API Business Models; Creating Value from APIs

API Business Models: Monetizing and Realizing Value

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Overall guiding principal:

Have a clear understanding of how I can create value overall, and how I could create value by integration with others.

How to realize value:

Direct Value

• Ads, listing
• Data sales
• Revenue share/affiliate
• License fees
• Service fees
• Selling transactions versus contracts

Indirect Value

• Discoverability
• Improve product (e.g. search) by increasing use
• Market research
• Leverage long-tail integration
• Increase customer file/acquire customers
• Prevent unsanctioned use
• Scaling the organization

Roadblocks to realizing value

• The overwhelming roadblock is the lack of conventions for exchange of value
• This results in companies being too internally focused, not seeing opportunities and killing opportunities by not capturing
• Lack of data about what actually is working Over time, these frictions will diminish

How to get started in the absence of complete information

• Have a defensible business model with numbers
• Don’t hurt the existing business (w/out good reason)
• Not the business model for the API; the API for the business model
• Measure and adjust, be agile, start small
• Think hard about partner/developer segmentation and focus
• “Time is a feature” get to market sooner with less
• Market it!
• Sell value to endusers, design for developers Above all; know your customers!