April 18, 2007

John Hagel on the "end of web 2.0 innocence" meme.

For the large Internet API platform providers, there is also an important caution. Sustaining a straddle between a platform business and an end-user business may become increasingly challenging. If you become too greedy in terms of expanding into the end-user businesses of companies using your API platform, you may find that your platform business becomes less attractive. Before you start eating the young that are nourished by your APIs, you might want to be sure there are no other food sources to sustain you.

I suspect that sustaining the right balance in the Web 2.0 ecosystem over time will hinge on a new development – charging relatively nominal fees for API use. This will put increasing pressure on API users to come up with viable business models and reduce the incentive for API providers to compete with their API users.


chad said...

i think the short story here is the minute a startup starts making any money on a mashup, they can expect the big boys they're depending on to try and cut their throats. this is normal corporate behavior, shouldn't surprise anyone. and it doesn't mean that mashup business are all doomed, but it is very analagous to trying to sell windows utilities in the 80s and havingg microsoft decide to throw a clone into the next rev of the OS (except that this time, upgrades happen overnight for all users, so mashup roadkill has far less time to react than windows roadkill used to).

Composing said...

Good point. Nothing new about platform venders eating their co-dependents. If anything's new it's the speed at which that can happen and the precariousness of the co-dependents.

On the other hand, as Trivers pointed out in 1971 there can still be reasons for the platform vendors to co-operate.