The online media industry is feeling increased pressure to monetize their content on the web. The current battle between Rupert Murdoch and Google is just one example within this game which will put on weight over the next months. Especially newspapers are seeing their offline revenues dwindling and increased online competition – often without a sustainable concept or strategy for a turn around. Marc Andreessen even suggests to shut down the print edition right now and become a pure internet player. Or you see it like Joseph Schumpeter and call it “creative destruction”. In any case, and as most of online media, the newspaper industry has to reinvent itself.
So far the bad news for media companies. The good news is that new technology provides new resources of revenues and distribution channels. Many media companies have launched APIs (application programming interfaces) recently. APIs basically allow the distribution of content & services to other businesses. As some call it “Bus Dev 2.0”, this new distribution channel introduces an additional revenue opportunity:
Indirectly: additional traffic is generated through the API which increases revenues through traditional business models, or
Directly, when the online businesses charges for the access to the API.
Both business models are certainly valid and make sense. Here is a list of role models, online media (and other) companies who are successfully utilizing the API technology to generate revenues:
NPR
Launched in July 2007, NPR’s API is the first major media API that opens up original news and other information for online re-use by other parties.
In the words of Todd Mundt, this creates “Unprecedented flexibility [that] allows anyone, from a blogger in Pittsburgh to KQED in San Francisco, to generate highly specific content searches of the NPR archive (going back to 1995) and port the results to a webpage or an application.”
Beyond exposing the information to over 250,000 produced stories on public radio stations, the NPR API provides lessons learned on particular technical and business challenges and also helps pave the way to a more collaborative and open dialogue with media producers and the public moving forward. It helps to demonstrate that intellectual property rights and mashups do not need to be mutually exclusive. Instead of building legal barriers around the content, there is an alternate opportunity that media producers can embrace: the utilization of APIs as a distribution channel.
The New York Times The New York Times Developer Network launched the first API in public beta in October 2008. Since then, the media company has launched a set of internal and external APIs, allowing other programs or websites to access its data and services.
It all started with an APIs for article search – users can search for more than 2.8 millions articles since 1981 such as movie reviews, recipes or congressional votes. The roadmap for 2010 includes events, weddings, news feeds and bestsellers.
The New York Times is a pioneer for this technology and many others are copying their model. Hundreds of mashups have been created, including complex visualizations of the origin of Barack Obama’s Campaign finance. The system is expected to increase activity drastically in the future – eventually bringing over 2.5 times more viewers to their content than the NYTimes.com website itself.
Expect this to be huge. As soon as the big media companies realize the potential of distributing their content via APIs they will all want to engage. The necessary infrastructure from companies like 3scale is available to make this happen.
We have improved the 3scale support portal recently. This includes new documentation, videos, a forum, integration with GetSatisfaction, etc. The support portal will make it much easier for customers to integrate our API management solution and understand which steps are necessary. Watch videos on YouTube and Viddler.
Google I/O was an amazing conference. Not just for the new Google HTC phone – Google Wave was a big surprise! Well done! Watch the video above. It’s worth the 1h 20min. After watching this you’ll be convinced that Google Wave WILL be the new e-mail.
We at 3scale had a big event as well. Lots of new contacts and feedback has been very positive. People like our light weight, proxy-less approach. An API Management Solution that can be implemented in a plug & play, self-serve way. Great feedback, from smaller companies up to the enterprise world and a big thanks to the Google team for their great support.
Announcing 3scale at the Google I/O developer conference on May 27/28, 2009 at the Moscone Center in San Francisco. The 3scale US team will be present after several weeks of preparation. Watch out for our new T-Shirts: “Don’t worry, be API”
Thanks a lot to Steven Willmott and Carlos Merida for their preparation. We have created a new service called AppSpotImage which has been built on top of Google’s App Engine. AppSpotImage is demonstrating a highly scalable and easy integration of 3scale as an API managment solution for developers using App Engine.
“20 years ago, Tim Berners-Lee invented the World Wide Web. For his next project, he’s building a web for open, linked data that could do for numbers what the Web did for words, pictures, video: unlock our data and reframe the way we use it together.”
I have been posting about this video quite a bit on Twitter: Tim Berners-Lee talking at the TED conference in February 2009 in Long Beach, California. His slogan: Raw Data Now!
Some quotes:
“Now I want you to put your data on the web”
“Raw Data Now!”
“It’s all about linked data”
See also a good write up from Compute Magazine here.
This is a mandatory watch for anybody interested in the next wave of the Internet. It’s going to be about leveraging linked (raw) data to generate synergies, unlocking its potential. So, c’mon guys, it’s not that difficult: Make your data available to the world now. And do it with 3scale. Trust me – it’s the easiest and fastest way of doing it.
Silicon Valley is and will be the magnet of entrepreneurship and the Internet sector – worldwide (see also my earlier post regarding the future of the Valley). I have had the honor to participate in several panels this week, mainly talking about the advantages and obstacles for entrepreneurs around the world to come over to Silicon Valley – either just to open a branch or to transfer their company entirely. The panels were organized by the Plug & Play Tech Center where my own company is hosted and which I highly recommend.
Below I am summarizing some of my thoughts and learnings during these sessions:
Define your goals
You will want to know what are your goals for coming over to the Valley: are they funding related, is it going to be a business development effort or do you want to build up a developer team here?
Make a budget
Coming over to the Valley is not cheap. Of course, I am not addressing large companies with this blog post. Start-ups often have a very tight budget and you will want to consider the costs of an office in the Valley: from travel costs (relatively low recently), to accomodation, office rental, car rental (you’ll need one, as public transportation is limited) and others. Below $3000/month it is impossible if you want your own accomodation.
Plan long-term
I don’t believe it makes sense to establish an office for a short period of time only. You might want to do just a business trip, but establishing an office in the US is a long-term project and you should see it as that.
Review your personal situation and communication strategy
Are you bringing your family, the whole team? How are you planning to communicate with your home based management team? My experience is that this is not trivial. Yes, daily Skype calls are possible (and necessary), but phone calls cannot replace personal meetings and brainstroming sessions, so I believe it is necessary that the team gets together on a regular basis. Once per months seems to be feasible.
Plan in advance your “entry strategy”
Planning at least four months in advance is strongly recommended. In that time you want to solve the issues from above, initiate contacts with office space landlords, lawyers and especially review your own network for already existing contacts in the Valley.
A very viable “entry strategy” might be the participation in a contest or conference in general. I have for example participated with my company 3scale in the Techcrunch50 global competition conference which has been hugely successful for our company.
Once you are in the Valley: Connect!
It is very easy to connect once you touched the ground in the Valley, but you need to be out there: attend any conference that is related to your business, check the following networks:
Oh – and check out Craigslist.org – they can help with almost everything.
Do it!
There are a lot of good reasons to be in the Valley. If your company can make it here, it can make it anywhere in the world. The Valley has the highest aggregation of (Internet) knowledge anywhere in the world and an ecosystem that many other countries can only dream of.
Not a day goes by that a major Internet business is releasing or updating their (Web) API. Web Services have become one of the key strategies for Internet businesses these days. This is not only happening in 2009, API technology and its standards like SOAP and later REST have been used for years. However what is new is that this technology is not only seen as a technical enabler but as a commercial enabler for new business opportunities.
Caterina Fake, co-founder of Flickr, called it BusDev 2.0 already in 2006 (http://bit.ly/K0eJk). Kipp Bodnar just wrote a very good blog post on APIs as the new marketing platform (http://bit.ly/9wg4d): “If I was a CMO, I would take some of my marketing budget from traditional media buys and creative work and use it to hire a small group of extremely talented web developers that have experience using API’s to develop simple and easy to use web applications.” I couldn’t agree more. Providing access to their services via APIs has been a major winner for several companies: Salesforce, Twitter, Flickr, NPR, just to name a few. These companies have managed to gain platform leadership – and their API plays a crucial role in that. And many other companies are following: from e-commerce over content & media, business services to the government (for the latter one I hope that European governments are at least watching closely what is happening in the US in terms of government 2.0).
What larger Internet companies have been doing for some time now, many mid-tier and smaller companies are following. Launching an API has not only become a core part of the IT strategy, new developer tools and the rise of RESTful Web Services have made it easier and faster to build an API in the first place. Many Internet businesses however still haven’t done the switch from an open API (without access control) to a managed API (with access control). The provisioning of key management systems, monitoring, analytics and billing systems is not easy, but it is the key to exploiting this technology as a revenue driver. My company 3scale enables companies to leverage their API through a SaaS based API management solution that can be implemented in just a few hours, allowing any kind of Internet business to manage their API.
What are the key benefits of providing a managed API:
Reach & Relevance: With the size of the web reaching 1 trillion unique URLs, there are good and bad news: although there are every day more possibilities to promote products & services, it is also always more difficult to get noticed. APIs provide a key enabler that allows Internet businesses to go beyond their own website and try to be visible on every other website.
New distribution channel: APIs can simply be seen as a new distribution channel. While the original website is usually the main channel, APIs allow to reach, promote and sell the company’s content or functionality to other websites. The main difference to RSS however is that the content user (the mashup) can be identified, monitored and charged for their usage.
New business model: APIs allow a new way to create new business opportunities. I usually differentiate between a direct or indirect business model, meaning an either direct way to monetize the content or functionality usage of a user (by hit or flat rate) or simply an indirect way of commercialization, meaning not being charged for the actual usage, but leveraging traditional business models through increase of reach.
Innovation & Synergies: Due to flexible integration and re-usage of content & functionality on the web, APIs foster innovation. The next major evolution cycle of the Internet will be a web, mashed-up from various sources of raw data, exploiting synergies to create something new with additional value add.
Looking at data from Programmableweb.com shows a strong increase of available APIs (1278 at the time of writing and doubling every 12 months) and even more Mashups (3905), however the real amount of APIs is likely to be much higher and the growth rate is accelerating. At 3scale, we are looking at these trends very closely and believe that we can contribute to the thriving ecosystem of the programmable web.
Martin Tantow, is a senior marketing & bus dev executive with 15 years experience in e-commerce, telecoms, software & digital media.
He is a senior advisor with Booz & Company, delivering strategic growth assessments for leading technology firm in the US and building the company's footprint in Silicon Valley.
Martin has built two companies in enterprise software & mobile telecoms and is a mentor and advisor to other start-ups.
He loves good food, cycling, white sandy beaches and many other things.
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