Making Money From Mashups

A well attended Mashup Camp session hosted by Stephen O'Grady of Redmonk and StrikeIron's Dave Nielsen lead to an active discussion on questions and issues around commercialization and business issues of APIs and mashups. Below are my rough notes from the session.

  • How are developer ecosystems best managed. Analogy made to old Microsoft Developer Network (MSDN) as a model of a classic, well-run developer program.
  • Concern from couple audience members about lack of responsiveness from API vendors. If I'm running a business, who do I talk to? Usually when they're small the providers don't respond to them. Sometimes developers have choices: easier to swap providers (ex one map provider to another), sometimes no alternatives.
  • Differences in new vs. old models software models: used to just distribute and install software, now in a hosted model there's additional costs such as bandwidth and ongoing operational costs (desktop vs. SaaS).
  • Alan Taylor creator of the excellent Amazon Lite, got a friendly cease-and-desist from Amazon for integrating Amazon data with links to Netflix and iTunes.
  • Providers have contractual obligations that get baked-into terms of service, like no real-time geocoding mapping from map platforms because this treads on navigation system deals (besides the system load issues). Thus API provider downstream commercial interests and agreements need to be protected.
  • Noted that Amazon and eBay have internal tools and dashboards to monitor API usage. Allows them to monitor usage by mashups. If something gets either accidentally out of control or becomes wildly popular, they can contact the developer (or shut them off if need be).
  • Worry about vagueness and open questions about terms of service: in the future will the provider be lenient with me in the grey areas or will they take my house.
  • Should there be a defined 'transitional space' that allows a mashup developer to be protected from an inconvenient API shut-off if they become successful (even what if they get dugg and traffic spikes).
  • There's a need to develop 'monetization models'. Examples given is how well defined the models are in the music industry (ex: ASCAP) or with financial data (ex: up-to-minute costs more). Suggestion made to create a collection of resources and examples drawn from other industries that can be used as basis for this type of discussion. Note: we may continue this as discussion thread on ProgrammableWeb or other means.
  • Question: what's the definition of a 'commercial site'? Does running Google AdSense ads alongside of mashup make a 'commercial'? None of the API providers' terms of service list give a definition of this yet it's often one of their constraints on use. Thus the onus shifts to the developer. Such as Google Maps TOS explicitly limiting free use if you are asking users to pay for access to your site that uses their API.
  • Discussion about Terms of Service issues such as how often they change and can take effect immediately, thus catching developers off-guard.
  • Balance of power: providers initially wanted to use APIs as a means encourage adoption, but have the real control at end of day.
  • Issue: no API price listed, just 'talk to us'.
  • Traditional data providers are considering this market, but, it is a chicken-and-the-egg problem -- they want proof of ROI in advance.
  • What would be best practices from providers: we will provide notice in advance of shutting you off for TOS issue; grace period when TOS change.
  • The "accidental business". Often developers today don't expect to build a more formal business. Try it out first, if successful, then we'll deal with that later. Often these are handled on a case-by-case basis.
  • A lot of mashup developers don't understand risk factors: provider risks, terms of service, switching costs, data availability, etc.

For a bit more on this session and the camp see Stephen O'Grady's post here.

Be sure to read the next Financial article: More on the Mashup Economy


Comments (11)

I understand one of the guys from <a href="" rel="nofollow">billhighway</a> attended mashup camp, did any conversations surface around a way to leverage their platform to monetize mashups? I've heard rumor they may be working on an api that would add a financial element possibly creating alternative revenue streams for mashups??

The ability for Google et al to arbitrarily shut down APIs to mashups that, God forbid, want to make money is a big business risk, and crimps innovation. We are building interfaces to other geocoding APIs should we need to switch on short notice. Competition is a good thing, I guess.

[...] January 18, 2007 at 11:14 am &#183; Filed under Business Making Money From Mashups: A well attended Mashup Camp session hosted by Stephen O&#38;#8217;Grady of Redmonk and StrikeIron&#38;#8217;s Dave Nielsen lead to an active discussion on questions and issues around commercialization and business issues of APIs and mashups. Below are my rough notes from the session. [...]

[...] Affiliation as The mashup business&nbsp;model IMHO, the only serious way to make business out of mashups1 is for the mashed-up service(s) to provide affiliation features.  A ‘mashup provider’ functions as a retailer for the service backend, thus earning a slice of the business created for the service provider.  Although this aspect covers only a little part of the whole Internet servicing ecosystem issue, I think it&#8217;s the most crucial.  Yes, all the traditional stakeholders—like marketing and customer/developer support—are possible, but those are supplementary roles and not directly linked to business transactions.  The beef is in the actual business service.  (I guess this is obvious?  Why the heck I&#8217;m writing this post?) [...]

[...] » Blog Archive » Making Money From Mashups Steve proposed and facilitated one of the most interesting and talked-about sessions at mashup camp. (tags: mashups mashupcamp conferences business-models licensing apis) [...]

[...] On the back end, you&#8217;ll need to worry about what your data and API providers think of what you&#8217;re doing so that they don&#8217;t cut you off. But on the front end, you have all the same ways available as before to make money on the web: advertising, affiliate revenue, subscription services, and so forth. The Hype Machine, the best mashup of Mashup Camp 3, for example, uses both advertising and affiliate sales revenue to make money. [...]

[...] Shopping is clearly one of the most popular mashup themes. Given its transactional nature and that fact that both developer and API provider typically share revenue there&#8217;s good incentives all-round. This is one way to help address the big question of Making Money from Mashups. [...]

[...] the back end, you’ll need to worry about what your data and API providers think of what you’re doing so that they don’t cut you [...]