An API Is Research And Development For Your Business Model

I spend a lot of time talking to folks on the phone, Skype, in Google Hangouts and in person about their API business models. Not everyone I talk with is willing to share their story public, so I'm also happy when I meet folks who are as open and transparent about figuring all of this out as I am.

This morning I spoke with Anne and Bailey over at the Pop Up Archive about their upcoming API, and potential business model(s) for their API when ready. We talked about their immediate API release and then brainstormed about how to get the word out, how people might use the API, and possible approaches monetization.

The Pop Up Archive is an audio transcription service, allowing you to publish audio files and receive back full text transcriptions of the audio. It is a pretty straightforward service, and they will be releasing an API so others can use the audio transcription service in their own apps, as well as access the wealth of audio resources they are amassing in their archive.

Even with the straightforward nature of this upcoming API resource, the question of who will use this service, and what they are willing to pay comes up--something we spent the good part of an hour discussing. We should have recorded, then we'd have the transcription, but since we didn't here are some of my thoughts from today's discussion.

Your API Is Tech and Business Research & Development
The tech space moves fast, and success is all about getting your API up and running, allow for developers to use, even if it is just within a trusted group, then iterate and evolve as you gain more knowledge about what people want and how they will be using it. You can speculate from now until the cows come home about how people will use, but until you have it up and running you won't know for sure. When you approach your API with a R&D mindset, you will be much more open to opportunities and more resilient when things go wrong.

Rolling Out With Minimum Viable Monetization Strategy
When you are pioneering into a new area of API resources, it can be tough to know what the market is willing to pay. Start with identifying your hard costs like compute, storage and bandwidth, tack on a reasonable profit and get your API open for business in a beta release. Make it clear that things will change, but let people start using your API, pay for basic services and begin understanding more about their usage and what your first wave of customers are willing to pay. Over time, you can evolve your monetization strategy, building on what your hard costs are, the value you deliver to your users, and ultimately what they are willing to pay for your service(s).

Casting A Wide Net To Identify Target Audience Beyond Obvious Ones
When identifying their potential target audience, the Pop Up Archive starting with the obvious ones like radio and journalists, but then how do they potentially identify other areas, that aren't so obvious? You do this by first by getting your API up and available in some sort of private beta. To support the API release, publish a blog and twitter account and get to work telling the stories of your API, which Pop Up Archive has done. Then get to work telling the details of every step of your journey, and every use case of the obvious target groups. These stories will become your net, and the wider you cast the net, including as many keywords as you can, and the number of stories you tell, the wider possible audience you will draw in. The Pop Up Archive introductory video says that if you don't provide text representations of your audio, they won't be found in searches--when it comes to APIs, if you don't tell stories of the problems your API solves, users will never find it when searching for solutions to their problems.

Not All API Consumers Are Created Equally
When identifying your API consumers make sure you get to know their needs and goals. In the case of the Pop Up Archive, some users may be using the API for audio transcription, while others may be using it to gain access to the rich library of audio uploaded by other users. These two groups will have radically different needs, and possess very differ thresholds of what they will pay for API access. While it makes sense to charge audio transcription users for the heavy lifting of transcribing, you want to incentivize archive users to access, syndicate and share as much content as you can. Why even charge them? With a proper branding strategy these users can become the marketing vehicle of the API, building directories, sites, widgets and other content syndication that could potentially drive new users to the API.

Anne and Bailey are doing a great job of approaching their API strategy in a very open and agile way. The worst thing any API provider can do is approach their strategy with a very rigid view, thinking they understand exactly how developers should use an API resource. The Pop Up Archive has built a great service that does two things, and does them well:

  • Audio Transcription
  • Audio + Transcription Archive

They provide a clean, easy to use website, and now they are preparing a first version of their API, with accompanying documentation, code samples and widgets. They have identified their operational costs and are developing an appropriate fee for the service that is based upon the number of minutes of audio you are processing.

In 2014, the Pop Up Archive will open their API for business with a handful of beta partners and begin iterating on the technology and business of their API platform. While there are a lot of unknowns, Anne and Bailey realize they just need to just get up and running, engage their users, and establish a feedback loop that will then help define the future of their API and its business model.

Your API is a an external, R&D lab for your business. While you will be producing real products and services out of this lab, you need to approach operations with an agile state of mind, enabling you to be open to use cases and business models you may never have conceived when you set out on this road. If you do this, your chances of success will significantly increase.

What sort of uses cases and business models do you envision for the Pop Up Archive?