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API
Business 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 business
Upsell opportunity API as Product        Increase footprint
  Device and mobile support         Distribution channel
                              Partner opportunities
Content acquisition
                    Drive traffic     Increase stickiness
   Accelerate internal projects    Extend product
ET #1
      I SECR
A   P

   An API strategy
        is not
an API business model
A very brief history of API
   business models…
API Business Models, 2005
API Business Models, 2013
ET #2
      I SECR
A   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 SECR
A   P

You need to bake your
 business model into
      your API
Indirect
Content Acquisition

3rd	
  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 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
ET #4
      I SECR
A   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 SECR
A   P

       Internal use may
      be the biggest API
           use case
API Business Models
Thank You

QuesOons,	
  ideas,	
  comments?	
  
   jmusser@gmail.com	
  
      @johnmusser	
  
                	
  

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API Business Models

  • 1. API Business Models 20 models in 20 minutes John  Musser,  ProgrammableWeb   @johnmusser   API  Strategy  Conference,  2013  
  • 2. yea rs   7   Is   ,000  AP tor ies   8  new s  s 3 ,000
  • 4. Why API? Many reasons… Drive innovation BizDev / LeadGen Marketing channel User acquisition New line of business Upsell opportunity API as Product Increase footprint Device and mobile support Distribution channel Partner opportunities Content acquisition Drive traffic Increase stickiness Accelerate internal projects Extend product
  • 5. ET #1 I SECR A P An API strategy is not an API business model
  • 6. A very brief history of API business models…
  • 9. ET #2 I SECR A P Most APIs have >1 type of ROI
  • 10. Free
  • 12. Pay as You Go “Pay  only  for  what  you  use.  There  is  no   minimum  fee.”  
  • 18. Transaction Fee 2.9%  +  30¢   per  transacDon  
  • 20. Affiliate Revenue Share: CPA +   =  $  
  • 22. 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  
  • 23. 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  
  • 24. ET #3 I SECR A P You need to bake your business model into your API
  • 26. Content Acquisition 3rd  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
  • 28. API as SaaS upsell
  • 29. 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
  • 30. ET #4 I SECR A P API business models are not 1 size fits all
  • 31. 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.  
  • 32. Evernote: 99% internal calls External   usage   API  usage  from   internal  apps  
  • 33. Netflix platform: 800 devices Daniel Jacobson, Netflix Engineering Blog, July 9, 2012
  • 34. ET #5 I SECR A P Internal use may be the biggest API use case
  • 36. Thank You QuesOons,  ideas,  comments?   jmusser@gmail.com   @johnmusser