion $ business

=      $2  billion/year  

“90%  of  what  we  do  is    business  through  APIs”  

John  Wa9on,  Expedia  Affiliate  Network,  TravoluGon.co.uk,  April  2012  

Affiliate Network

Recurring Revenue Share

•  3%  of  $9.99/month  per  “Unlimited”  subscriber  •  2%  of  $4.99/month  per  “Rdio  Web”  subscriber    •  7%  of  purchase  price  for  each  MP3  purchased  

Recurring  revenue  every  month  for  as  long  as  a  subscriber  recruited  by  you  remains  an  

Rdio  subscriber  

Affiliate Program

You need to bake your business model into

your API

API SECRET #3

Indirect

Content Acquisition

3rd  party  applicaOons  built  on  the  [eBay]  Open  PlaTorm  accounOng  for  $6.9  billion  in  Gross  Merchandise  Volume  (GMV)  in  2008.  

Kumar Kandaswamy, May 31, 2012

60%  of  all  tweets  came  from  3rd  party  clients  [2010]  

Ryan Sarver, Chirp Conference, April 4, 2010

Content Syndication

API as SaaS upsell

APIs, the glue of SaaS 200  SaaS  companies  with  API  success  stories:  

“We  find  that  if  our  customers  use  any  single  integraOon,  they  are  three  Omes  as  likely  to  convert  to  paid.”  

Sunir Shah, FreshBooks Blog, Aug 25, 2010

API business models are not

1 size fits all

API SECRET #4

NPR: Internal use = API growth

NPR News Android app

Relaunched NPR mobile site

NPR iPad app

NPR Music iPhone app

NPR Music Remix

NPR Blogs Made API Friendly

Facebook Integration

Player 2.0

Homepage Improvements

Story Page Improvements

Source  NPR.  Shown  in  millions  via  Ominture.  Last  updated  September  23,  2010.  

Evernote: 99% internal calls

API  usage  from  internal  apps  

External  usage  

Netflix platform: 800 devices

Daniel Jacobson, Netflix Engineering Blog, July 9, 2012

Internal use may be the biggest API

use case

API SECRET #5

API Business Models

Thank You

QuesOons,  ideas,  comments?  jmusser@gmail.com  

@johnmusser