After Combining My API Plans, Pricing, And Rating Research I See Hints Of An API Industry Economic Engine
31 Oct 2015
After writing I Have A Bunch Of API Resources, Now I Need A Plan, Or Potentially Several Plans, and How Are We Going To Create The Standard And Poors And Moodys For The API Economy, I wanted to combine what I had learned while crafting these stories, and try to look at how these two areas could work together. The API plan and pricing research is derived from existing approaches to API service composition introduced by providers like 3Scale, however the rating portion is fresh territory for me, with very few precedents to follow.
What I see when I start wading through a structured approach for API providers to craft meaningful API plans to serve up their API resources through, and how developers will be paying for API usage, via the apps they build, I begin to see the potential of a structured approach to API plans, and pricing. When you start thinking of the implications across providers, and consider the opportunities for developers to manage API consumption across API providers, and exchange the credits they purchased, or generated via API usage--a potential blueprint for an economic engine for the API space begins to emerge.
I wanted to explore this concept, by crafting a visualization, and ponder how common approaches to API plans, and pricing, could be complimented by a standardized API industry rating system.
The only thing really original in this diagram, is the introduction of an API rating system, and the potential for developers being able to exchange credits between the API service providers they depend on. The rest of this standard API management approaches, that are defined by API providers like 3Scale. If you aren't familiar with modern approaches to API service composition, API providers can have many different API resources, as well as many different plans for subscribing to these API services, which provide a wealth of dimension for API providers to define, price, and limit how developers put API resources to use in applications.
The T Circle in the above diagram is where the current magic happens, when you put modern API management solutions to work for API operations. This allows you to mix and match access to your API resources, charging different prices, to different developer groups, introduce volume usage levels, and measure as many dimensions of consumption as you desire. Rarely do successful APIs have just one rate of access to them, this approach to API management allows providers to maximize access to resources, while also maximizing potential revenue around subscriptions, and usage consumption.
When you start putting API providers into standard API plans, and pricing framework like this, you start seeing intra-provider opportunities, industry wide benefits, as well as potential to really make API consumers lives much easier. If there were standardized ways to understand how API providers were pricing their resources, and how they tiered access, and adjusted pricing between these tiers, the API industry competition would heat up significantly. The problem comes in when you start allowing developers to transfer credits from provider to provider, while it may seem like you are transferring common units of value, but in many cases there are big differences between each API provider and what the value of one transaction may be.
Once you introduce an API rating system to the equation, it provides one possible way for rating each provider, and setting a benchmark that can be used to exchange credits between each platform. If each provider operated in a credit format, that could be cashed out using an exchange rate, or possible transferred from one platform to another, you'd start to see some potentially interesting market effects. I think you'd quickly see some negative, as well as positive effects, but I think some balance could be struck between some of the common API resources being served, and consumed across the API space. Newer resources, with fewer precedent would be very volatile for a period of time.
The R Circle in the above diagram is mean to reflect the potential of an industry wide API rating system, when you have standardized information on API pricing, across API providers. This pricing would vary across the plans each provider offers, but you could still come up with a median pricing for individual providers, and even entire industries. When you apply the rating system you could provide a potential exchange rate that could be applied when moving credits bought, and earned via each API platform, between API providers. Developers could explore which platforms allow them generate credits by engaging with API resources, exchange to other providers, where they could then spend the credits for other services they need, in lieu of cash. This also opens up the possibilities for markets for API credits exchanged across business sectors being impacted by APIs.
I'm just exploring concepts involved with common approaches to API plans and pricing, and brainstorming a potential API rating system, then using my imagination to understand the developer, and industry implications of this one possible future. Only one part of this equation exists, and it would take some significant work to bring such a thing into reality, but it is fun to explore, and consider one possible design for an economic engine, that could possibly scale, and drive the API industry.