Posts tagged "API economy"

The success of the API economy: how they are driving new businesses

A system able to automatically recognise any object in a video and describe it with words so that anyone can find the frames by looking for those terms. This is how API (Application Programming Interface) Video Intelligence works, which Google has launched this year for developers to design their own applications using the method. The giant based in Mountain View also invites third parties into it by opening up other doors for them via other APIs: any app can tell the user how to get to a destination using Google Maps, or use the capabilities of Google Translate.

Other big-name companies are also building bridges to third parties thanks to their APIs, which we can define, in simplified terms, as sets of rules that allow applications to communicate with each other (one opens the door and the other enters, to “chat”). Facebook makes it possible to create chatbots in Facebook Messenger, Twitter has just revised its API platform to better offer all its functionalities, and Amazon has even created a platform so that anyone can publish its own APIs.

However, it is not only the goliaths that are generating new business opportunities in the “API economy“. According to Programmable Web, a page that counts them, there are already more than 18,000 APIs.

And ShuttleCloud is one of them. Using our API, interested companies can offer their new users the chance to migrate all the information from one email account to another. In this way these users can transfer the personal data stored in their email accounts, from more than 200 providers (including Gmail, Outlook and Yahoo) in a simple and secure way.

Monetization strategies

“We already live in an API economy where CIOs must look beyond APIs as technology and instead build their company’s business models, digital strategies and ecosystems on them”. Paolo Malinverno, Vice-president of Research at the tech-focused consultancy Gartner, spoke of the need for companies not only to see API’s as a tool, but also to realise the business opportunity entailed by opening up their doors to other companies, instead of locking up their functionalities and data or using those of others to improve their service.

More and more companies seem to be aware of the advantages offered by these interfaces. In fact, some have already called 2017 the year of the API economy, although forecasts call for them to increase even further in the coming years.

The most common business model, as reflected in the IBM report on the API economy, is direct consumption: an organisation develops an API and offers developers the ability to use it. However, there are different ways to monetize an API:

  • Indirect or intangible monetization. This is the strategy followed by Google or Facebook: they allow the free use of their APIs in order to increase their presence on the market. Despite this, some companies place certain limits on the free use of their APIs. For example, they can charge the developers of an app when the API receives too many visits from its service, like Google Translator does.

Allowing an API to be used completely free of charge (Dropbox’s strategy) also has benefits for the company: users continue to use the platform, even if it is not directly through their website, and that makes them use their storage space, whose expansion does require payment.

  • Transactional monetization. Under this model the API developer receives benefits through direct use: it establishes an amount that the people responsible for an application have to pay based on the volume of API use, receiving revenue based on it.
  • Monetization based on the product. In this case the price is based on the estimated value of the service offered to the company using the API. For example, this monetization can be determined by a fixed rate, or an amount can be established based on the revenue of the company that uses the API.

Although it is, obviously, necessary to devise a strategy to monetize APIs and for their creators to benefit from making them available to developers, those who use them also benefit greatly.

After all, a developer can create an application in a short time and without too much effort by accessing programs and data that he otherwise would not have been able to. In this way a company can launch a product using one or more APIs and focus on designing a feature that sets its app apart.

Sometimes APIs arise from an alliance between two different services, and end up offering functionalities not only to end users, but also to companies that can benefit from the alliance. A case in point is Shopify, an e-commerce platform that joined forces with Facebook to create stores integrated into the social network. Now thousands of businesses sell their items and offer customer service directly from Facebook, thanks to it.

As is clear, Application Programming Interfaces have advantages for different parties, both for those who choose to share information, and those who borrow it, making things easy for the end user. Thus, it seems only logical that the API economy will continue to pick up steam. ShuttleCloud is one more actor in this new economy, as an API facilitating the migration of email between the major providers. Check out ShuttleCloud and our clients.