Here at Mashup University being held at the Computer History Museum in Silicon Valley, I had a chance to catch up with Dave Nielsen (pictured left) who is the Developers Program director at the Mountain View-based StrikeIron. I have been meaning to catch up with him ever since the first Mashup Camp because of the way StrikeIron seemed to be out in a largely uncharted territory where few other API providers have gone when it came to the business models behind the various mashup API's out on the Web.
Today, the business model for most APIs is still unclear. Many of them -- for examples the ones from Google, Yahoo, A9 (Amazon's search subsidiary) and others are free for usage as long as that usage is non-commercial. How or why that makes sense remains to be seen but it's clear that traction with developers is very important in the strategic scheme of things for many of the more forward thinking Internet players. Another model that's delivering an ROI now is the one where a financial transaction takes place at the end of a particular API's execution. The APIs for eBay's PayPal service come to mind.
StrikeIron however is working a third and far more bleeding edge pay-per-API-execution model which is why I wanted to find out more from Nielsen about the company's model since it requires some special infrastructure from a security and transactional point of view -- an infrastructure that very few companies have in place. As it turns out, StrikeIron is more of an intermediary than it is an original API publisher, working with companies like Dunn & Bradstreet that want to provide APIs to developers on some sort of cost basis (per execution, a monthly fee for all you can eat, etc.) and that don't want to be bothered with overcome the same technical challenges (aka: reinventing the same wheel) that StrikeIron has already taken care of. StrikeIron does take a piece of the action.
Going back to the many writeups we've done here on ZDNet regarding the benefits of outsourcing, if you're at a company that has an API that you'd like to connect to a transactional engine, you have to decide whether inventing that sort of infrastructure equates to a competitive differentiator or, if it makes more sense to simply outsource those things that don't differentiate you from the others and focus your investments on those areas where you set your company apart from the competition.
My podcast interview of Nielsen -- a part of a special ZDNet series of podcasts I'm calling The Mashup Files, can be download manually or, if you're subscribed to ZDNet's IT Matters series of podcasts, it'll be downloaded to your system or MP3 player automatically (see ZDNet’s podcasts: How to tune in).
Disclosure: In the spirit of media transparency, I want to disclose that in addition to my day job at ZDNet, I'm also a co-organizer of Mashup Camp and Mashup University. StrikeIron, which is mentioned in this story, is a sponsor of Mashup University. Google, also mentioned in this story, is a sponsor of both events. For more information on my involvement with these events, see the special disclosure page that I've prepared and published here on ZDNet.