Enterprise API Strategy

How to make five billion dollars with APIs: API Monetization at eBay

API Monetization at eBay

API Monetization is on everybody’s mind: How can I make money with APIs? How can I justify my investments in API-related activities?

But all too often, direct monetization (i.e., charging for API access) is what people think about when they think about monetization. In the vast majority of cases, however, this monetization model is not a good choice. Instead, think of APIs as something to improve the value that you’re generating with your business.

Don’t make APIs your business. Make your business with APIs.

In this interview, eBay distinguished engineer Tanya Vlahovic explains how eBay so far has generated five billion dollars of revenue with their Buy APIs.

Simply stated, these APIs allow eBay partners to look up inventory and to sell it to buyers. Partners can build their own experiences around those APIs. This is a classical case of value co-creation on a platform: eBay has a large inventory of goods, and partners can invent and serve new sales channels to buyers that otherwise would not have existed.

For this to work well, the APIs must be designed in the best possible way for the target scenarios. Tanya walks us through her Know Your Developer (KYD) model which she uses when designing and implementing APIs. It involves seeking feedback from pilot users, including multi-day on-site workshops with them to make sure that the APIs are as useful and as easy-to-use as possible.

eBay has a large ecosystem of APIs, and Tanya also is responsible for API governance across all those APIs. While we do talk about governance issues and how to evolve an API landscape, a more detailed conversation about API governance is reserved for a future conversation with Tanya.

In this conversation, we focus on the buy APIs and their successful monetization. We also talk about KPIs and how these can help with APIs. There are operational KPIs that provide insights into system health, and these are essential at the operational level.

On the business level, however, the simple metric for the buy APIs is how much revenue they generate. There are some secondary ones such as making sure that misuse is detected (to avoid consumers systematically crawling eBay’s inventory, for example), but at a very high level, driving revenue is the primary focus of the APIs.

If you are interested in more details of eBay’s API story (which started in 2000 with their first APIs!), listen to Tanya explaining their journey and their guiding principles and methods.

If you liked this video, why don’t you check out my YouTube channel for more “Getting APIs to Work” content?