API services provider SOA Software has today launched a new set of features aimed at helping businesses better monetize their APIs. Alistair Farquharson, CTO of SOA Software, spoke to ProgrammableWeb ahead of today's launch.
The new features added to the API Management Platform from SOA Software help API providers define licensing terms for their API products. This allows providers to create more nuanced business models based on usage of their API products and to better manage relationships with partners and end-customers who may be accessing the business' data and functionalities via API.
Monetization via service-level definition
Alistair Farquharson, CTO of SOA Software told ProgrammableWeb:
"An API license is a lot like a cell phone plan. It has three essential parts:
License terms: These tell you what I can do, what are my entitlements. For a cell phone it might be that you can do data and calls, but not international calls. For an API, it might be that you can access different resources or that you have read/write permissions.
Quotas: For a cell phone, this would be something like 1000 minutes a month. For an API license, it is things like how many transactions you can make in a month, or the number of calls you can make in a month.
Legal definitions: This section defines any specific legal language, for example, there could be different legal terms based on different licensing entitlements."
The new features of SOA Software's API Management Platform product walk business customers through setting up a suite of licensing agreements that can be matched to various business models. For SOA Software, this is an essential need for their customer base, who are mostly B2B operators with a "fairly sophisticated monetization and go-to-market strategy," says Farquharson.
"Once you have defined these three areas [i.e. license terms, quotas and legal definitions], you can set cost structures. For example, you can set a bronze, silver and gold subscription level and maybe the gold lets you do 300 transactions per second. Then your API products preset these licenses to the user in a consistent way. In addition, a customer can control for a particular partner what they can see in terms of the licenses available."
API management providers focusing on monetization services
Lately, several API management service providers have been launching complementary services that help their end business users monetize off of their API products. Recently, MuleSoft (the parent company of ProgrammableWeb) launched new features to their Anypoint Platform product letting their customers use service level agreements to manage monetization strategies. In addition, StrikeIron released the IronCloud platform specifically to help customers operationalize their APIs and produce analytics on the churn risks, throttling limits and upgrade potential of any API product. Farquharson is confident that SOA Software's new features provide the same level of usage insight to help their customers identify monetization opportunities:
"There are two key reports in the system: one provides an overview of API usage and then a second report cross-references this against the licenses. It gives a business the ability to dynamically change their license plans."
While acknowledging the potential for businesses to continually tweak their licensing agreements to optimize the monetization model, Farquharson is hoping that the new API management platform features will serve to reduce complexity and help API providers provide a more consistent, less complex business model.
"In the B2B space, our customers tend to know their market a bit better, so they tend to have a fairly good idea of licensing, and we do recommend not to over complicate it. Our new services help API providers instil best practices [around monetization]: to be transparent, logical and simple."
By Mark Boyd. Mark is a freelance writer focusing on how we use technology to connect and interact. He writes regularly about API business models, open data, smart cities, Quantified Self and e-commerce. He can be contacted via email, on Twitter, or on Google+.