So.
Hey, everyone.
My name is Navdeep.
And in this video, we're going to talk about the different types of APIs we have.
So let's say there is a company who have built a unique piece of technology, and this company want
other companies to use that piece of technology.
So they can use two different approach.
Either they can open source the code base so that other companies can use it.
The second option is they can monetize that.
Unique technology by building an API on the top of that specific function.
So broadly, we have these four different types.
The first one is free, and it is the simplest API driven business model that allows developers to access
the API freely.
So if you look at the APIs of Google Translate or all the government database you have, you can simply
fetch the data and they don't really charge anything for that.
Now, for government and public sector, that makes sense because those people wanted to provide information
to the people.
But the reason Google is giving their Google Translate APIs for free is because Google wanted to make
sure that they have a lot more data in this technology so that they can improve the translation.
And that's why they are giving out this specific piece of technology for free so that people can use
it.
They can feed more amount of data to this system and we can improve that and later maybe they're going
to monetize it.
So that's your free APIs.
Then we have developers.
B So if a developers is paying a specific amount for using an API and a good example is AWS or Stripe
or Twilio, and these companies can use four different types of pricing model.
So if you look at companies like AWS, they use pay as you go pricing along with tiered pricing.
So if you remember in the last video we were discussing about how Amazon Web Service, which is a cloud
computing platform of Amazon, is using pay as you go along with tiered pricing into their S3 bucket.
That is a simple storage bucket where you can store all your media assets.
So we saw that AWS had three tiers.
In tier one, you will get 50 TB of space for a specific amount and if you exceed that space, you have
to pay a small amount for every additional gigabyte of data you use and that's your pay as you go.
Bundle up with tiered pricing.
Now, another company that will charge developer to use their API in pay as you go pricing model is
openai.
And this company is getting a lot more popularity recently because they have announced a new product
called GPT three.
So every time you hit a request to check GPT three, you're using an API and open AI company is charging
based on the amount of APIs you are using.
So if you're hitting more number of requests to open AI, they will charge a higher amount and that's
your pay as you go pricing.
We are developers are paying for these API.
Then you have freemium.
And a really good example of freemium APIs is that in freemium, these companies will give you certain
API calls for free and if you exceed that limit, then you have to pay for the additional API calls.
So if you look at companies like GitHub and Gimlet, I used to work for this company that's come late
and they were giving us 14 API calls for free.
And if you exceed that limit then you have to pay for that.
The fourth one is unit based and a really good example of unit based pricing model is Twilio and MailChimp.
So if you send more number of emails or messages to your customer, you have to pay a higher amount
to Twilio and MailChimp.
And the last one is transaction fees.
If you accept more payment from Stripe, in that case, you have to pay them on every single transaction.
So Stripe normally charge 2.9% on every single transaction with 30 cent as the transfer fees, and that's
your transaction fees pricing model.
So over here the developers are paying to utilize these API services given by all these different types
of businesses.
In the next part, let's understand how developers will get paid if they use these APIs.
So now we have an API monetization model where the developers get paid if they use these API and you
can divide these into two different parts, you have your revenue share and affiliate.
So if you're using Google AdSense API in your website, then Google will show their ads on your website
to your user and that's your Google AdSense API.
So let's say if you have a website with 1 million user and your user are reading a lot more on your
website, in that case, you can simply sign up for Google AdSense.
If they approve your website, you can simply take their API or a JavaScript snippet and you can integrate
that in your website.
And every time your website will load up, they will simply show the ads from Google and you will get
a 45% revenue share from Google and that's your revenue share API.
So you are using an API and the company is paying you for that.
The second one is Affiliate, which works exactly like Google AdSense.
So let's say if you have a lot more YouTube subscriber or let's say if you have a good blog and if you
wanted to promote some product, well, you can simply give the affiliate link of those product on your
website or let's say on your YouTube description and your audience can just buy those product with this
link and you will get paid affiliate commission maybe, let's say around 5 to 10%, and that's your
affiliate APIs that you are using in your blog post or in your YouTube video so that the company can
share their revenue with you because you are giving them the customer.
So you may have one question in mind that no, how exactly does a company decide how much amount to
pay to a specific developer if they are using their affiliate API?
Well, there are three different types of ways a company can decide the amount you have CPA, CPC and
sign up slash referral.
Let's start with CBA.
No CPAs cost per action.
So let's say you are giving an affiliate link of a product and ten customer are clicking on that link,
but only two people are paying for that product.
In that case, you only have to purchase, so you will only get the commission for these two purchase
that is cost per action.
Then we have cost per click.
So let's say if these ten customer are clicking on a link.
You will get paid for all these ten customer because they are just taking out the product and you are
building awareness for that specific product.
That's your CPC.
Then you have sign up or referral.
So let's say if I have a medium account and I'm giving my referral link or sign up link to you, and
if you sign up using that link and if you take a premium subscription of Medium, then I will get some
referral bonus and that's your sign up and referral.
So in short, in this monetization model, the developers get paid by using these APIs.
So now you understand three different monetization model of an API.
Let's talk about the last monetization model where a company is paid indirectly if somebody else will
use their API and this have four different category, the number one is content acquisition.
And a really good example is Google Business Review API.
So so if you search about a business or a startup on Google, you can simply look at the review and
the rating of that business along with the opening and closing time.
And Google is taking the help from other people so that they can review these businesses.
Now, Google took it a step further and they have opened these Google Business Review APIs.
So if a mobile developer wanted to integrate these Google Business Review API in their mobile app,
they can do that.
So let's say if you like a business, you can simply give the review about that business within the
mobile app.
And once you submit that review, that review will reflect on the Google business page.
If somebody search about their business on Google and that's your content acquisition.
Second is content syndication.
And if you have seen product comparison apps or classified or vertical search platform, that's a really
good example of content syndication.
So let's say platforms like eBay and Amazon have opened their APIs so that other businesses can build
their website and they can compare all these different products across these e commerce app.
And they do it by utilizing their API.
So let's say you have a website where you can compare the price of MacBook across all the e commerce
platform.
Now what you are exactly doing is that you are fetching the data from all the e commerce platform in
the real time with the help of these API and these e commerce companies have intentionally.
Open these APIs for you so that you can compare a product and then buy that product from one of these
e commerce website.
And that's your content syndication, all the product comparison app and the classified.
Or let's say if you are booking your flight ticket or train ticket from all these super app, then all
of this is a really good example of.
Content syndication where the company is paid indirectly if a customer really likes the price or the
value proposition.
Third one is upselling.
So let's say you are a developer and you have built a unique piece of technology and you have open sourced
it so majority of people can use it by themselves.
But if some enterprise wanted to build a custom solution on the top of your technology, then they may
need your help for that.
In that case, you can upsell a premium service or you can maintain their product and work maybe full
time or part time with them.
And that's your upselling value proposition.
The fourth one is brand building.
Now, Facebook has built an open source documentation platform called docu Sauce, and Facebook is just
giving that for free to the people so that they can build a brand in the open source community.
Now just like this, you have all these different APIs in different domain in payments.
You have Stripe Square, Phoenix in e commerce, you can use APIs of Shopify, BigCommerce Magento.
In messaging, you have Twilio, SendGrid message board.
Then you have identity API verification, data management, logistic forms.
You can just pause the video and you can look at how these different companies are giving their APIs
to these developer so that they can utilize their service and they are charging on the number of requests
they are hitting.
So that's all about the API licensing business model and how these different companies are licensing
their API so that the developer can use a specific product or a service and they can pay on the amount
of API request they are hitting.