In an earlier blog I defined Monetize your Data as one of five API entry points. Charging money directly for your APIs is the obvious form of monetization. But might there be other ways of monetizing data that are not quite so direct?

The basic objective of the “Monetize your Data” entry point is broadening and strengthening of your Business Ecosystem, thereby increasing your revenue stream. In reality there is more than one way to achieve that objective, organically as well as non-organically.

The four approaches that I typically see are listed below. Choosing which approach to take is a fundamental business design decision. Choosing wisely will determine the success, or not, of your monetization API play.

Open APIsUsing this approach, the APIs are your product and increased revenue is derived in one of two ways:

- Charging a 3rd party for use of your APIs. Any public “for money” API fits this model.

- Increasing the volume of business transactions through 3rd party use of your API’s.

In the latter case the APIs themselves are free to use – in some cases you may even be paying a 3rd party to drive business through them. An example of free to use APIs is the Twitter APIs, driving tweet traffic through 3rd party apps, thereby increasing advertising revenue. A more partner centric example of Open APIs are the Westjet API’s, using IBM API Management to partner and open up new channels.

Note that with Open APIs, you relinquish control of the end user experience to whomever is driving traffic through your APIs.

Open PlatformThe platform is your product, made open by your APIs. These APIs are used to on-board either customers or partners. In contrast to the Open API’s approach, with an Open Platform the control of the end user experience remains with the platform owner.

The perhaps best known example of an open partner platform is amazon.com where 3rd party merchants through platform APIs can sell their goods through the Amazon experience.

Open EcosystemApple is the obvious example of this business model. Same as with an Open Platform, APIs are a way of on-boarding participants. The difference is that the “owner” of the ecosystem doesn’t necessarily participate directly, and certainly doesn’t control the complete end user experience. The “owner” of the ecosystem simply provides the business operating system as well as the channel reach.

In some ecosystems, APIs can themselves be (part of) what is being sold. In other ecosystems, apps are the primary product. In yet others, data may be the “currency”. It all depends on the nature of the ecosystem in question.

Organic InnovationIn the context of the monetization entry point, organic innovation is aimed at new products or new audiences. There is a fine line between this approach to monetization and the broader aimed Freedom to Innovate entry point. In practice the difference mostly matters for the set of APIs created to power innovation. If monetization is the only objective, the set of APIs tends to be small and focused on organic opportunities for new revenue streams, typically enabling cross LoB composite products. This is in contrast to a broader/general innovation play illustrated by the recent example of Asda George’s API hackathon.

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