4. Out of the Box Control
Internal and External
Audiences
Access Control, Rate
Limits, Developer
Portal, Monetization
http://www.3scale.net
Plug-and-play Setup
Get Traffic running
immediately
Scale quickly and efficiently
4
5. The Talk will cover 3 things
How the
API Economy Economy Examples
Works
7. The Value of an API
Revenue
Ecosystem
Amazon.com Mobile Apps
Affiliate Sites
+ API
Ancillary Services Internal Developers
7
8. Projected Growth: APIs
Programmable Web API CAGR: 100%
Directory Growth
Project 250k
APIs by 2016
Adding Approx
100 APIs a week
10% API Traffic
growth / quarter(*)
e.g. Think of this as 10% of the Alexa 2.5 Million top
Websites
8
(* source – 3scale customer base average)
9. Massive Diversity
Wide range of industries
starting with APIs
Companies large and
small
APIs driving success for
early adopters
B2C APIs B2B APIs Partner APIs Internal APIs
…
9
(image source: http://www.programmableweb.com)
13. Broad classes of business APIs
First it’s worth thinking about the different functional roles of an API
e.g
The API is the product
The API projects the product
The API promotes the product
The API powers and feeds the product
14. Digging
Deeper Direct revenue
Utility / Pay per transaction
Tiered Pricing Bands
is the product
Reach more places
Provide more utility
Enable Mobile
projects the product
Allow deeper integration
Biz Development Lead Gen
promotes the product
User Acquisition
Advertising
Brand promotion
powers and feeds Affiliate Programs
the product
Content Acquisition
Partner tie-in
Internal Innovation
15. The API Openess Cycle
Internal Re-Use
Inter Dept, Dashboards, Processes
Raw Service
Measure, Collate, Analyze
Customer
Re-use Core
Apps, Integration Assets
Open to
Anybody
1000 Flowers, Market
Extension
Partners and Distribution
New Revenue, New Reach, Ecosystem
17. The API IS the product
Core value is tied up in the API
Others
API is core value
Direct Customer Usage
API Encourage Resellers
Amazon AWS Build Tech Knowledge
Ecosystem
Strategy Build Switching Costs
e.g
Enable new Services
Huge Growth Encourage 3rd Party Tools
API >> Websites
$ If core service sees usage growth
18. The API Projects the product
Extends availability of functionality to new places
Mobile apps / 3rd
Others
Parties / Added Utility
Added to a product
Encourage partner ecosystem
API Innovation opportunities
Salesforce.com Build Tech Knowledge
Ecosystem
Strategy Build Switching Costs
e.g
Enable new Services
50k + devs Encourage 3rd Party Tools
Thousands of value
increasing customer spend (primary)
add apps $ If
and numbers (secondary) for core product
19. The API Promotes the product
Secondary function and indirect revenue impact
Secondary (non core) service
Designed to drive Others
Leads / traffic
Distribute “Teaser” Information
API Brand Diffusion
Amazon.com Promote to niches
Ecosystem
Strategy Cultivate Partners
e.g
Improve Partner Impact
Widgets to
Whole sites powered
10’s 1000’s of affiliates $ If
increasing customer numbers (primary) and
spend (secondary) on core product
20. The API Powers and Feeds the product
Content acquisition via the API
Content, User information,
Ratings, comments Others
Etc. into the service
Reach all relevant producers
API Facilitate Access
Twitter.com Virtuous circle data in/out
Ecosystem
Strategy
e.g
75% of traffic
By API
250,000 Apps $ If
when UGC brings appreciable value to the
central product.
21. Hybrid Models
Many APIs combine these models
Support The API often starts by serving a
different particular need and is repurposed over
audiences time.
Multiple
revenue
The API separates Data from Business
streams Logic and presentation to make this
possible.
e.g
• Started to power affiliates • Core P2P Infrastructure an API
• Evolved to running auctions • “Skype as a platform”
• 60% of listing now via API • Third parties embed Skype
• Core part of revenue stream • End user uniform experience
• Entrenched market power • Huge reach as a result
22. Entities (and Identities Involved)
Managing Ecosystems, not closes silos
Internal Customers
• Developers • Apps
• Business Units • Integrations
Partners Wider World
• Suppliers • Independents
• ISVs • End Users
• Contractors • Aggregators
•Affiliates • Resellers
25. MODEL = DATA
VIEW = FORM
Model
View Controller
CONTROLLER = BUSINESS LOGIC
26. Think of your business as MVC
• Are you…
– Model: Data, Content, Core Service, Raw Material
– View: Audience, Market
Access, Visualisation, Presentation
– Controller:
Transformation, Recombination, Logic, Value Add
– More than one?
• What are the interfaces between these things?
– Partners that could grow the whole?
– Can you build an ecosystem around your strength?
26
28. The API Economy is Upon Us!
APIs are Key to
Unlocking
This Data Value
Look Ahead in the
Cycle
Derive Value from
Every Step
29. Thank you and QA
3scale
Contact: info@3scale.net
Web: http://www.3scale.net and @3scale
Offices: San Francisco, Barcelona, London
Speaker: @njyx or steve@3scale.net
30. Credits & More Resources
• 3scale: http://www.3scale.net
• More on API Business Models and Development
Models
– http://www.slideshare.net/3scale/apis-for-biz-dev-20-
which-business-model-9672038
– http://www.slideshare.net/3scale/apis-power-mvc-for-
the-web
• Images:
– Flickr & iStockphoto
These four categories have distinct revenue models. Some APIs combine elements of several classes.
This breakdown is not 100% comprehensive, but many currently public APIs can be classified against it. We use this at 3scale to identify the primary areas of value being created by an API.
Key point/focus here is charging directly for the operation on the API (1-1 relationship between operations ordered and payment): “utility computing” can apply to messaging, CPU time, storage, transaction processing etc. – primarily used for “Infrastructure as a Service” type APIs. Twitter arguable fits here also since it charges for access to it’s full data feed.
This category is for APIs which enable and extend a product in a significant way – making those products more useful, integrating them more tightly with customer systems, third parties, mobile devices etc. Here there may be a direct revenue relationship which can be calculated between how much the API is used and the revenue generated by the main product. The category can increase both depth of use and breadth of reach for a product. The Salesforce API allows both third party applications to run on top of Salesforce (or on dedicated hosting such as Appirio) and connection from customer/third party server applications.
This category uses the API as a dynamic promotion channel – providing useful but limited content / features to third parties in order to promote usage of the core service. eBay, Amazon and others engage in this through affiliate programs – the API “supports” the affiliate program by allowing third parties to “suck out” exactly the right product meta data to display to their users. Amazon also exposes valuable product popularity data in order to help partners what to display.
This category is often combined with others but essentially uses the API as a way to generate value back into the core product by capturing data rather than releasing it. Twitters traffic is free on the API to write but in turn creates huge value for twitter in republishing back to it’s user base, the youtube API similarly allows for video upload, Foursquare gathers check-in data. How the data is monetised after collection is not connected to the API in general.
Most APIs combine a number of elements
Most APIs combine a number of elements
- Model is your data- Controller is the business logic- View is how you experience it