Mashups, APIs Help Make Money, Panel Suggests

When looking at how to make money off Web 2.0-based applications, some companies are recommending building and offering mashups as the key to creating profit centers.

Adam Gross with Salesforce.com, Kapow Technologies founder and CTO Stefan Andreasen, and Mashery CEO Oren Michels debated the best way to not only help an enterprise streamline its own procedures but to develop application programming interfaces and turn them into a revenue stream.

"Fundamentally you will have API producers and API consumers," Gross said during a breakout session at the Web 2.0 Expo on Wednesday. "And each time a new API comes out, there is a lot of excitement in the community on how to commercialize them."

Companies such as Microsoft, Google, and others are releasing APIs that were developed internally to help the public build portals and other Web browser sites that are combinations of several disparate elements, sometimes called mashups. The most obvious example is to combine Google Maps code on a Web site that also aggregates financial data from a second source.

The panel, speaking mostly to independent software vendors and developers, showed how using APIs and mashups could solve the CIO's dilemma of both increasing productivity as well as making money for the company.

For example, Salesforce.com's Gross highlighted on-demand e-commerce company Infopia, which builds an application for managing eBay listings.

"EBay is happy with the mashup because they want more people to sell things on their site. Infopia is happy because people are using their APIs," Gross said. The API is available on Salesforce.com's AppExchange platform.

They also highlighted examples of combining CRM APIs with Google's AdWords as well as Skype Internet phone service.

Mashery's Michels said these type of API repositories are especially helpful for companies without a ton of developer resources. Mashery offers on-demand API infrastructure with no up-front costs and the promise of first-year savings of more than 90% compared with developing the same software in-house. Salesforce.com's revenue model is based on a per-seat subscription basis.

Developing APIs for mashups also addresses what the panelists agreed was a long tail that exists inside and outside a business. The long tail is a reference to Chris Anderson's 2004 Wired Magazine article suggesting that half of the marketplace is served by traditional vendors and the other half is served by niche companies.

"We have talked with companies with more than 5,000 internal Web sites and no API," Andreasen said. "There are company-wide applications such as CRM and ERP systems run by a central IT department, but the majority of Web sites and applications are not."

A recent McKinsey report suggests 40% of a company's energy is spent doing tacit tasks, such as copying financial data into an Excel spreadsheet by hand. A company building APIs around Representational State Transfer (REST), RSS, SOAP, and Atom feeds could increase levels of productivity that were inaccessible until now, Andreasen noted

There is no forseeable trend as to what kinds of enterprise mashups are up and coming, the panelists noted. But they agreed there was a significant need to offer an online as well as an offline product. "Because," Michels quipped, "you're always going to find yourself on an airplane at some point."