Making money is likely the final goal of any company using APIs. API Management is the common layer processing all API traffic. It provides security enforcement, monitoring and additional integration and governance capabilities. And it is the only meaningful location to enforce a consistent monetization strategy on top of APIs. But while API monetization requires good API Management, a Business Model is even more important.
Business model: API monetization requires good API Management
Direct monetization is the most obvious model: click on subscribe and get charged for API access. But many questions will pop up. For example, “Will somebody pay for it”? At which price? Who is paying: internal or external, developer or manager? Per transaction, bundle, per month?
There are also many other indirect ways: improving company visibility, indirect revenue through Partners or efficiency improvement and costs reduction. Do not neglect it, for many businesses, it drives much more revenue than a direct subscription.
As API is a source of revenue, it must be considered as a true product. Here is the API Product concept. So there is the need for a new role: the API Product Manager. He/she knows both the business of the product and the new distribution channel of API. He/she makes the link between the existing business units and the customer’s expectations.
A Business Model is the core of your strategy and your API Management must be capable to implement what you designed.
For both direct and indirect, adoption is key to success.
API Portal: At the heart of any user experience
If APIs are exposed, they are to be consumed. And so there is a need for a consumer user interface—it’s called an API Portal. The audience is application developers, being internal or external. They expect to find APIs, read documentation, subscribe (and potentially pay!) and monitor usage.
But it does not stop there. Developers want a nice experience, user-friendliness, integration with collaborative tools and any helpers like code generators. For indirect monetization, the ecosystem’s adoption is the main vector to increase the source of revenue.
API Monetization: An API Portal is required and must provide a good user experience.
A good API Management solution includes an API Portal. Companies could also decide to make their own API Portal. It makes sense for deep integration with the company’s IT applications (inside an enterprise portal, with collaborative tools, identity management) or for unique user experience and design.
It can be worth it, but it takes a lot of effort and time. As time-to-market is critical, using the API Portal included in the API Management solution as a temporary solution can be a good move.
We talked a lot about the solution, but it is only part of a good API Management.
Good user experience needs good APIs with good documentation and “good vibes.” Developers can “feel” APIs, and thereby like them or not.
This is a big part of the adoption. APIs need to be correctly managed, with the right lifecycle and notifications. This is the job of the API Manager role, but it is also linked to the API Management solution’s capabilities.
Out of the box vs. customization and integration
When choosing an API Management solution, monetization is not always, but often a topic. what I expect at that stage is out-of-the-box capabilities, with a user interface to a subscription to a plan, consumption panel and integration with billing software. And what is presented is a demo.
If the designed business model and user experience match out-of-the-box capabilities, then congratulations!
Sadly this is pretty rare, most of the time because the business model was not defined at that stage. Business owners were probably not even involved and API Product Manager not identified. So this will end the reverse way: start from the feature and end with the business model.
The first piece of advice is to include an API Product Manager in an API Management selection. A second one is to rely more on customization and integration capabilities rather than out-of-the-box solutions.
Yes, it will take more time and effort, but it will be worth it in the long term. Even if solution selection was approved by business owners, the business model can change over time.
Integration with a billing tool is important. People are often interested in out-of-the-box integration with a Cloud offering. It makes a great starting choice, but as they implement a business model, it may not match expectations. And be very careful at the cost associated with it. Integration with company billing application seems the best long-term choice. But this also requires consistency with the designed business model.
Finally, in the case of direct monetization, API Portal has to present the right user interface. Unless a customer creates its own portal, the solution must include strong customization capabilities.
- A good API Monetization starts with a good Business Model.
- Success relies on ecosystem adoption, and the key is the API Portal.
- API Management is based on a solution, but it is first what you are doing with it. Good and well managed APIs are critical for adoption.
- Sure, the best is having everything you wish out the box. But it is rarely the case, so it is better to rely on customization than fitting your business to software capabilities.
Should I monetize my APIs?