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API Business Models
- APIBusiness Models 20 models in 20 minutes John Musser, ProgrammableWeb @johnmusser API Strategy Conference, 2013
- yea rs 7 Is ,000 AP tor ies 8 new s s 3 ,000
- why, why, why?
- Why API? Many reasons…Drive innovation BizDev / LeadGen Marketing channel User acquisition New line of businessUpsell opportunity API as Product Increase footprint Device and mobile support Distribution channel Partner opportunitiesContent acquisition Drive traffic Increase stickiness Accelerate internal projects Extend product
- ET #1 I SECRA P An API strategy is notan API business model
- A very brief history of API business models…
- API Business Models, 2005
- API Business Models, 2013
- ET #2 I SECRA P Most APIs have >1 type of ROI
- 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 Affiliate Network “90% of what we do is business through APIs” John Wa9on, Expedia Affiliate Network, TravoluGon.co.uk, April 2012
- Recurring Revenue Share • 3% of $9.99/month per “Unlimited” subscriber • 2% of $4.99/month per “Rdio Web” subscriber Affiliate Program • 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
- ET #3 I SECRA PYou need to bake your business model into your API
- Indirect
- Content Acquisition3rd party applicaOons built on 60% of all tweets came from the [eBay] Open PlaTorm 3rd party clients [2010] accounOng for $6.9 billion in Gross Merchandise Volume (GMV) in 2008. Kumar Kandaswamy, May 31, 2012 Ryan Sarver, Chirp Conference, April 4, 2010
- Content Syndication
- API as SaaS upsell
- APIs, the glue of SaaS200 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
- ET #4 I SECRA P API business models are not 1 size fits all
- NPR: Internal use = API growth NPR Music Facebook Integration iPhone app NPR iPad app Relaunched NPR mobile site Player 2.0 NPR News Android app NPR Music Homepage NPR Blogs Remix Improvements Made API Friendly Story Page Improvements Source NPR. Shown in millions via Ominture. Last updated September 23, 2010.
- Evernote: 99% internal calls External usage API usage from internal apps
- Netflix platform: 800 devices Daniel Jacobson, Netflix Engineering Blog, July 9, 2012
- ET #5 I SECRA P Internal use may be the biggest API use case
- API Business Models
- Thank YouQuesOons, ideas, comments? jmusser@gmail.com @johnmusser