5 Steps To Building An API Marketplace

Marketplaces are making increasing use of Application Programmer Interfaces (APIs) to grow their business, although they typically just offer API subscriptions to marketplace users. However, obtaining the maximum benefit from APIs requires the marketplace to actively promote their use so the marketplace can deliver more apps and services. A true API marketplace should help its users publish APIs by providing supporting tools and documentation. It should also allow users to discuss APIs with each other, especially to provide the API developer with feedback. The following steps will help you build your API marketplace and capitalize on your users’ creativity, which will generate income and build customer loyalty.

1. Exercise Governance

A marketplace needs to control the publication of APIs to meet business and regulatory requirements. Governance is also necessary to ensure APIs meet the marketplace’s standards for technical specifications such as access control rules, naming conventions and URL patterns. A bottom-up approach is often the most effective method of governing APIs without stifling developer creativity. For example, you can implement a decentralized publishing model that allows each business unit the discretion to decide how it designs and publishes its own APIs. A centralized system can then apply the marketplace’s governance policies to ensure the API meets organizational standards before it’s published.

Related: How To Gain New Users For Your Marketplace

2. Implement an API Portal

Marketplaces have historically used a single portal that allows developers to subscribe to APIs. However, an API marketplace should contain multiple portals, each of which accepts a particular type of API or developer. For example, customers, partners and professional developers could use separate portals to access APIs. Furthermore, financial APIs could go through a different portal than telecommunication APIs. Some marketplaces also use portals to differentiate between internal and external APIs.

API portals can provide a means of community collaboration by allowing developers to receive feedback on their APIs. Developers can submit a prototype that users can test with a dummy backend and discuss in a forum on the developer portal. Assume for this example that a digital services provider has an API environment that allows users to create apps for the company’s mobile platform. This system has two separate portals, one for the developers and one for the users. This approach allows the company to offers users apps from many multiple sources, including businesses, government agencies and non-profit organizations.

3. Promote API Use

The use of incentives to encourage API use is essential for maintaining their success in a marketplace. This approach ensures that API developers will continue to publish useful APIs and application developers will use those APIs when building applications.

Digital service providers frequently offer programs that allow developers to share the revenues generated from the applications they publish on the company’s app store. A digital marketplace may not be able to offer financial incentives, but there are other ways of driving API adoption. For example, marketplaces can recognize the best API publishers by maintaining a leader board with their achievements. Marketplaces can also track the most popular APIs and display the number of their subscribers on the developer portal’s dashboard.

4. Monetize APIs

Marketplaces are increasingly likely generate revenue with APIs, including selling them selling them directly to application developers. A typical model for this process includes a revenue-splitting arrangement that allows the marketplace to keep 30 percent of the revenue created by the apps using the API, with the developer keeping the remaining 70 percent. Other methods of generating revenue with APIs include assessing fees for their use, often by using a charge-back model. Usage reports are essential for this step, since they will provide the metrics needed to calculate the division of revenue. A marketplace that doesn’t monetize APIs still needs to track API usage, even if it’s just to inform developers when they may need to upgrade their subscription levels.

Related: How To Tackle And Measure Marketplace ROI

5. Incorporate Analytics

A business will need to obtain insights into API use once an API marketplace becomes functional. This capability can be incorporated as a complete platform or individual tools, depending on the marketplace’s requirements. Analytics use key metrics to provide real-time insights into APIs such as performance bottlenecks and security issues. They can also be run in batch mode to identify long-term trends on APIs, including availability, usage across geographic locations, latency, request timeouts and abnormal responses. A dashboard on the API portal can help business managers and IT staff visualize these trends effectively.

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