Finally, someone’s attempted to put some numbers behind the mashup “economy”. In this case, Matt McAlister posits that the traffic you lose on your main site has the potential to be made up by revenues from “mashup partners” which are sharing their ad revenue with you.
I’m not going to argue with Matt’s numbers (though if people are getting $30 CPM in the US, I’m in the wrong country). What I’m going to softly question is the assumption behind that business model: that people will easily make deals with “mashup partners” which will release revenue.
My gripe with this isn’t technical – it’s surely going to be possible to come up with a system whereby API keys for mashups are only awarded to people you have deals with. But there’s a philosophical problem here – mashups to date have only really worked because the likes of Google and Amazon and Yahoo! have made their APIs available to all and sundry with very low bars for entry (indeed, lots of the commentary around these APIs has been explicit in recommending that these bars are set really, really low). This has unlocked a torrent of creativity. But if you were to stick a business contract which stated that revenues on any mashup product need to be shared, I’d wager that the takeup of these API keys would collapse. After all, most of the people making these mashups are militantly anti-registration and even anti-commercialisation.
And then there’s the administrative issue. Someone has to look after all these contracts with mashup partners. Someone has to account for them, manage them, renew them and police them. I’m sure Google and Yahoo! have got very sophisticated data munging techniques for checking who’s got their API keys and how they’re using them, but I bet the minute you put a paper trail behind that it starts getting really difficult. In other words, it won’t scale.
Personally, I think the only business case behind mashups, if you’re a content owner or an ecommerce player, is simply this: does it drive traffic to my main, revenue-generating site? How much stuff do I have to “give away” to make that happen? Of course, this doesn’t apply to Google and Yahoo!, because at the end of the day they’ll make money as long as AdSense of YPN ads appear on the mashup. But for everyone else – it’s still going to be about page views or item purchases. IMHO.
PS: Someone emailed me last week to say “oh, so you’re down on APIs now, right?” Absolutely not so. APIs play a key role for content publishers, as long as they’re done in such a way that doesn’t put business value at risk. The balance between unlocking the creativity of the network and suddenly finding that you’ve ripped value out of your business is very fine, I reckon. Unless, like I say, you’re a portal with an ad network to foster. But let’s not mistake one business model for another…