Podcast: The API Economy, Building Value Through Open, and Securing That Value »

This afternoon we did a podcast for a Focus IT Roundtable on the risks and opportunities of the API economy, addressing many of the top concerns for API providers and developers around openness, business models and the future of APIs. Moderated by Ben Kepes, our Sam Ramji, Alcatel-Lucent's Mike Maney and Mashery's Delyn Simons come together to discuss:

• The value - and risk - of APIs 
• Offering and securing robust platforms 
• How open source and open APIs relate 
• Business model collisions between providers and developers 
• How API providers can avoid conflict with their developer community
• Enterprises becoming API providers  
• The future of the API economy   

Check out the podcast now up on MP3 and look for some blog posts later this week on these same topics! Follow us on Twitter to stay up to date on awesome API content. 

Web 2.0 Talk: Punctuated Equilibrium, Celestial Navigation, and APIs »

Web 2.0 Expo started up today in San Francisco's Moscone West. This Wednesday, 3/30, I'll be speaking with top Netflix engineers Michael Hart and Daniel Jacobson (formerly NPR) on succeeding in the API economy with "Punctuated Equilibrium, Celestial Navigation, and APIs: Lessons from Netflix and NPR." I hope you'll join us Wednesday at 9:00 am in room 2005. 

In evolutionary theory, punctuated equilibrium refers to a period of significant environmental stress resulting in rapid, dramatic changes among species. It is a powerful model for understanding the changes in technology, business models and data over the last few decades - changes that have given rise to the age of APIs. In this talk, we'll look at three key themes in the API economy: 

• The Evolution of Business Models: From 1st Party to Partner to Platform 
• The Evolution of Architecture: From Mainframe to Mobile
• The Evolution of Data: From Silos to Social 

Attendees will walk away from the talk with an actionable strategic framework and best practices for winning the market with APIs, including creating developer and partner success, diversifying the core, getting to mobile, exposing the right functionalities and gaining adoption. Hope to see you there and let me know on Twitter if you want to meet up. 

The Instapaper Dilemma: The Journey to an API Business Model »

EXCELLENT discussion on the Instapaper Blog of the business model struggle that API providers go through. 

Founder Marco Arment lays out common tensions that platform owners go through as they get many requests for an API and consider how to deliver an API to developers. Marco's dilemma is common. He's getting requests for an API so there is demand! And he realizes that APIs are a powerful way to drive distribution and adoption. However, he is concerned about the cost of supporting an API and potential competition with his own applications.

He initially hobbles the API to protect his business model, and ends up with people scraping his website. He considers charging developers for access via a revshare model, but realizes that effectively charging developers will kill the adoption he is seeking.   

He arrives at a clever solution that every API provider should consider for their business. He gives the basic API away for free, and makes the full API free to paid subscribers ($1/month!). Brilliant! This is a user—pay arrangement, and it accomplishes a number of things:

• makes developer adoption of the Instapaper API very easy
• aligns his interests with 3rd party developer’s interests and drives *user-paid* subscriptions of his service
• leaves room for 3rd party APIs to innovate and to make money on his API

It is a brilliant discussion and a MUST read for API providers struggling to figure out the right business model for their APIs. Read up! 

You can also check out our resources page for more of our perspectives on APIs and business models. 

Winning with APIs and the Advent of the NFL’s West Coast Offense »

Joe Montana and Bill Walsh made it legendary in the 1980s, and today The West Coast Offense still stands as one of the most successful and innovative strategies in the history of football. We've talked about what football has to do with APIs on the blog before. On January 27th at 11:00 am PT / 2:00 pm PT, we're holding a free webinar in partnership with Credera to explore this topic more. 

The West Coast Offense leveraged existing assets in new ways to bring its players fame and fortune, much like today's retail and ecommerce companies are innovating to win with APIs. This webinar will give an introduction to using APIs to reach new channels and device platforms, generate revenue through partnerships, stimulate third-party innovation, super-charge affiliate strategies and succeed in the new mobile, multichannel web. And of course - what football has to do with it all. You can register here. 

We'll discuss: 

• What is an API and what it means for your business team and your tech team 
• API champions and case studies of companies succeeding with APIs in the new web economy
• Reaching the mobile and multichannel web by opening up to partners, developers and affiliates 
• Driving third-party innovation and rapid development with a successful API strategy 
• Building an API roadmap from concept to implementation
• Device strategies for reaching the thousands of new mobile and connected device platforms  
• Combining mobile, social and ecommerce to turbocharge your business 
• Leveraging existing assets to find new revenue sources and impact your bottom line with APIs

Hit us a note on Twitter with your questions! 

Partner or Open API strategy: Where should you start? »

Embarking on an API project--let alone an enterprise-wide API strategy--can be a scary proposition. It's easy to imagine a big-budget API project costing more than expected, taking longer than planned and ultimately not delivering the anticipated value.

We've observed that many successful API initiatives are done in stages. With each stage more risk and larger investment can be made by building on previous projects.

Stage 1: Internal APIs

Typically the first stage is to create an API for an internal development team to use. Often times at this stage, the demand for an API is driven by the need for mobile applications. The API doesn't have to be perfect, but it has to be good enough to meet the concrete needs of the mobile application. Tackling the internal, mobile project as a first step allows the API team to learn big lessons while keeping the project scope small so that the API starts to add value immediately while setting the ground work for later stage developments.

Stage 2: Partner APIs

The second stage is to collaborate with partners. At the beginning of this phase we see companies work with one or two strategic partners, who will create applications, add-ons or integrations with the API. At this stage the API will be hardened and because the API will be used across organizational boundaries, the API team will learn a new set of lessons including support, documentation, authentication schemes and so on. One key benefit is that the business development team will start to see movement with their backlog of projects into IT. After the API team gets comfortable with a couple strategic partners it is a natural next step to create resource portals and automated systems for provisioning partner keys so that more and more partners can take advantage of the API.

Stage 3: Open Innovation

The final phase is open innovation. After the API team has learned from internal and partner projects there will be a vast amount of institutional wisdom and courage for opening the API to the world of innovative developers, who can take the API in creative, valuable directions for the business.

Exceptions to the rule
Netflix has followed the opposite direction and has found huge success. They started with the open API strategy (as a result of a contest) and found over time that by far most of their traffic came from a few partners who were building streaming services for specific connected devices.  

The month the new interface went out for Xbox, streaming went up very noticeably. While Netflix still supports the public API, they put more focus behind adding and supporting larger partners over 'the long tail' of developer apps, until they had over 200 mobile partners and 25% of prime time internet traffic. Later, internal developers re-engineered their private streaming API.. by using the public API.  

So while long tail innovation is good for buzz... the enterprises that focus on collaboration with partners and customers will win. Even at NPR, the API project was successful because it powered the internal website and partner collaboration.

For the full story, check out this webcast on the Netflix API strategy. 

But what about smaller companies? Many smaller companies or startups might not have large partners that can give them huge distribution. In this case, an open API can be a way to get some uptake of an API. More on that next.

APIs and the Advent of the West Coast Offense »

Sundays in the fall are fantastic. Why? The NFL and APIs are making it fun to watch football games with enhanced information for all my fantasy football players. I can sit in front of the TV with my iPad and follow all the scoring and updates. Some day soon my TV will have apps that access the precious player statistic APIs.  

This got me thinking about how APIs will change the way we live, utilize our assets (like TVs) and measure success. In the football analogy, I immediately thought of two people that did the same for the NFL- Bill Walsh and Joe Montana. Although Bernie Kosar is credited for popularizing the term "West Coast Offense," Walsh and Montana executed the new offense and changed the game forever.

Retail 2.0 and Football 

The West Coast Offense changed the utilization of the game's legacy assets: a leather football, a 100 yard field, established rules, and 11 elite athletes. The new offense focused on the passing game and emerged in the 1980s when the NFL was dominated by the run game. In 1979 the San Francisco 49ers drafted Joe Montana in the 3rd round (82nd overall); when all was said and done he won 4 Superbowls and broke almost every passing record to date - no one could touch the 49ers. However, this was all done with a largely unproven strategy that remixed the game and emerged as innovation.

Where am I going with this? Well in today's world of retail and ecommerce, the Walsh and Montana are the Amazons, Twitters and Facebooks. You might not think of these companies as analogous, or even competitive- but they are coming to your field. They are setting the standards for commerce, integration and brand interaction.  They've got a strategy to proliferate and dominate - and it's through APIs.  

If your company doesn't have an API strategy you'll face a passing game that your run game can't keep up with.  It's projected that there will be 1 trillion connected devices in 2020. How will they connect to your enterprise?  APIs. Why? Because the players that are remaking the game are using them at a rate of billions of transactions a day and they are winning the Superbowl. Product companies are creating their foundations in APIs, from your iPhone to your TV. APIs are one of the greatest integration points in the history of computing.

Getting in Shape for the Season 

There are several approaches to implementing an API as the ultimate integration point. The goal is to extend your enterprise's assets to more consumers, devices and partners; it becomes a system integration effort rather than a new application development effort. You're not really building new systems as much as you are creating an integration layer, "the cartilage," between the consumers and your internal systems.  

You might also provide some aggregation functionality. For example, when someone uses your API to request inventory, you can aggregate multiple sources of inventory, providing a single unified view to the consumer. Again, you are hiding the complexities and details of your internal systems behind a simpler, coarser gained API. Think of the consumers, devices and partners of the API as wide receivers that are running down the field towards the end-zone.  

End game? You'll score faster and more often with an API in the future.

RESCHEDULED: Netflix and the Second Coming of the Internet - Webcast Now Wednesday, December 15 »

Last week we experienced technical difficulties during the scheduled webcast on Netflix's API strategy. We apologize and have rescheduled the event for Wednesday, December 15 at 10:00 am PT / 1:00 pm ET. People who registered for last week's event do not need to register again, and new registrants can sign up here. A dial-in number for audio will be provided to all registrants in addition to the screencast and VOIP option. 

In Netflix and the Second Coming of the Internet: The Biz and Tech of the API Economy, Netflix's Daniel Jacobson, director of API engineering and Michael Hart, director of social engineering, will discuss the Netflix API platform and strategy. Here are some additional details:   

We'll hear about how Netflix's API strategy has evolved and discuss some of the top issues and best practices for API platform providers, teams and developers, including:

• Building an effective partner program
• Identifying the right API metrics to measure and drive the business 
• Reaching the hundreds of devices that define today's internet, from TV set-top boxes to gaming consoles
• Getting to mobile
• Rapidly testing application experiences 
• New technology like HTML5 and WebKit and where it fits
• API design best practices 
• Security, scale and management
• Developer experience 

And more! Hope to see you there for some great content and lively Q&A with the audience! Shoot us a note on Twitter if you have any ideas or questions you hope to see answered. 

APIs for Payment App Development: Ixaris and Apigee Team Up »

We're excited to announce that Ixaris, a leader in global electronic payments, is using Apigee Enterprise to secure, manage and control open APIs on its new development platform for payment applications. 

Ixaris Opn, which will be fully available next month, is a payments platform to allow developers, businesses and finance companies to create payment applications rapidly and easily. If you've been following our This Week in APIs posts, you know that transaction in the new Internet is a hot and rapidly growing space. Here are a few key differentiators of Ixaris' approach that reflect best practices for API providers and will shape the future of payments:

•  Remixable development components.  Ixaris will be offering open APIs called "paylets," providing reusable software components that are pre-configured for different payment use-cases. In the "plug and play" web, providing powerful functionality that serves common developer goals and can be re-used and remixed is tablestakes. 
•  Flexibility and Choice: Opn provides developers with a brandable solution that provides access to the three major global financial networks: Visa, MasterCard and SWIFT for both outbound (card issuing, money transfers) and inbound (card acquiring, bank payments) purposes. 
• Simplicity, simplicity, simplicity. Ixaris' platform will abstract the complexities of global financial services to help developers focus on their core competency while benefiting from powerful payment services. Lowering the barrier to entry for development is essential in a fast-moving, hit-driven web and something all API providers must keep in mind. 

Make sure to stay tuned for more news from Ixaris at the Web 2.0 Summit in San Francisco, November 15-17. 

3 Steps from Screenscrape to Business Model: Why Scrapers Mean You Need an API Strategy »

What would you think of a retailer who kept some of their merchandise assortment in a locked backroom, inaccessible to potential customers?

And what would you think if that retailer’s customers were trying to pick the lock to that backroom to get access to that merchandise, to try it out and possibly buy it, or maybe feature it in their own store for sale on behalf of the retailer? Should the retailer ignore those customers or potential distributors? Put a more sophisticated lock on the door? Pursue legal means to get those customers to ‘cease and desist’? What if you are that retailer??

At Apigee, we are sometimes asked, “How do I know if I should open an API?” One sure sign you should have an API strategy is when well-intentioned developers are scraping your website to get at your data so they can do something interesting with it. That’s a clear indication you’ve got something of value locked away, and making that data easily accessible could unleash a torrent of innovation.

So when confronted with scraping activity on your website, what should you do?

1. Find out who the scrapers are and have a dialog with them!

Often they are your most rabid fans, customers or potential partners. Find out what they are trying to do and why. If the data they are scraping directly supports your core business, say a retailer’s item catalog or hotelier’s room information, you should consider making that data freely available, or even paying developers to take the data and generate customers with it. If the data does not directly support your core business, you may have a distinct data business that’s a derivative of what you do.

2. Take inventory of the data exposed on your website, and also take inventory of data you have that’s not exposed on your website.

Do you want that information in the hands of your customers or partners? How could it be used to build your brand, increase your customer engagement, further your company goals?

3. Find the Business Model

If it seems like there is an opportunity to extend your business or create a new business channel, get working on an API strategy immediately! There are many examples of companies that have built fantastic distribution channels or complementary businesses via APIs…. Facebook, Twitter, eBay, Salesforce, Netflix, and many more. Done right, an API lowers the barrier to entry for developers wanting to build services off of your data… just the opposite of the challenge scraping poses. While there is nefarious scraping out there, scraping might just be opportunity knocking.

Crossing the Streams is Good: New Opportunities for Retail in Geolocation and Mobile »

I'm a big movie fan so when I set out to write about the power of API partnerships for retailers I recalled a scene in Ghostbusters where the boys cross the streams of their "unlicensed nuclear accelerators" and unlocked new potential. Application Programming Interfaces are like those streams. When one or more are used together they unlock new ways to serve customers.  

New APIs are coming on to the scene daily. Remember that APIs are code that help systems connect and communicate with each other over the internet.  Some of the early retailers to adopt open APIs are Amazon, eBay, Sears, and Tesco. These retailers are exposing their product catalogs via an API and allowing partners to develop solutions (apps, websites, etc) with those APIs. This allows the retailer to reach more customers through these partnerships and affiliations.  

Let's explore the opposite situation. What APIs are out there that a retailer can consume for the benefit of their customer? Mobile applications and mobile marketing are certainly on the top of many retailer's strategic lists. Mobile apps are great but store locators and product catalogs are becoming a big yawn. What else is there? How about an API for location-aware promotions? Combined with a mobile app or SMS marketing campaign these APIs streams can cross and become huge weapons in the competitive battlefield. Imagine luring a customer to a store with a special promotion right as they're about to walk in to a competitor's location. 

Location-aware APIs combined with a smartphone's GPS API, combined with a retailers store locator API.... mix it together and bang out a new way to reach more customers. There are several location-aware APIs out there like Google, FourSquare, Locomatix and SimpleGeo. And don't forget about social APIs. Adding social functionality, like that available in APIs like Facebook, Myspace and Twitter, creates the "perfect storm" of mobile, geo and social to let your customers not only get what they want, when they want it, where they want it, but engage and share with their social network around your platform- expanding your reach even further. 

There are some other interesting prospects emerging. Recently there was a startup that unveiled a mobile payment solution that doesn't require hardware changes or software changes at the point of sale. It's called MobilePayUSA. Imagine combining that functionality along with a retailer's product catalog and a recommendation API like ProductWiki. Now you've got a customer in the store that can browse the store and online catalogs on their mobile device, get reviews of products and pay for them - again those are some powerful steams being crossed. The most important streams might already exist in an enterprise. We'll explore what happens when those streams are crossed in the next post.

Jumpstarting Your API Strategy to Grow Your Business »

From discovery to development to launch, enterprise customers face similar issues when building out their APIs. From best-practices in API design to infrastructure and security concerns, to monetization models and go-to-market strategy, to developer adoption and partnerships, we're learned a lot from our work with over 150 companies successfully offering APIs.

We've got a new whitepaper out called "Leveraging APIs to Grow Your Business," written by API experts from Credera and Apigee. It'll give you a framework for leveraging your existing assets with APIs and addresses the top business and technical issues for bootstrapping your program.

Topics include:

• What is an API?
• How do the three types of APIs grow your business?
• How do you drive business success with APIs?
• What are 3 rules for getting started now?
• Is there an "API Cookbook" for getting started?

For more best practices and advice, check out our resources page, and let us know how we can help you!

GigaOM Mobilize Presentation: Mobile Devices and Cloud APIs »

Last week I was invited to present at GigaOM's Mobilize conference, focused on the future of the mobile web, the growth of applications and the intersection of cloud and mobile. I presented a short talk called "Archimedes' Spiral: Mobile Devices and Cloud APIs" on the driving forces of cloud services and mobile apps and what device manufacturers, carriers, web property and cloud services providers need to do to succeed in the new mobile landscape. Take a look and let me know your thoughts and feedback- I'd love to hear from you. You can email me at .(JavaScript must be enabled to view this email address).

“Open APIs In the Enterprise Talk” from Web 2.0 Expo NY »

Here is the presentation I gave at Web 2.0 New York on "Harnessing the Web's New Indirect Channel: Open APIs in the Enterprise." Thank you to everyone who came, I really appreciated your warm reception. Please send me your comments and questions- .(JavaScript must be enabled to view this email address).

This slideshow is offered under Creative Commons Attribution Share Alike licensing, so feel free to modify it and use it for your own purposes in whole or in part, but remember to give your contributions back to the API community!

Why an API? Reason #1: Developer-Sourced Innovation »

Chris Anderson recently gave a TED talk on Crowd Accelerated Innovation that contains fantastic insights on one of the reasons enterprises should open their businesses via Web APIs.

In essence, Chris observes that three ingredients can drive tremendous innovation:

1. A (large) crowd… a group of people with a common interest to create an ecosystem around something
2. “Light”, clear visibility of what is possible, and
3. Desire to achieve and excel

While Chris illustrates how these three ingredients work in tandem in online video to drive innovation in disciplines as diverse as dance or science, this phenomena is exactly what drives innovation on a company’s business via open APIs.

If while watching Chris’s talk, you replace “online video” with your service, platform or network exposed via a web API, you can understand how to open your business to drive amazing innovation.

An open API draws a crowd of developers with an affinity to what you do. They might be interested in movies, location, music, mobility- anything. Some developers will innovate on your API out of a love for what you do, but you’ll get *a lot* more innovation if you find a way for those developers to win (desire to achieve and excel). Winning could be 70% of the proceeds from selling applications, or it could be affiliate payouts, or a huge winner-takes-all innovation prize. Shining a light on cool things your devs are doing will inspire others with what is possible. You can also look across what is happening on your APIs and learn about your own assets and be inspired. Thus the flywheel of innovation gathers momentum.

An obvious example of this is Apple’s iPhone. The APIs are open, and there is an easy way to make money (desire), and everyone can see (light) the interesting ideas in the App Store and do the math on the payout on those successes, so a large crowd has gathered and innovation has flowed from that platform. The virtuous cycle has begun and the innovation wheel is furiously accelerating. Compare that to the wireless app market prior to the iPhone, or to cable television. Prior to the iPhone, devices were controlled by the service providers, crowds were limited and desire was squashed with difficult terms.  A (much smaller) crowd existed, and much smaller innovation resulted.  In the case of cable, there is nearly no openness, no desire, and no crowds.  Innovation has been limited.

Companies from Twitter to PayPal to Netflix to Best Buy to Ameritrade have opened their businesses to developers, given developers incentives and visibility, and seen tremendous crowd-sourced innovation. In an era of tight budgets and cost justification, it is difficult to fund even a handful ideas, much less the dozens or hundreds of ideas necessary to uncover new opportunities and discard those which do not work. That is Crowd Sourced Innovation on your business via an open API.