How to Make Money With Your API

Guest Author, August 25th, 2010

This guest post comes from Daniel Jacobson, Director of Application Development for NPR. Daniel leads NPR’s content management solutions, is the creator of the NPR API and is a frequent contributor to the Inside NPR.org blog.

NPROne of the questions that I am most frequently asked regarding content APIs is “how can I make money with my API?” Before answering that question, however, it is important to ask for whom the API is designed. After all, the audiences for your API will determine what business opportunities exist.

The most common target audience for APIs is the developer community. While that audience is an interesting and potentially important one, it is not where the greatest value can be realized.

When we launched the NPR API in 2008, we established four target audiences, each of which were important. The target audiences were (and still are):

  • NPR: NPR is of highest importance because as we build all of our systems, mobile apps, etc., it was important to be as nimble and efficient as possible. We have adopted this so deeply that the API is the foundation of everything that we do, including acting as the content source to NPR.org.
  • NPR member stations: NPR member stations are a critical aspect of the NPR mission and business model. Offering the stations a new, more effective way to get NPR content in a robust way better serves the stations and their communities, as well as NPR.
  • NPR partners: Having the API quickly became a more effective way to interact with content aggregators, business partners and other commercial entities with whom we established relationships. In fact, the API became a business development tool where some external organizations approached us because we had a robust API.
  • the general public: Finally, as part of our public service mission, it was and is important for NPR to share our content with the world. Exposing it to the developer community is a natural extension of this effort. But when we launched the API, we fully expected this to be where true innovation took place with the API. In fact, the day after our launched, I told CNet that the community of “developers will come up with a lot of brilliant ideas.”

With the API live for a full two years, I decided to look more closely at how effectively the API has been serving these four audiences. Although I am not surprised by the results, you may be…

The following charts show the distribution of how many API keys are registered by each of our four audiences. That metric is then compared to the consumption of the API (as measured by API requests) by the four audiences:

Obviously, there are many more API keys registered to the general public than the others. In fact, our API currently has over 10 times more public keys than all other keys in the system combined.

Despite the disparity between public keys and those used by other audiences, the dominant group from a request perspective is overwhelmingly NPR, responsible for more than 92% of the total number of requests. That means that the remaining 8% of requests are coming from all three other target audiences combined.

When considering this distribution in requests by audience relative to the key distribution by audience, it is clear that NPR has by far been the most effective user of the API. So, given the incredible amount of consumption by NPR, how has that translated into revenue opportunities? Below is a chart detailing the growth in total page views across all NPR platforms over a twelve-month span:

By the end of the twelve months, NPR’s total page view growth has increased by more than 100%. How were we able to add that many page views in such a short amount of time? The API. Not directly. But the API did enable NPR product owners to quickly, efficiently and independently build specialized apps in various new platforms. As a result, what we have seen is primarily additive growth. In other words, in addition to NPR.org’s growth (by about 19%), we have been able to add the NPR News iPhone app, the improved mobile site, the Android app, the iPad app, etc., each of which adds page views. From our analysis, adding these new platforms is generating new traffic and is not cannibalizing page views from NPR.org in a substantive way. These new page views create new sponsorship/advertising inventory that create new revenue opportunities.

So, when asked the question “how can I make money with my content API?”, the answer should always be based on your target audiences. And from NPR’s experience, the best way to make money is to focus on how the API can improve your internal processes. Of course, it is still important to maintain a solid support and growth model for the other audiences as well, but we cannot all be Google, Netflix, Twitter, etc. Unless you are planning to spend a lot of money on community engagement, you are better served by making sure you can liberate your product owners and grow your business more quickly, efficiently and independently.

In other words, don’t assume that the API’s primary audience is the developer community. Question that default position and do the introspection that will enable you to get the maximum value out of your API.

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12 Responses to “How to Make Money With Your API”

August 25th, 2010
at 12:38 pm
Comment by: Daniel Jacobson: Talks About How to Make Money with Your API

[...] Web, a great site that keeps us posted on everything API. True to their cause, they have now posted a blog entry from Daniel Jacobson, who is the Director of Application Development for [...]

September 15th, 2010
at 3:01 am
Comment by: Metrics for Content APIs: An NPR Case Study

[...] my previous post, I discussed how companies can make money by using their content APIs to improve internal processes [...]

September 16th, 2010
at 12:01 am
Comment by: NPR API Architect Headed to Netflix

[...] Netflix has been popular with developers, one major reason for an API is internal development, as Jacobson recently wrote in a guest post. “I think it’s a great fit because I think that’s exactly the model that NPR has [...]

September 20th, 2010
at 9:34 am
Comment by: Web APIs: What, Why and How | Hot Scripts Blog

[...] An API that is useful has a huge monetization opportunity. There are several ways you can charge developers to use your API – for example charging per each API call or as per the number of bandwidth consumed. Here’s a great case study of how NPR makes money with their API. [...]

September 20th, 2010
at 10:00 am
Comment by: Web APIs: What, Why and How « The World of PHP

[...] An API that is useful has a huge monetization opportunity. There are several ways you can charge developers to use your API – for example charging per each API call or as per the number of bandwidth consumed. Here’s a great case study of how NPR makes money with their API. [...]

September 25th, 2010
at 10:56 am
Comment by: Chad R. Smith

Hey Daniel,

I just heard of your latest endeavor and I wanted to wish you the best of luck in the next phase of your expanding career! I enjoyed the conversation we had over a month ago and know that you will have as much success if not more after you leave the DC area. If you ever make it back this way let me know and we will do lunch.

Take care,
Chad R. Smith

December 9th, 2010
at 10:36 am
Comment by: Open APIs: Why Bother? Here are 5 Reasons | Another Newyork Times

[...] Make MoneyThat’s not bad on its own, is it? The eBay API is a strong platform, with many businesses built off of just listing applications. It’s paid off for eBay, because 60% of listings are added via the API. Earlier this year we looked at how to make money with your API. [...]

December 10th, 2010
at 9:31 am
Comment by: Open APIs: Why Bother? Here are 5 Reasons

[...] Make MoneyThat’s not bad on its own, is it? The eBay API is a strong platform, with many businesses built off of just listing applications. It’s paid off for eBay, because 60% of listings are added via the API. Earlier this year we looked at how to make money with your API. [...]

December 21st, 2011
at 5:17 pm
Comment by: Gatsy

A few years ago I\’d have to pay smoenoe for this information.

December 22nd, 2011
at 3:29 am
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December 23rd, 2011
at 6:34 am
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December 19th, 2012
at 1:44 pm
Comment by: Daniel Jacobson's Blog » How to Make Money With Your API

[...] This post first appeared on ProgrammableWeb.com [...]

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