Tracking On The Red Flags For API Monetization
05 Nov 2014
I spend my time gathering what I call b"uilding blocks", as I work my way through the API landscape. I’ve been tracking on the building blocks of API management since 2011, and have expanded that to include API design, deployment, evangelism, integration and other areas of the API lifecycle in the last 3 years. I'm working my way through the 700 APIs in my API stack, I am looking for industry focused building building blocks, as well as the ones associated with an APIs business model, or monetization strategy.
I have almost twenty monetization building blocks I'm tracking on ranging from free access to the availability of partner programs. As I work my way through various business sectors being impacted by APIs, I'm starting to see interesting patterns, some of which can act as a red flag for me that there are potential problems within an API operations. To the uneducated API pundit, the illnesses around APIs arise from simplistic concepts like “being public”, when in reality there are deeper issues at play, usually around the business model, and these patterns for me begin to really get at the root of the problem, rather than just speculating on the cause.
An example of this has to do with the existence of a handful of management and monetization building blocks, and the absence of others--such as when an API does not have a pricing page, service tiers, or any paid infrastructure, but offers free access to an API. This is amplified when a provider also doesn't provide any clear rate limiting available, resulting in a service you do not want to depend on, because I can guarantee buried in the terms of service is a clause that they can start charging at any moment. The most well known example of this in the wild is Twitter, who despite having Gnip and DataSift, still does not provide clear and scalable pricing options for its developer.
As I continue studying the monetization strategies of APIs, I'll work to establish more patterns that are derived from the presence of, or absence of, specific combinations of monetization building blocks that may tell a larger story. Hopefully I can work to counter much of the BS in the space, and when you hear statements like “public APIs are not viable”, we can clarify with “public APIs who don’t have clear business model, and communicate their pricing and rate limits are not viable”.