API World Day One: Developer-focused Services Rise Up While API Business Models Remain Unsolved

The API World and DataWeek events are currently taking place in San Francisco with a mix of API providers and developers, C-level enterprise representatives, and marketers all vying for attention. It is a mixed bag of attendance with over 4,000 participants expected, although the close proximity of the event to the timing of the API Strategy and Practice Conference being hosted at the end of the month, also in San Francisco, may be causing some lack of cohesion in the type of audience attending. Key themes include the growth of services aimed at supporting developers, the limited creativity of using realtime data and the slippery task of defining a viable API business model.

Middleware to Solve Developer Blues

A key theme emerging at API World has been the skills shortage many enterprises are facing when seeking out new developers. One large company that we spoke to currently has a lead developer with double pneumonia and has realized that they need to bring on new hires to lighten the burden of some of their key developer leaders. For international enterprises and global startups attending, this skills shortage is further exacerbated by the ‘brain drain’ that occurs when many of their top developers relocate to Silicon Valley after cutting their teeth on local projects.

As a result, middleware solutions are gaining in prominence at this year’s event. API Integration management service Webshell has a startup booth that is seeing strong interest from developers, while AnyPresence’s enterprise-based, template-driven solution to designing APIs and mobile apps has taken the Top Innovator award here.

The demand for development staff is only set to grow, and along with the growing trend in more enterprises targeting developers directly (a similar trend seen in how open data platforms are aiming to get data into end users hands and minds), API World is demonstrating that any service aimed at easing a developer’s capacity to code has a good head start. (Other services are focusing on creating a simplicity that helps developers tackle complexity.)

The Benefits of Real Time: Using Context and Personalization

Thanks to several of the providers exhibiting and presenting as part of the DataWeek portion of the events program - as well as an opening keynote by Robert Scoble - realtime data access is available to developers and enterprises who are seeking to provide more personal, contextual engagement with their customers and staff.

While the database services and development skills are coming online, the imagination around how to use such opportunities is still limited in terms of the examples many providers are giving. It still feels like many are saying that now, when you walk past a shop, you can be automatically sent a coupon (“straight to your phone!”) for a product the shop knows you like, or predicts you will like. Perhaps this is an issue of capacity-building within enterprises, or startups needing to do more use case research.

The conversation about the benefits of using realtime data in combination with data on personal interests (past shopping behavior, cookie history, likes, demographic data, etc) or the context in which the user is situated (the location, time, weather, etc) needs to extend beyond what direct marketing opportunities this opens up. Some industry representatives we spoke to believe the market is not mature enough to be having these conversations just yet, or to be working on API orchestration in such a way to really map out the potential involved in realtime data processing. Along with this, the conversation about privacy considerations and ethics in regards to the data that is collected seems virtually non-existent, although a talk to finish the event today is aimed at encouraging company’s self-regulation around managing data.

Viable API Business Models

Defining a viable API business model has become a key talking point amongst conference participants at API World this year, and one that has not yet yielded many clear solutions. The inspiration of Twilio is still driving many to believe there is great wealth in the API economy, if only they can define a viable API-related business model, while others are spooked by the Netflix API shutdown in March and are wondering how they will manage supply chain risks from changing access to API-flowing data.

Defining an API-related business model

Not everyone is in the lucky (or clever) position of Twilio, where the API is the product. French startup Algolia, however, is. Having recently received $1.5 million in seed funding, their business model is API-as-product, they offer a tool that helps websites provide more richly filtered site search results. (ProgrammableWeb interviewed CEO and Founder Nicolas Dessaigne at the conference, to be published tomorrow.)

Today’s talk at 4 pm by Ben Schmaus from Netflix is one of the most eagerly awaited of the program, as many are curious to see what the changes to Netflix’s API program – which saw a closure of releasing new API keys to developers back in March – will mean for other businesses wanting to use APIs as a business tactic.

An emerging business model we have seen growing in prominence at ProgrammableWeb is the modular approach. The way to monetization for some businesses is to offer their existing service as an API that can be embedded in someone else’s app or service delivery chain. For example, CanvasPop are hoping to help app developers monetize their image manipulation apps by using their API to provide an commission-based service, direct from within the app. A key benefit for enterprises using AnyPresence’s backend-as-a-service is the opportunity to build APIs that can be inserted into other apps to create new revenue streams.

Using a business model that relies on external/open APIs

Services like the abovementioned Webshell believe a viable model requires a strong level of API trust. A startup’s reliance on access to data via an API can cause a business to crumble overnight. Twitter API’s changing terms of service has seen new products emerge and self-destruct in the blink of an eye (TweetDeck and Banjo come to mind). For enterprises using open APIs, if an API’s data becomes inaccessible, “the whole supply chain workflow can stop”, says Mehdi Medjaoui and Thibaud Arnauld from Webshell. As a result, they say their API integration management service manages three key risks:

“1. When an API's Endpoint changes, because we use JavaScript as the abstraction layer, we are able to follow the changes
2. If the API is broken: for example, with Google Shopping going offline, we are able to link to Google Wallet to maintain services, or
3. If the company has completely died, and we can do nothing, we suggest an API that is comparable.”

API World – and the concurrent event DataWeek - conclude today. ProgrammableWeb's Amy Castor and I will continue reporting on key discussions from the event. API Business Models 2013 slide by John Musser.

Be sure to read the next News Services article: API World Day Two: Finance APIs Take Front Seat and Why Developers Need to be Business Analysts