June 17, 2021
Aligning Your API Strategy with API Marketplaces
What Is an API Marketplace?
Whether you’re an API publisher or a developer that consumes APIs, it’s important to develop a strategy for how you will conduct your business. Publishers need to generate awareness of their APIs so developers can find them. Developers, who are usually searching for specific functionality, need an efficient way to find APIs that meet their requirements.
Enter the API Marketplace! Like any brick-and-mortar store or e-commerce site, an API Marketplace brings sellers and buyers together. If you want pizza, you call the local pizza place. If you need a book, you can go to Amazon.com. If you want to buy or sell APIs, you go to an API Marketplace where providers can list them and developers can consume them.
A typical API Marketplace enables developers to find and connect to APIs by providing categories, collections, and search capabilities. This makes it easy to find a particular API type or specific functionality. Developers can also compare APIs and see pricing, endpoints, and other relevant information to decide which API best suits their needs.
On the provider side, an API Marketplace allows providers to publish APIs so developers can discover them. The Marketplace also allows providers to monetize their APIs, usually by creating different subscription plans. Providers can publish APIs without having to worry about payment systems, user management processes, or other supporting infrastructure.
API Marketplaces vs. API Portals
Before API Marketplaces became prevalent, API publishers typically relied on API portals. These portals, which are still in use, are either custom-developed or created from a template API management product. They are usually deployed by a single API provider, and much like an API Marketplace, they allow developers to understand, integrate with, and deploy the provider’s APIs.
Portals also deliver API documentation in conjunction with an API specification and include features like explorers and tutorials. These allow developers to securely onboard with the API provider by creating API keys or OAuth credentials.
An API Marketplace differs from a portal in its ability to aggregate many API providers into a single view. So from the publisher’s perspective, the question is: Do you want to be on a “street corner” all by yourself selling your API?
There’s no competition but very little traffic. Or is it better to be in a crowded marketplace? There are many competitors, but also many developers milling around.
API Marketplace Benefits
In comparison to an API portal that offers a single API, an API Marketplace adds enough value for both publishers and developers to make it worth their while to participate within an ecosystem of many APIs and developers.
[API Marketplace Benefits Infographic]
- Enables APIs to be known by developers and helps measure market demand.
- Fosters participation and encourages use by making APIs easier to find and easier to use.
- Provides forums to receive feedback from developers.
- Posts educational guides and hosts online events for publishing APIs.
- Offers the ability to browse to see which APIs are on the market and which ones provide the required features.
- Provides forums to hear about what other developers think about an API.
- Posts educational guides and hosts online events for creating APIs.
- Establishes rankings, tables, and statistics to identify successful APIs.
As these benefits suggest, what’s good for publishers is often good for developers—and vice versa.
Incentives and Monetization to Promote Reuse
A key feature to look for in an API Marketplace is whether the host incorporates incentives to promote API adoption. For example, a publisher and developer might share revenues derived from the apps the developer builds by using the publisher’s APIs. This approach aligns with the trend of API Marketplaces, which enable businesses to generate revenue from products sold to third-parties.
A Business Leader’s Guide to APIs
API Marketplaces generate business by monetizing APIs via two methods. With the first, indirect monetization, companies reach more customers and generate wider use of APIs. An example would be a leisure company that publishes an API program to enable travel companies, tour operators, and hotels to upsell excursion tickets. Using the API is free, but each time a ticket is sold, the leisure company and the company that sold the ticket split the revenue.
In contrast, the direct monetization method involves a publisher directly charging the developer for the use of an API. The publisher sells a service, and the developer uses the API to enhance an application. Publishers will need analytics to track usage if they charge for each API use, or they have the option of a one-time flat fee for unlimited API use.
Governance to Ensure Standards and Performance
Another factor to consider in selecting an API Marketplace is whether the host maintains control over the publishing of the APIs. This includes who can publish and where they can publish. Ideally, the host should ensure APIs are published in compliance with standards covering URLs, naming conventions, and access.
The leading API Marketplaces also use analytics to identify issues with site performance, availability, and security. Other key performance metrics for an API to look at include faulty calls, latencies, usage, registrations, throttling, and response times.
The Future for API Marketplaces
To ensure that validated publishers and developers can find each other and work together productively, a key facet of future API Marketplaces to look for will be third-party attestation. To participate in an API Marketplace, both groups will need to pass audits to prove they are either offering a legitimate API or have legitimate use of an API.
Taking this approach will make sure API Marketplaces thrive and that neither group wastes time working with illegitimate or unethical parties. More importantly, APIs with value will generate significant revenue or other benefits for both publishers and developers.
APIs are a vital component of the products we build at 3Pillar Global. Whether you are struggling with your current APIs, or planning an API strategy, be sure to download our Business Leader's Guide to APIs eBook. To learn how we can help your product development efforts, contact an expert today.