The Business of Klout's API07 Oct 2011
I attended Mashery's Business of APIs Conference in San Francisco last week. There were a lot of great API presentations, but I thought one really told a great story in-line with the focus of the event, which is the Business of APIs.
Tyler Singletary(@harmophone), Developer Evangelist at Klout, told a story around how they are continuing to grow, control and monetize Klout, while also ensuring Klout continues to have meaning and deliver value.
Klout's value lies in brand awareness, integrity and the meaning, usefulness and value of the Klout Score to consumers and businesses. To continue offering value and maintaing the integrity of the brand, they are creating a dynamic way to manage their API community, incentivize postive usage of the API, while controlling negative usage.
To build awareness of the Klout brand, and increase value, Klout depends on properly displaying of Klout Score and Klout Logo, and linking back to Klout profiles. The more value an API user delivers to the Klout brand the more relaxed Klout can be on quotas, rate limits and even pricing.
Not all API users will deliver the same value to the Klout brand, competitors may access data, and application may use scores in a more programmatical way, and not have the desired awareness generating value of other implementations. In these cases Klout can impose tariffs, implementing much stricter quotas, rate limits and charge more for accessing the API.
Through a dynamic terms of service, branding guidelines, and pricing, Klout can adjust these business controls based upon how much value an API user brings to the Klout brand, establishing a desired balance within their API ecosystem. Finding that sweet spot where they are delivering the desired units of value to their consumers, while protecting, growing and building value in the Klout brand, even generating revenue it where it makes sense.
I really like Tyler's transparent way telling the story of how Klout is defining its business model, and employing their API to deliver maximum value to their business. Their dynamic approach to incentivize and tariff their community, using their terms of service, branding guidelines and pricing is something I'll be thinking about a lot more.