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APIs: A Strategy Guide by Dan Woods, Greg Brail, Daniel Jacobson

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Programmable Web’s View of API Business Models

API business models have evolved from a few simple patterns to a much larger collection. John Musser, Editor and Founder of the ProgrammableWeb.com, has analyzed how business models for public APIs have evolved. In 2005, most API business models fell into the categories shown in Figure 3-4.

API business models circa 2005

Figure 3-4. API business models circa 2005

The categories are pretty straightforward. Free means developers do not have to pay to use the API and that the API provider does not consider that the API has a significant business benefit. For the developer, value from the usage of free APIs can accrue from the use of the business assets, awareness of content provided, through the ability to reach new customers, or any number of other ways. For the provider, a “free” API with no significant business benefit might still add some cachet or “cool factor” to the company and the team. Of course, there are lots of good reasons to offer an API to developers for free, but these are better described under the Indirect category below. In reality, there are very few totally “free” APIs—most successful APIs are attached to some sort of business benefit, as described below.

Developer Pays means there is a charge for using the API. In this model, the developer uses the API to create something they or their organization wants. For the Developer Pays model to work, the business ...

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