In our Digital Gold Rush blog series, we’re on a quest as digital cartographers to map out the different business models for monetizing digital assets. So far we’ve identified 2 business models for monetizing APIs: the revenue share model and the fee-based model.
The third business model is freemium. Freemium models can be based on a variety of factors such as volume, time, or some combination; they can be implemented as standalone or hybrid models (in conjunction with the rev share or fee-based models we’ve already discussed).
Enterprises are drawing on the tools of the digital trade -- APIs, data, and apps -- in what is amounting to a gold rush in the new digital world. A treasure map of how these tools can be used to transform digital assets into revenue streams is critical to navigating this uncharted world and discovering gold. In our Digital Gold Rush blog series, we're charting out out the different business models for monetizing digital products; last time we discussed the revenue share model. This time we're discussing fee-based models.
As Marc Andreesen penned, "software is eating the world." We are seeing it everywhere from photography to movie watching to navigation and more. There's also a huge shift to software in telecommunications services. Phone calls, conference calls, messaging, which all required dedicated devices can now be provided by software apps. In a new eBook, we explore the imperative for telecommunications companies to make some fundamental shifts in technology and business models if they are to remain competitive in a world being eaten by software.
Software-defined networking (SDN) is changing the economics of large-scale datacenters. Similar to the effect of Linux on the operating system market, OpenFlow is driving disruptive commoditization of expensive network switches, routers, and controllers. As networking shifts to software control, the entire stack of compute, storage and networking now becomes a software-defined datacenter. Where is the software that defines the network? It resides anywhere it needs to, and it uses APIs to read the state of the network and to change the network’s behavior in tandem with changes in application workloads.
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.
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!
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.