Sometimes these days interoperability seems like a lost cause in the technology world. Twitter has been making life hard for startups that make Twitter clients; Facebook has been making life equally hard for Twitter; and Google is preventing anyone else from adding content to its own social network, Google+.
But even as the aforementioned advertising-driven companies have made life hard for developers, enterprise companies have proven that software interfaces for web interoperability can be reliable and robust – powerful enough, even, to build a company on.
Leading the charge has been Amazon, whose web services and software interfaces, or APIs, have emerged as key startup building blocks. Amazon’s S3 storage service and EC2 virtual server service have been like the polar opposite of the Twitter API: Steady where Twitter has been unpredictable, scalable where Twitter has imposed tight limits, and open ended where Twitter has been closed.
But the biggest and most obvious difference between the constrictive Twitter API and the empowering Amazon API is this: The former is free, while the latter costs money. In other words, paying Amazon up front can actually reduce costs long term compared to a free API like Twitter’s, since there’s less volatility and risk in the API itself. (A fair number of startups who bet big on the Twitter API are now cursing the decision, as Wired has documented previously.)
Amazon is hardly the only example of how it pays to bet on software interfaces with a solid revenue stream behind them. Salesforce.com, for example does brisk business with its paid platform cloud Heroku and with its App Exchange, which sells software that runs on its paid core customer relationship management offering. Even Apple’s iOS app store, while essentially free for developers, illustrates how much money can be made writing for a platform that serves paying customers.
“In the consumer world, API’s are usually driven by companies who also have their own direct-to-consumer offering, and thus there is inherent potential conflict in them leveraging their data and user base versus enabling others,” says Matt Murphy, a general partner at Kleiner Perkins Caufield & Byers who has overseen the venture capital firm’s mobile-focused iFund.
Outside of the consumer world, the case for providing a robust API is more clear-cut. Murphy cited as on example of this Twilio, which offers a paid API to connect applications to phone services like text messages, recorded information lines, and conference calls.
Companies like Twilio that make lots of revenue offering software interfaces have an incentive to maintain and improve those interfaces and to keep those interfaces open and running smoothly. That means building on such interfaces is safer, as a rule.
“You need to be mindful of the competitive dynamics,” says Paul Buchheit, a former Google engineer whose startup FriendFeed built on APIs from Facebook, Twitter, Flickr, and others. “The simplest question to ask is if the platform is the product, or if it exists mainly to support another product. The Amazon Web Services platform is the product, and so it’s unlikely that Amazon would do anything to harm the platform. However, in the case of Twitter, the platform is just a feature, and so they will do whatever they believe is best for the core Twitter product, even if that means killing the platform.”
“iOS is kind of in the in-between space of platform as product and platform as feature, and the obviously exercise much more control than Amazon does. I’d be very wary of building an iOS app that somehow competes with Apple, for example.”
Of course, paying customers don’t guarantee a software interface is reliable, just nor does a lack thereof mean a software interface is flaky. Google’s App Engine, for example, offers a paid API that has been criticized as unreliable and constrictive.
GitHub, meanwhile, has built an innovative business around the native API of the free, open-source software revision tracker git.
As a general guideline, however, you can safely assume that if you’re not paying money for an API now, there’s a good chance you’ll be paying, somehow, for your usage later.
The Power of Paying: What Consumer Hotshots Can Learn From Corporate Drudges
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