The $30,000 API? Animoto’s Unique Money-Making Strategy

A company named Animoto is experimenting with an unusual API business strategy: Revenue sharing. And because the company takes a customized approach, it often negotiates significant advances from its API partners.

Generally, there are two basic models for making money with an API, according to an IT Briefcase article:

  • Charge per call or per business transaction.
  • Charge based on accessing a business service.

eBay uses this second approach with its storefront API, charging a monthly service fee of approximately $16 to $300 for its storefront API, with add-ons for items such as customer support.

But Animoto is finding success through a “strong direct offering,” said Jonas Gerber, Animoto’s vice president of Business Development.

Shutterfly uses the API for Animoto's video animation tool

Animoto is an online video creation service that turns photos and video clips into more polished videos or animations. Users can add text, music and design features.

Gerber described its approach as offering a deal-gated API program that’s more like negotiating a partnership than simply giving access to an API.

“It has to be a deal-gated API — there has to be a business arrangement that makes sense,” Gerber told ProgrammableWeb by email. “In most cases we require an up-front advance that is recoupable.”

Some partners sell the service and participate in a revenue sharing program with Animoto. Others integrate it with their own offerings, but pay per rendering. In those cases, Animoto will often limit the rendering to 60 seconds so the partner doesn’t cause Animoto to lose business.

How much is that “recoupable” up front advance and what percentage does Animoto take from your revenue?

Gerber said the amount will vary based on negotiations with each specific partner, but one developer complained on Quora last year that the company asked for $30,000 up front for an API Key and a 50 percent share of all revenue.

Gerber didn’t confirm or deny that account, but did say that, in addition to the API, Animoto gives each partner project a team to help with the deployment.

Animoto launched its API in March 2011. Currently, it has approximately 15 partners, including Shutterfly, which uses the API to allow customers to create videograms.

“We're the only company that has successfully gotten people to pay for videos,” Gerber said.

Animoto also offers a Flash video creation widget that can be inserted into sites. It also requires a developer’s key.

For similar APIs, see 268 video APIs in our directory.

Be sure to read the next Video article: 270 Video APIs: YouTube, Flickr and Skype