The API Economy: API Provider Perspective
3scaleSteven Willmott
EIC 2012/ Munich, Germany
One of the top API Infrastructure Providers
Worldwide
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http://www.3scale.net
Out of the Box Control
Internal and External Audiences
Access Control, Rate Limits, Developer Portal, Monetization
Plug-and-play Setup
Get Traffic running immediately
Scale quickly and efficiently
The Talk will cover 3 things
API EconomyHow the Economy
WorksExamples
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API ECONOMY
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The Value of an API
Amazon.com Mobile Apps
Affiliate Sites
Ancillary Services Internal Developers
+ API
Revenue Ecosystem
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Projected Growth: APIs
CAGR: 100%
Project 250k APIs by 2016
e.g. Think of this as 10% of the Alexa 2.5 Million top Websites
Programmable Web APIDirectory Growth
10% API Traffic growth / quarter(*)
Adding Approx 100 APIs a week
(* source – 3scale customer base average)
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Massive Diversity
B2C APIs B2B APIs Partner APIs Internal APIs
(image source: http://www.programmableweb.com)
Wide range of industries starting with APIs
Companies large and small
APIs driving success for early adopters
…
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APIs will become the major way of doing business on the web
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Enterprise Inside-Out
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COMMON MODELS
Broad classes of business APIsFirst it’s worth thinking about the different functional roles of an API
The API is the product
The API projects the product
The API promotes the product
The API powers and feeds the product
e.g
Digging Deeper
is the product
projects the product
promotes the product
powers and feeds the product
Direct revenue
Utility / Pay per transaction
Tiered Pricing Bands
Reach more places
Provide more utility
Allow deeper integration
Enable Mobile
Biz Development Lead Gen
User Acquisition
Advertising
Affiliate Programs
Brand promotion
Content Acquisition
Partner tie-inInternal Innovation
The API Openess Cycle
Core Assets
Raw ServiceMeasure, Collate, Analyze
Internal Re-UseInter Dept, Dashboards, Processes
CustomerRe-useApps, Integration
Partners and DistributionNew Revenue, New Reach, Ecosystem
Open to Anybody1000 Flowers, Market Extension
DRILL DOWN
The API IS the product Core value is tied up in the API
API
API is core value
EcosystemStrategy
Direct Customer UsageEncourage Resellers
Build Tech Knowledge
Encourage 3rd Party Tools
Enable new Services
Build Switching Costs
Others
Amazon AWS
e.g
API >> Websites
Huge Growth
$ If core service sees usage growth
The API Projects the product Extends availability of functionality to new places
API
Mobile apps / 3rd
Parties / Added UtilityAdded to a product
$ If increasing customer spend (primary) and numbers (secondary) for core product
EcosystemStrategy
Encourage partner ecosystemInnovation opportunities
Build Tech Knowledge
Encourage 3rd Party Tools
Enable new Services
Build Switching Costs
Salesforce.com
e.g
Thousands of valueadd apps
50k + devs
Others
The API Promotes the product Secondary function and indirect revenue impact
API
Secondary (non core) serviceDesigned to drive Leads / traffic
$ If increasing customer numbers (primary) and spend (secondary) on core product
EcosystemStrategy
Distribute “Teaser” InformationBrand Diffusion
Promote to niches
Improve Partner Impact
Cultivate Partners
Amazon.com
e.g
10’s 1000’s of affiliates
Widgets to Whole sites powered
Others
The API Powers and Feeds the product Content acquisition via the API
API
Content, User information,Ratings, commentsEtc. into the service
$ If when UGC brings appreciable value to the central product.
EcosystemStrategy
Reach all relevant producersFacilitate Access
Virtuous circle data in/outTwitter.com
e.g
250,000 Apps
75% of traffic By API
Others
Hybrid ModelsMany APIs combine these models
Support different
audiences
Multiple revenue streams
The API often starts by serving a particular need and is repurposed over time.
The API separates Data from Business Logic and presentation to make this possible.
e.g
• Started to power affiliates• Evolved to running auctions• 60% of listing now via API• Core part of revenue stream• Entrenched market power
• Core P2P Infrastructure an API• “Skype as a platform”• Third parties embed Skype• End user uniform experience• Huge reach as a result
Entities (and Identities Involved)Managing Ecosystems, not closes silos
• Developers• Business Units
• Suppliers• ISVs• Contractors•Affiliates
• Apps• Integrations
• Independents• End Users• Aggregators• Resellers
Internal
Partners
Customers
Wider World
ZOOM OUT
Think of it as MVC
Model – View - Controller
VIEW = FORM
MODEL = DATA
CONTROLLER = BUSINESS LOGIC
Model
View Controller
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Think of your business as MVC
• Are you… – Model: Data, Content, Core Service, Raw Material– View: Audience, Market Access, Visualisation,
Presentation– Controller: Transformation, Recombination, Logic,
Value Add– More than one?
• What are the interfaces between these things?– Partners that could grow the whole?– Can you build an ecosystem around your strength?
APIs are the Glue which makes this happen
The API Economy is Upon Us!
APIs are Key to UnlockingThis Data Value
Look Ahead in the Cycle
Derive Value from Every Step
Thank you and QA
Contact: [email protected]: http://www.3scale.net and @3scale Offices: San Francisco, Barcelona, LondonSpeaker: @njyx or [email protected]
3scale
Credits & More Resources
• 3scale: http://www.3scale.net• More on API Business Models and
Development Models– http://www.slideshare.net/3scale/apis-for-biz-de
v-20-which-business-model-9672038
– http://www.slideshare.net/3scale/apis-power-mvc-for-the-web
• Images:– Flickr & iStockphoto
Resources: Commercial
• http://www.programmableweb.com• http://www.zdnet.com/blog/hinchcliffe/open-apis-reach-new-
high-water-mark-as-the-web-evolves/215
• http://www.sexywidget.com/my_weblog/2008/11/api-business-mo.html
• http://www.3scale.net/wp-content/uploads/api_ecommerce.pdf
• http://www.3scale.net/wp-content/uploads/api_media_companies.pdf
• http://www.slideshare.net/sanjayjhawar/apis-20-presentation-at-the-telco-20-conference-in-orlando-11-december-2009
Resources: Commercial
• http://www.slideshare.net/fedecarg/open-platforms-and-apis• http://www.slideshare.net/openplatform/op-commerciallaun
chv2• http://www.slideshare.net/samramji/darwins-finches-20th-ce
ntury-business-and-apis• http://www.slideshare.net/jmusser/pw-glue-conmay2010• http://www.slideshare.net/3scale/apis-the-glue-of-cloud-com
puting• http://www.slideshare.net/Mashery/api-leader-mashery-capt
ures-application-developer-trends-with-developer-pulse
• http://www.slideshare.net/Mashery/the-business-of-apis-2009-programmablewebcom