"Open and Free" are often used interchangeably when talking about APIs. But if you look at in terms of the "API Economy" - open and free API are orthogonal.
'Freedom' in the cloud is more typically discussed as your rights to move data from one service to another. Application portability has also been raised as important but current application models are both early in their maturity curve and vary greatly.
Open and free are both crucial attributes in order for a market economy to grow. There are many aspects of cloud computing but for the developers and users of cloud services, the atomic unit of the cloud is the API.
The link between openness and economic growth is a deep subject that may provide clues for how to build a better cloud – this paper makes me think a company’s APIs might represent the “export goods in which it has a comparative advantage”.
In the software industry open platforms have typically outperformed closed platforms in the long run due to the economies that develop on top of them, cementing those platforms’ place in a range of markets.
Open APIs are:
1) Openly documented
2) Available via self-service (i.e. developers can sign up and get a key on a website)
3) Using open technologies (SOAP, REST, RSS)
A good example is bit.ly - a simple URL shortening service that also lets you see how many people have clicked on your shortened version of that URL. It’s really useful if you want to both project important articles on the web and understand the reach of your projection. Is it an Open API?
Test 1: Bit.ly's API is openly documented (here)
Test 2: It's available via self-service. You can get an account and a key right away.
Test 3: It uses open technologies: It's a REST API (granted, it is a mix of verbs and nouns)
Open APIs lead to 3rd party innovation
Tweetdeck users put their bit.ly API key into Tweetdeck, which automatically uses their bit.ly account (indicated by the API key) to shorten URLs that are typed into tweets. It made Tweetdeck better and probably increases the traffic to bit.ly.
This could also work on the iPhone application of Tweetdeck but it’s not yet implemented in the version I have. Many iPhone applications work use one or more cloud APIs that provide access to services in a clean, machine-friendly way.
From the efficiency of innovation perspective, keep in mind that Twitter most likely never contacted Tweetdeck to use their API, nor did bit.ly (as far as I know). The Tweetdeck guys simply built a killer application that uses those services via APIs rather than scraping their web sites. In the last month, Tweetdeck also added Facebook and MySpace support via their APIs.
Open APIs lead to innovation, efficiency and reach through designing your core business service to be “remixed” is found through APIs – Tweetdeck users got new value through the app they like and Facebook and MySpace got a new stream of user-driven content, all without sales or business development teams engaging at the outset.
Next time: Free vs. Paid APIs...
(Sam Ramji is the VP of Strategy for Apigee. Previously, Sam drove many of Microsoft's Open Source Initiatives)