HopStop announced to its developer community and posted on its website that it will discontinue its free API model. HopStop’s announcement shouldn’t shock API junkies as HopStop joins an ever growing list of free API gone pay-to-play (i.e. Bing, Google Maps, etc.). Instead, HopStop’s move should make us consider business models surrounding an API offering.
Mobility and ubiquitous web access are certainly changing the entire planet; and without doubt, APIs are shaping the new generation of web access and apps. “Mr. Cloud Computing” and Amazon CTO, Werner Vogels, reported how important and transforming APIs have become:
“Anything that was hardware and difficult to procure, provision and manage, now has an API and allows engineers to construct the systems they have always wanted to build….Data centers, servers, storage, databases, load-balancers and more are now all programmable through an API.”
Since APIs have become mainstream and table stakes for digital firms, an API provider must consider whether to offer its API for free or for pay. 3Scale CMO, Guillaume Balas, suggests that a company must first determine what it hopes to accomplish through the API:
“Not charging for your API access has definite advantages, such as improving branding and online presence and accelerating developers’ adoption … But don’t neglect the economics of your API business and the costs (infrastructure, management, maintenance, support, communication and promotion) associated with it.”
Layer 7 CMO, Dimitri Sirota, suggests that API providers subscribe to a mixed model when deploying an API:
“Have your API be free to start with and ask people to pay for higher grades of SLA, premium functionality, enhanced support, etc. Maybe offer a revenue share.”
Both executives make excellent points and deserve merit. However, the question to charge or not to charge is too simple in today’s API Economy. Although APIs once limited their exposure to internet giants and developers, everyone from the Federal Government to General Motors are now incorporating an API into their market strategy. Today, API transactions include endless amounts and types of data. Accordingly, the appropriate economic model for an API launch varies (and the variations will only increase). Since APIs and their associated pricing continue to find their legs in today’s marketplace, expect APIs providers experiment with free APIs, pay-to-play APIs, and don’t be surprised when the models change.