The web is a platform, and every modern web developer relies on Application Programming Interfaces — APIs — as critical building blocks in their development process.
ProgrammableWeb — a pioneer in the cataloging of public APIs — currently lists 4,290 APIs on their site, from mega-platforms like Google Maps, Twitter and Facebook to uber-niche offerings like We Feel Fine (an art project that harvests feelings from blogs)
But of all the APIs out there, the ones that interest me the most are those that deliver money.
In the early ’90s, the Internet was just a place for goofy personal webpages and IRC chat. There weren’t enough people online for advertising to make much sense, and e-commerce sites made some money for the sellers, but not for anyone else. It was free and fun, but there wasn’t much money in it.
In 1994 CDnow brought the real-world concept of referral marketing to the web, and in 1996 Amazon introduced its Associates Program and took the idea mainstream. With a few lines of HTML, affiliate marketing programs turned any online publisher into a paid sales agent, generating commissions for sales of products they never touched. All of a sudden, those goofy personal webpages could make you money! The money API was born.
At about the same time that CDnow was introducing their pioneering BuyNow affiliate program, clickable banner advertising was taking root at HotWired, the digital publishing arm of Wired magazine (the media bible of the web’s early adopter set). This innovation was quickly followed by the development of the first ad server (in 1995), paving the way for the rapid development of an automated, ad-supported web.
Search marketing was the next big innovation in web monetization, but it wasn’t until Google introduced their AdSense program (based on the 2003 acquisition of Applied Semantics) that the web’s greatest money-spinner was offered as an API.
Like an affiliate program, AdSense-enabled publishers could now earn a share of revenue for the ad clicks they generated. But unlike any program that had ever existed before, Google could match their ads to your content, not the other way around (an innovation that’s now worth about $10B a year to Google, or 28% of their total revenue).
Now, instead of hustling on behalf of someone else, you could write about whatever you wanted and Google would find you relevant advertisers and start sending you money.
AdSense is still the most amazing “money API” on the web, but its best days may be behind it. As user attention shifts from PC-based web browsing to social networks like Facebook, social game environments like Zynga’s Ville franchise, and (my personal favorite) the app-centric world of iOS and Android devices, the field of 3rd-party monetization is suddenly wide open again.
There aren’t any clear leaders yet. Despite the fond hopes of traditional ad network operators, in-app monetization on mobile devices isn’t anything like web advertising. And selling virtual goods is huge business for game publishers and the big platform owners, but that hasn’t yet translated into a truly portable money API for games.
You can bet that Facebook is cranking away on an embeddable social advertising API to rival AdSense, and Twitter is thinking deep thoughts about how to monetize the intent embedded in their stream without pissing users off. But what about the rest of us?
We’ve already made a couple of very obvious “money API” bets at Founders Co-op — like Urban Airship in mobile and Big Door in gaming — but our core belief in the power of “money platforms” is written all over the portfolio.
Consider Bonanza (a selling platform for indie fashion retailers), or Deal Co-op (a white label platform for daily deals entrepreneurs), or GroupTalent (a labor market for high-end dev teams), or Smore (a promotional publishing platform for small business owners) — all of these services exist to help a specific group of entrepreneurs make more money, more easily.
If you’re an entrepreneur looking for inspiration for your next startup, think about what a “money API” would look like in the markets you know best. If it doesn’t exist yet, is legal, and uses the magic of software to help a lot of people make a lot more money, I’d love to hear about it.