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The API Revenue Stream
At Mashery we are very interested in the business of APIs (if you missed our Business of APIs conference earlier this fall, you should check out some videos of the sessions). We love to talk about the benefits APIs bring to businesses all across different verticals. From growing your brand awareness to internal development of new apps/products, APIs can make your business function better, faster and more efficiently.
What is often missed however, is the monetization opportunity that APIs provide. Many companies are monetizing their API, but not a lot of numbers are out there right now on how much revenue APIS are driving. The good news is, the range of data is growing. It may still be a while before we have definitive numbers on ROI and profit margins for APIs, but we do have some other statistics that should help CEOs, CFOs, CTOs, etc. accept that APIs are vital for their business.
For example, at the BAPI conference in New York, Chris Jason, from ESPN, talked about how their API program has helped them grow their digital business. ESPN has gotten over 500 inquiries about their commercial API program – that means 500+ new customers. On top of that, they have been able to start partnerships much faster because of their API. And now, they may even have an opportunity to increase ad sales by including live scores in ads, all because their API provides great flexibility in how they use their data.
YellowPages Canada has been able to increase the rate of business development partnerships by more than tenfold. Other companies, such as Get Satisfaction and Edmunds.com, have been able to greatly boost their business development activities and reach partners that were unavailable before. Ismail Elshareef, Director of Open Platform at Edmunds, mentioned at BAPI that eBay would not sign a deal with Edmunds until they knew Edmunds had an API.
And for more concrete numbers we have Exepdia’s Affiliate Network, which manages $2 billion in sales through its affiliate network, has stated that 90% of the business they do comes from their API. The API let’s Expedia spread it’s sales to websites and apps all across the globe.
Numbers like this will be popping up in other industries soon. Pipl, SportsData and others are all outright stating that they charge for the use of their API. Companies from Dun & Bradstreet to Klout to BestBuy are all finding ways to monetize their APIs. Whether it is by charging for data directly or through affiliate revenue, more and more companies are finding new revenue streams through their APIs. With an API management layer in place to control and monitor traffic, and to package data for each customer, companies are setting their data/services loose, and charging for it. The app economy is being replaced by the API economy – don’t miss out.