API

Business Models
20 models in 20 minutes
John Musser, ProgrammableWeb
@johnmusser
API Strategy Conference, 2013


s
r
a
e
y
7

s
I
P

A
s

e
0
i
r
0
o
0
,
t
s
8

s
w
e
n

0
0
0
,
3

why, why, why?

Why API? Many reasons

Drive innovation

BizDev / LeadGen

Marketing channel
New line of business
User acquisition
Increase footprint
Upsell opportunity API as Product
Distribution channel
Partner opportunities
Content acquisition
Drive traffic
Increase stickiness
Device and mobile support

Accelerate internal projects

Extend product

R
C
E
S
I
P

1
#
ET

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

R
C
E
S
I
P

2
#
ET

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 Aliate Network, TravoluGon.co.uk, April 2012

Recurring Revenue Share

Affiliate Program

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

R
C
E
S
I
P

3
#
ET

You need to bake your

business model into
your API

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 nd 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

R
C
E
S
I
P

4
#
ET

API business models

are not
1 size fits all

NPR: Internal use = API growth

NPR
iPad app

Facebook Integration

NPR Music
iPhone app

Relaunched NPR
mobile site

Player 2.0
NPR News
Android app

Story Page
Improvements

NPR Music
Remix

Homepage
Improvements

NPR Blogs
Made API Friendly

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

R
C
E
S
I
P

5
#
ET

Internal use may

be the biggest API
use case

API Business Models

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