Interface Remixers will Pay for Privilege of APIs

Jonathan Boutelle brings up an interesting point after attending the BayCHI Web2.0 panel the other day: the Web 2.0 companies heavily promoting their APIs (Technorati, Flickr, Google) are glad to have developers create interesting new interfaces out of them…unless you want to make money from that interface.

This discussion is just the tip of the iceberg.

Think about this for a second. These companies are all testing the waters here in Web 2.0 world. They’re creating, maintaining, and optimizing their APIs for usefulness, while promoting developer adoption as fast as they can. Technorati is pushing tags, Flickr is pushing photo sharing, and Google is pushing maps. Developers, curious to know what they can create with these APIs, are making cool things such as Housingmaps.com and the Flickr tag browser.

The problem is that there has been no discussion about who can make money where. According to Boutelle, these companies don’t want you to make any money without talking to them first (which means they want some of it). This makes sense, of course, because that’s what the APIs are presumably being built for. So, anybody building remixed interaction interfaces ought to think twice about how they’re going to make money from it (if that is their intent).

Interestingly, not all companies ask for part of the pie in the same way. Amazon, for example, actually pays for developers to use their APIs by giving them referral fees for any products bought.

Another issue that Boutelle relates came from Paul Rademacher of Housingmaps. He pointed out that because remixers (those building interfaces atop of public APIs) don’t own the database, they compete on the functionality and utility of their interface only. This is a much more level playing field than if you owned the back end.

So, one lesson here is that even though these APIs are public, they’re not free, and it highlights further that a lot of business leverage in Web 2.0 is in the database, not the interface.

However, that’s not to say that for every useful interface paradigm we see, there won’t be a market there. For example, if a company comes up with the best real estate interface for Google Maps, say…Housingmaps…and they capture enough of the market before others can, they will begin to have leverage over other copycat interfaces simply because that’s what people use. Sure, they’ll pay royalties to Google, but the bigger they become the more leverage they have to negotiate with Google for future slices of the pie.