ProgrammableWeb’s Guide to Modern API Business Models
Ten years ago, few if any companies knew anything about building or using networkable APIs, never mind the idea of monetizing them. But here we are today in the 2020s and suddenly, between the ideas of legacy modernization, digital transformation, and omnichannel customer journeys built from previous silo’d systems, most organizations are not only exploring APIs, they’re looking for ways to quantify the potential impact on the bottom line in terms of increased revenue or decreased expense. As a result, the subject of APIs is now a standard part of every technology and business conversation being had across most organizations.
And, as those organizations look to flesh out their API strategies, one of the biggest questions they look to answer has to do with what API business models they should apply to those strategies. In 2013, ProgrammableWeb founder John Musser published and presented 20 API Business Models in 20 Minutes; a body of work that many API economy practitioners still view as the current gold standard guide to API business models.
Over half a decade has passed (an eternity in Internet time) since Musser’s initial comprehensive review. With so much having changed across the API economy during that period, ProgrammableWeb felt it was time to revisit the question with a brand new comprehensive reference to the many different API business models in play.
In this paper, we’ve not only endeavored to revisit the old models to see what has changed, but we’ve also identified all of the newcomers based on real-world observations across the API economy over the last five years.
Something else that’s new; this report, which is openly available to all ProgrammableWeb visitors, relies on a hierarchical model to organize almost 40 different API business models into a variety of categories and sub-categories.
One thing we’re not shy about; this is an opinionated hierarchy. For example, whereas many people often talk about the idea of public vs. private APIs, you’ll find neither category in our hierarchy. Instead, we prefer to discuss APIs as being internal or external; a tacit reference to APIs that are exposed within or without corporate firewalls. For example, an API that is only available to partners is likely to be an external API. But it’s most definitely not a public API (which often equates to an API’s availability to any developer, anywhere, regardless of affiliation).
Replete with real-world vignettes (mini case-studies) of the various business models in action, our report covers the full gamut of API business models; everything from real monies saved by way of efficiencies derived from API-driven composable enterprises to the idea of the so-called “coin-operated” style pay-as-you-go business model. In the end, our hope is that for those of you trying to figure out the business aspects of your API programs, one or more of the business models presented in this paper will inspire you to attach real dollar value to your API strategy.
Yes. So much has changed. But, if there’s one thing that hasn’t, it’s the question that Musser originally said to answer first before asking “What is my business model?” The first question to ask is “What is my business?”
Enjoy the report and let us know what you think!
ProgrammableWeb's 2020 Guide to API Business Models