Thoughts on Open APIs
By EoseolpeugunYB (http://www.systemplug.com)
2011-01-09
The world is now in the middle of an API disclosure war. I am not sure whether that phrase is exactly right, but it has certainly become an era in which many companies and developers are no longer focused on hiding the data they possess. Instead, they are thinking about how to reveal more of it and make it usable for others.
Isn't that remarkable? Only a few years ago, it felt like everyone was trying to prevent outsiders from using the data they had collected or built. Now even a company like Naver is trying to provide APIs.
The shift in corporate thinking began largely in the context of the explosive growth of Twitter. Even before Twitter, providing data through APIs was becoming more common, but Twitter offered a dramatic API with few traffic and data restrictions, built a strong third-party ecosystem, and created its own Twitter ecosystem around API usage.
1. A paradigm shift in the web ecosystem
For a long time, the web ecosystem was dominated by a strong tendency to trap users inside one service and provide a comprehensive offering so that they would not move elsewhere. As a result, other than a few dominant dot-com companies that had already built their own services, few new markets were being created, and the environment was becoming a league of incumbents.
But when companies such as Google began offering APIs so that their accumulated data could be used in different areas, new ecosystems started to emerge and the web paradigm itself began to change. That shift spread into many areas of the IT industry, and a word emerged to define it as a full-fledged trend: Web 2.0.
2. API policies that awakened closed companies
Many companies still failed to understand this current, and many still have not joined it. A representative example was the attempt by major U.S. media outlets to restrict how Google collected their content for search. Media companies did not want to give Google access to the content they had paid journalists to create, because they feared becoming dependent on Google and losing their influence over users as media organizations.
That concern led to strange policies, such as limiting readers to five articles a day. At that moment, however, certain companies rang the alarm bell for content businesses: blog-centered news services recognized as new media, such as The Huffington Post, Boing Boing, Mashable, and Gizmodo.
Unlike traditional media, these outlets allowed Google to use their content aggressively and embraced API-centered distribution strategies such as RSS and article sharing via Facebook and Twitter, creating new kinds of influence. Then, in 2010, The Huffington Post surpassed The Washington Post in online traffic and crossed the break-even point, creating a storm that shook the traditional media order.
In the end, other media companies were also forced to accept policies that made use of a range of API strategies already being used by newer media players.
3. Not just opening data, but sharing philosophy, and what about Korea?
This process should not be understood as merely establishing API data exchange as a new policy paradigm. What matters is understanding the philosophy hidden beneath it and the direction of new user needs. In media, for example, locking content up has reached its limits.
Put differently, it is no longer enough to trap users inside one framework and try to elicit a response by emphasizing internal philosophy and value alone. There are now too many interesting services. Rather than forcing users into a single platform, services have to integrate and expand into other services, offering forms of fun and value they could not create on their own.
But what about Korea? Consider Naver Open Cast. It cannot be used outside the framework Naver created. It must be used only within the Naver frame. And what about the newer Naver Me? Other than the services Naver itself provides, it is inconvenient to use anything else. That is exactly what begins from a lack of understanding of Web 2.0 and from a mismatch in philosophy.
4. The economics created by opening APIs
Through open APIs, Twitter built a platform with more than 100 million users, thousands of third-party applications, and a network of thousands of developers. Through that user network, it has been generating a wide variety of services and ideas that Twitter itself could not have created alone.
Although Twitter had only just fully entered its growth path and did not yet have a concrete revenue model, it was already building profits by using the large databases provided by its users, supplying information to Google and Microsoft, and exploring models such as Early Bird. Beyond APIs, Google opened Android as a mobile operating system and has moved to dominate the mobile advertising market, while Apple encouraged independent developers and built the iPhone's own content network, which became a major force behind device sales.
Even if it does not make money immediately, the market has already become business-driven through user participation and full-scale third-party involvement.
Conclusion
If we think about business, API economics is an indispensable policy and business model for responding to changes in users and changes in the era. Open APIs can give birth to entirely new services outside the platform and can even create new platforms. It may look like dependency, but the underlying philosophy matters.
The key point is that the ecosystem newly created outside the platform ultimately strengthens the influence of the platform that opened the API. The way YouTube's video database became stronger and new stars emerged through APIs provided by Google is exactly how the platform itself grows stronger, securing both new users and new revenue in the process.
This has been a somewhat simplified set of examples, but the important thing is that overseas, new services are being created and innovated on the basis of this kind of philosophy. Various Korean businesses, including Naver, need to recognize that reality.
