Gapingvoid helps us explain API monetization
September 30, 2008
copyright (c) hugh macleod, www.gapingvoid.com
Yesterday I made a presentation to senior management at Best Buy about the API ecosystem and some of the great opportunities they will have with their recently announced, mashery-powered “remix” api.
I’ve long been a fan of Hugh MacLeod, the cartoonist behind gapingvoid, and am very fortunate to call Hugh a great friend.
So when I was looking for some images to help explain how the “remixed” world works, I borrowed liberally from Hugh’s trove of cartoons (which he makes freely available to anyone to use, with attribution). It occurred to me that given Hugh’s licensing terms (and his own business model of giving away free cartoons in order to make money as a cartoonist), he of all people understood the value of making content available to others.
So I asked Hugh to think about the API ecosystem and come up with a cartoon that could help explain the why companies would make content available as an open api. He was kind enough to take a break from finishing his book manuscript to draw the cartoon above. I love it – and anyone who sees me speak is likely to see this cartoon in my slides. Thanks, Hugh!
Mashery and Best Buy: The e-commerce API and Killer Christmas Lists
September 25, 2008
Back in the day when we were young little spuds, one of the highlights of the year was sitting down with a stubby pencil and a fresh clean sheet of paper to make out our Christmas list. Fast forward just a few short years and kids cranked open some sort of word processor to create their Christmas lists. Imagine now if you would for a moment, a world where kids use open content on the web to create their own Christmas list web site and link to all the specifics of every gift they’ve requested. Ladies and gentlemen, not only do Mashery and Best Buy give you an e-commerce API, we give you the Killer Christmas List.
Mashery is thrilled to announce that we are powering the infrastructure for yet another major firm’s API. Mashery infrastructure is supporting the release of the new Best Buy API, called Remix. Best Buy is an electronics retailer with annual revenues exceeding $40 billion.
The Mashery powered Best Buy Remix Developer Network provides access to any content on the Best Buy Web site, including:
· Product specifications
· Prices
· Photos
· User Reviews
· Any and all content from Bestbuy.com’s product catalog data
If you are wondering why this is important and what the real business value is for e-commerce, check out Brad Stone of The New York Times who writes about how open content is becoming very important to old media and old retail.
Another interesting take on the notion of open content is Joshua-Michele Ross of O’Reilly’s Radar who covered the open versus closed approach of some Internet e-commerce vendors and how the Mashery/Best Buy Remix approach is the correct one.
Shop.org and The Digital Retail API
September 17, 2008
We find ourselves livin la vida loca this week in Vegas! Exciting week here as we not only have the largest gathering of online retail vendors at the Shop.org Annual Summit; we also have all these odd virtualization people in town (just kidding).
Shop.org is focused on the challenges and opportunities most pressing to Digital Retail, including:
· Web 2.0 and its empowering effect on online shoppers
· Best practices in online marketing and merchandising
· Analytics and how to make your findings work for your business
· Customer focused website design
· Multichannel integration
These are the same opportunities we see in the online retail space. With more and more conversations about consumer products happening away from the retailers site, there is a need for online retailers to follow the model of the physical world and be everywhere. What do we mean by this? Whether it’s an affiliate partners site, a rating and reviews site, a niche blog, or the latest social networking site – conversations are happening where people gather to talk about their passion whether it’s shoes, fashion, electronics, or travel. We see this as a perfect opportunity for online retailers to syndicate their catalog content to new channels across the web via APIs.
Mashery has been developing a solution for retailers that enables establishment of a successful Affiliate Developer Program like that of Amazon, eBay or one of Mashery’s clients Shopping.com. Online retailers can create the kind of direct customer interaction that traditional affiliate programs, which use links and banner ads for example, can’t match. By using APIs to extend online presence, digital retailers can:
· Reach More Customers through a model of virtual densification
· Bring in More Revenue by driving more highly qualified consumers to their site(s)
· Broaden Marketshare by moving past traditional search advertising & SEO
In the weeks ahead we will share more insight to how this model works as we look forward to announcing new customers in the multichannel retail space! Keep watching.
Mashery Powers MTV Networks Content API
September 11, 2008
Remember that Steve Ballmer video where he danced around screaming “Developers!, Developers!, Developers!?” While forgiving the over-the-top nature of the delivery, there was no doubting the passion and the message behind the fireworks. Steve’s point was that Microsoft’s target, focus, and success hinged on developer buy-in of what Microsoft was selling. We agree wholeheartedly with that notion. Steve’s exclamation is still true today – developers are one of the keys to enterprise software traction, there is no doubt.
At Mashery, we believe the next big developer key that we will all be shouting is “Content!, Content!, Content!”
With a focus on content, Mashery is powering the infrastructure supporting the release of the new MTV Networks Content API. Through this API, MTVN is providing access to every music video in the MTV archive (plus all related metadata)! The API can be used to develop applications and mashups, including:
· Build a music video gallery of MTV, VH1, CMT or LOGO artists
· Create an application to send music video dedications to friends on Facebook, MySpace, Flux or any other social network
· Mine the MTV music video archive to create music applications
· Create a WordPress plug-in to dynamically pull music videos into blog posts
So, other than the super cool fact that the MTV archives are available and we can now start pulling Dire Straits videos into all of our applications, why is this important? We are fast approaching the day when all content is available online and this content is designed from its inception to be placed online. This next phase of web content will be driven by what we call the 3 A’s of massively available online content:
· Access – Big media companies like MTV Networks are driving content access vehicles. Easy access to this content facilitates incorporation (hello developers) into applications, mashups, and social media. Developers will provide and manage this access through APIs.
· Availability – Content must be highly available for efforts like the MTV Networks Content API to work as advertised. Down time or limited availability of content will not be tolerated. Initially, it makes sense that big media companies would make their content available; they are likely already operating at high availability levels (99.999% availability or above). As media companies (natural content providers) validate the content model, other industries will follow.
· Adaptability – Developers have been able to embed videos online for a long time. For the MTV Networks Content API, the big news is the adaptability of the content: Beyond just embedding videos, developers can now search, provide full metadata, control open content, and access to the entire MTV catalog. This adaptability of content is where the content providers, regardless of industry, can provide tools to make their content massively available.
Mashery is thrilled to be providing the infrastructure for the MTV Networks Content API, and we have more Content API excitement coming soon.
Start small so we can go big…
August 20, 2008
Continuing on our theme of planning for success, I wanted share my thoughts on a quote from a Mashery customer in the retail sector. During a meeting with her team, Michele proclaimed “start small so we can go big.” This was one of those “ah ha” moments for everyone.
One of biggest challenges we see companies face is the arduous task of determining what content or services to make available through their API. They get bogged down in the depth and breadth of what they could make available. The key is to start with something simple, but of value. When launching an API companies must make information or services available that is interesting to the potential users – give them enough to build something really interesting – otherwise no one will use it. Starting “small” doesn’t mean risking the success of your API.
Early adopters or users will try and test things for you. These same people are also the ones who will be vocal and will share feedback. You will learn a great deal from these users in the first 30 days (if not sooner). You will learn what your users want to consume, how they want to consume it, and what they are willing to pay to use. If you try to figure all of this out ahead of time, you will get it wrong. Ask the companies that have gone before you…..everyone has lessons learned they can share.
The first version of your API will be focused on learning how to support your community and how to leverage them to shape your next release. This means everything from observing what they do with the API, to being responsive to their requests and comments on blogs and forums, and promoting the apps they have built…all with the goal of continuing to build on what you learn and creating a longer term strategy.
A great example of this would be to look at what NPR is doing. In mid-July, they released the first version of their API. They made some of their valuable content available and gained a great deal of momentum and visibility for it. NRP did get some push back on what they didn’t make available but that is a topic for another blog post! (media companies have content they own, content they get from others, and paid contracts that put some level of limitations on what they can do…again, a later blog post) NPR is now looking to take their API to the next level and is pro actively seeking feedback for the next generation of their API. Take note and follow their model.
Identify what you have that is of value to others, make it available, listen to feedback, learn….and then iterate.
Thank you to Michele A for the great quote – “start small so we can go big!”
Planning for success vs planning for ok
August 11, 2008
The number of companies releasing APIs continues increase(see programmable web blog post). Whether it is the New York Times, Lonely Planet, Dada Entertainment or WhitePages.com, planning is an important part of driving both adoption and ongoing success. Planning isn’t just about the types of web services you offer, or about the business model that might be deployed. In the words of one of our customers, Tom Tague, from the Calais Division of Thomson-Reuters, “it’s about planning for success vs planning for ok.” In the 7 months the Calais service has been available, he has experience that provides insight to his words.
Tom tells the tale of being “slash dotted” – which to many is seen as the ultimate achievement among the developer community. What is Slashdot? It is one of the technology industries most prominent sites where millions of developers around the world share the their perspectives. In the first month of being launched, the Calais initiative was slash dotted and their registered user count went from a few hundred to over 1000 in a matter of 12 hours. Having the infrastructure and support in place to manage this high activity was extremely critical – even more so for Calais being part of Thomson-Reuters. The press has a reputation for being the hardest on it’s own kind. Not being able to handle this could have created a backlash.
While some people think that traffic volumes might be an issue, Tom told us that one of the key components to success is managing the ongoing user activity. The real notion of planning for success means thinking about what you need for support. Users lose keys, users need to have their access limits increased or decreased, and keys need to be blocked because they are using your content on inappropriate sites. This type of activity must be managed on a daily basis. The ability to have real time insight to user activity and being able to respond immediately are critical. Pro-actively managing what is happening from a business perspective is important to your success with your partners and community of API users.
Launching an API requires some thoughtful planning and requires continuous nurturing. Whether it is for a handful of strategic partners, or scaling to thousands of users, you must have the necessary infrastructure and tools to be able to support their changing needs.
If you get a chance to hear the Calais story, you really shouldn’t miss the opportunity. Tom has much to share.
How do I monetize an API?
June 18, 2008
In speaking with hundreds of companies about their API strategy, a common question is about monetization – “How do we monetize our API?” We thought this would be a great conversation for our first post.
Our friend Dave McClure has a quick and simple answer – “bake your business model into your API.” It might sound a bit too simplistic, but Dave makes a great point. The primary business driver for launching an open API is to drive new business opportunities. This might come in one of two form 1) new business partners or 2) brand awareness.
If you think about the traditional long tail chart, the people at the “head” are already our key partners who pay you for access to content in some form today. The API just simplifies the revenue model you have today. No more CSV files being FTP’d!
The “shoulder” are the people you want because they are big enough to be an interesting source of revenue, but there are too many to respond to. The same API you use for your strategic partnerships is now used to drive new partnerships. To not cannibalize your strategic partnerships, you can limit the type of content by data fields, or to a specific date range, or volume of results.
The long tail is the masses who want your content to help supplement their niche sites. The business opportunity here is really brand awareness. Take another subset of the content and services you offered to the “shoulder” and make it available for free. Manage the brand through your terms of service. Restrict the use of content to B2C type sites and require a link back to your site.
Let’s consider an example like Compete:
Compete is a seven year old company that provides qualitative “click stream” information to find consumer behaviors. They started out their company selling their data based on industry; 90% of all revenue is made from this service. They had some of their data that they threw away – they decided to use this data and make it available for free. They launched compete.com and gave away the stats for free. The traffic to Compete.com doubled!
In May 2007, they opened their API so people could use their data on other sites across the web. They saw a huge spike in traffic and awareness; the traffic had doubled yet again. They got more visibility in 6 months of their open API, than in 6 years of PR.
In addition to brand awareness and visibility, Compete also identified an additional revenue stream when they established a new segment by partnering with major search engines. They also established new partners who brought them awareness – ZooomInfo shows Compete stats on each page seen by over 1 million users/month and over 100,000 Firefox users leverage a Compete search stats plug in from their browser.
Ok, so you get all of that, how does a company like Compete structure the deals with these new business partners? Mashery has several customers that have both a free and fee based API including Compete, Urban Mapping, and Whitepages.com.
Much like Compete, some of our customers do not make their entire catalog of data available because they prefer to reserve the information for their traditional clients. They then leverage their API in two ways: 1) they have a paid API which allows access to a subset of the master data and 2) they have a free model which is a subset of the already reduced data. For the paid API, there is charge per transaction, anywhere up to a penny.
Other companies structure the fee as a combination of a fee per query, and a monthly minimum. Of course, the great part of the monthly minimum is the recurring revenue stream. The query part of the fee is typically be based based on a tiered volume
Opportunities to monetize exist. It just needs to make sense for your business and your customers. Don’t forget to evaluate alternatives to monetization – brand awareness, building a business development funnel for the paid API, extending the reach of your service, etc.
Let us know how you monetize your API. We would love to hear from you.
