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What's a good API business model? If you have an API, or you plan to have an open API, or just want to use APIs in your web or mobile app, what models make sense? See 20 different API business models. This comprehensive survey of the gamut of today's options covering anything from paid to getting paid to indirect.
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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
