Discover more from Fogplug by Thor Ingham
Episode 3: Tesla, Apple Music, Spotify - APIs in the real world
Welcome to today's episode where we're discussing the fascinating world of APIs and how they're transforming our experiences in the real world. From Tesla's use of Spotify to Apple's music onboarding process. We're exploring how businesses are leveraging their APIs to their advantage and why it's important to consider your role in the API economy. An API is an application programming interface. In this context, APIs provide an interface with a contract specifying the expected input and output that others can consume.
The data could be stock prices, restaurant locations. Or in this case, an API for music.
So what is API management? To me, API management is the solution used for publishing and securing a digital product in the form of an API.
API management will typically provide a CMS, a content management system, for hosting your API documentation. This is where you can offer and design the API. You will also typically have a runtime engine, referred to as an API gateway. The gateway will have features such as securing your API or throttling how many times an external person or application can invoke your API.
Publishing your API allows you to define different access tiers. For instance, an API could be free to use, or it could be behind a payment. The API Management solution will typically allow one to define different tiers. The payment in my opinion should focus on the experience e.g. throttle the free tier and ask payment for more frequent usage. In addition to technical feature one could also provide better support for paid users and redirect the free users to a community forum.
The title is Tesla, apple music, and Spotify. And APIs is in the real world.
As a Tesla driver, I can attest Tesla revolutionized how we view cars. It's an experience, not just another means of transportation. Tesla provides over-the-air updates that provide enhancements or even new features. The car started without Spotify and now has Tidal, Apple music, YouTube, Twitch and games fully integrated.
I won't cover updates improving self-driving; that's a different discussion. To me, Tesla transformed how we think about technology in vehicles. The Tesla vehicles are digital platforms.
When it comes to customer service, they have an app. Based on problem submission and feedback, their system is unparalleled. Whenever I've had an issue with my car, Tesla comes to my home and fixes it on site. Tesla handle their service process through the Tesla app from reporting the problem to providing feedback, even payment if needed is done via the app.
A fun fact about my Tesla, which is a Tesla model three performance. It does zero to 100 kilometers an hour in 3.0 seconds. Thats, 62 miles per hour in three seconds. Even if one does not think the digital experience is all that, no one can say that it is not fun to drive.
However what's even more interesting is how they've incorporated various digital products into the cars. So Tesla consumes API APIs and give their drivers more. Let's think about this. Tesla makes cars while Spotify and apple provide music and podcasts. Spotify, which are the API available before apple entered the streaming markets, provide the Tesla with a differentiator. And now every single Tesla sold comes with Spotify for free. But what about apple music? How will apple get people to use this service instead of Spotify? Remember apple just recently. Released their API and made it available for Tesla.
From my perspective, apple, they are not doing much. Although I did personally switch to apple music because of my apple TV, my apple family, that arcade subscription. It doesn't make financial sense for me to keep paying for Spotify family. Now that it's available in my car. And the onboarding process. It was frictionless. I simply scan the QR code with my phone in the car and voila. It will set up. This is what we've referred to as an onboarding process for your API. Yeah, it has to be easy if it's not easy. People will stick to what they're already using. So not all API APIs are created equal Spotify as API, for example, allows me to stream on my X-Box my PlayStation. And my dedicated media stream is without relying on the phone to stream the data. Meanwhile, what apple does is they offer airplay. So unless you use a Sonos device or a Google home speaker you will be streaming from your phone to your device.
This could be due to some sort of exclusive contract. An example of digital products, having different tiers as I mentioned earlier.
What does this mean for businesses? Well, if you offer a service that others can benefit from you, you need to create an API. You need to promote it. And if you promote it, you can be part of the API economy. Now integration is key here. A robust integration that serves an API will make or break a great API.
By choosing the right API management solution can be tricky. And this is why I recommend looking into IBM API connect or software AGS, webMethods. Dot IO platform. Both of which are safe to deploy on the internet and trusted by a vast majority of banks, insurance companies, retailers. You name it?
If you have a business. And that business is selling. Let's say, take away food. You need to be on Foodora. Or a similar service and it has to work. If you offer financing. Then you need a API so that you can be integrated with online marketplaces where transactions happen. If you are the first. Then you might not be needed on the marketplace. Or have a hard time. Being better than the first listing.
So if you have a library of content or a service that others can benefit from then creating an API. To open up and share that content or service is crucial. By developing an API and making your content and services accessible to others. You can join the growing API economy. You will let us see, I'm talking about public API.
I'm talking about public KPIs in a way. Where we are exposing beta. To others outside the organization. There are times when you might want to open up API APIs within your organization. And that's. Totally fine. Just make sure that you're. Creating API APIs. That do not expose your internal legacy systems directly.
You should be be creating. What we call an API facade pattern. You should be hiding the intricacies. And difficulties and legacy. Of your old systems. There's no need to use an API management solution as a proxy for existing services. If. Those existing services are trash. Another nice thing by creating proper digital products and exposing them as API APIs is that it will make it easier to. Swap out all that applications with new applications because your consumers they're relying on a contract as mentioned earlier. The contract that defines what data they need to send and what data they. Expect to get. This contract can be created using your business language. And it doesn't have to contain. Any single reference to. Your backend systems.
The API economy and this refers to the. Ecosystem of application programming, interfaces, or API APIs. That are available for developers to tap into and build upon. Companies that provide API APIs are enabling developers to create new applications and services that leverage their content and services.
It not only spreads the reach and impact of your company's offerings. But it also fosters innovation.
We have an example in Norway where. The National Rail company published an API that would allow you to. Provide a location and then get their response, which would state when the next train is arriving at your station.
They forgot about the API that didn't publish it or do any marketing around it.
But one day there was a developer who had one of the first smartwatches, a pebble watch. This person created an application for his pebble watch and for his train station. And after he wrote an article about what he had done they soon realised that. Ah, Somebody else can use our API to create new services using our data. This is a good thing. And just a very simple example of if you publish and make something available, others will do something smart with it.
Some other examples of companies that have embraced the API economy include YouTube, Twitter, Facebook, and Salesforce. These companies have opened up API APIs to their platforms, which has enabled external developers to create new applications. And the integrations that extend the functionality of the services.
There are even examples of companies that rely on these API APIs. Um, they are more than just a new service, then they're an entirely new business.
So by promoting an API for your library of content. YouTube can participate in this API economy. And benefit from increased reach engagement and even revenue opportunities. It's important to remember that deep and comprehensive integration.
It's absolutely essential, robust, seamless integrations that provide a cohesive API experience will make or break an otherwise great API.
You can dress up a farm pig with makeup and lipstick, but at the end of the day, it's still just the pig.
To put it another way. API integration is like a chain is only as strong as its weakest link. If there are gaps, inconsistencies, or a lack of cohesion across these integrations the overall user experience will suffer greatly.
The most stunning visual design and cutting edge features cannot compensate for a fragmented disjointed API integration strategy. Users will quickly become frustrated with the lack of flow and harmony across the integrations.
Just like lipstick and makeup cannot transform a pig into something it's not. Uh, Brady API facade can not mask the deeper issues of weak integrations and lack of cohesion. For an API to truly succeed and gain widespread adoption. The integration that provides a seamless end to end experience is absolutely required. Anything less, it's like dressing up a pig in lipstick. It may look nice on the surface. That is still a pig. I think I've made myself clear here.
Nice services, foster great experience.
So ask yourself the following question. What is my place in the API economy? We have developed a set of frameworks and guidelines for API development, API governance, and how to structure organisations to effectively implement an API strategy.
If we look at tools, IBM, API connect is a great API management solution. It has an API gateway. That's safe to deploy on the internet and it's trusted by a vast majority of banks and insurance companies. I'd recommend looking into this one.
If you're a Microsoft Azure customer and you need to get started quickly until IBM offers there's as a service on Azure. They currently have it on AWS and on IBM cloud. So in the meantime, I would check out Software AG with their webmethods.io platform. You can even use your Microsoft credits to pay for it. One could say that Software AG is leading the pack on Azure. It really is a one click deploy. And in my opinion, it's miles ahead of Microsoft API solution. Depending on your requirements. Of course.
It's relatively easy to choose an API management solution these days, as long as you can ensure that it's capable of running on any cloud computing platform, as well as in any on-premise data center using the same skillset. Life is simply too difficult and complicated to rely on native solutions for two different cloud platforms and yet another solution for on-premise infrastructure. But at least this my personal opinion on the matter.
We are just over 30 developers in our company. And we would never be able to call ourselves an expert. On everything. So we target Software AG webMethods and IBM middleware. While there are many options available for API management, trying to use multiple disparate solutions across various deployment environments can quickly become an untangle situation. It will introduce unnecessary complexity and will reduce your operational efficiency. Your teams will have to maintain expertise and manage the differences of each platform. A single unified API management solution that can span both cloud and on-premise infrastructure is ideal. It will abstract the way the underlying complexity for developers and enable a consistent experience across environments.
Such an approach also allows for a more seamless deployment. It will reduce friction. It will reduce bottlenecks. And it will help you deliver APIs.
Though, employing native solutions for each platform has its benefits in some regards, the initial challenge out weighs, these benefits for most organisations. So in my view, flexibility and simplicity afforded by a platform agnostic API management solution is preferable in the vast majority of cases. But again, that's my personal opinion based on my experience.
APIs are becoming increasingly important in our digital world. Whether you're a business selling takeaway food or offering financing, you need to consider your place in the API economy. And remember the key to success is integration. So let's dive into some examples of consumer API is that you might've come across.
There are a number of examples of businesses that have grown significantly. Leave due to the API economy. Twilio. Twilio is a cloud communication platform that provides API is for businesses to build communication solutions. Like messaging, voice and video capabilities into their applications. Taking an API driven approach has allowed businesses to add the communication features to their applications without needing to build them from scratch. As a result, Twilio has grown rapidly. Their revenue has increased from 160 or so million dollars in 2014. To just over a billion in 2019, and it keeps growing.
Another example from financing is Stripe. So Stripe is a payment processing platform that provides API for businesses to accept payments online. Their API driven approach has made it really easy for businesses to integrate payment processing into their applications without needing to set up a separate merchant account. Stripe successes. Reflected in its rapid growth with the company being valued at over 95 billion in 2021. Stripe is actually so easy to implement in your online store. That they provide you. I think it's five or six. 5 6, 7 lines of code. You have to write to be able to accept billing. And that's pretty great. I'm remember. Stripe isn't the bank. They're just an API that allows you to interact with the banking and finance systems available. Now Shopify is an e-commerce platform that provides API is for businesses to create online stores. Their API driven approach allows businesses to customize their online stores and integrate them with other applications. So they provide you with payment processes and shipping providers. Shopify has seen a huge grift and they increased from 200 million. In 2015. To nearly 3 billion in 2020.
And another example that I believe everybody that's heard about is Airbnb. Airbnb is a platform. They provide an API for third party developers to build applications that integrate with Airbnb booking system. Airbnb doesn't own a single apartment or a single house or a single flat. They just provide a platform where people can list a room or residency.
Finally, there's a site called commodities-api.com. They offer a marketplace for consumer goods and pricing. So what you can see is prices of various commodities. For instance, if I wanted to have the latest price specific date or even today's date. I could go to their API and they will get the prize for coffee. I'll get the prize for burnt oil and I'll get the prize for corn and lumber. Many examples. They also have a very simple pricing tier. I mentioned earlier, the tiers of pricing. It's how you distinguish your customers or consumers for your API and manage a way to potentially monetize it. Commoditites-api.com have done this. They offer a free tier. Which gives you 100 API invocations a month for free and they will give you limited support. They will only give you new data on a 60 minute interval. And they will give you some historical data. And so on.
Now, if you go up to that professional tier. You can have. 10,000 API calls a month. You can have an SLA for your API consumption, you will have access to premium support and you get updates every 60 seconds.And for this, they charge a hundred dollars a month.
If you like the service and use it for your app or website and you see that you're a success. Then you can probably happily pay a hundred dollars for the data. If this provides an even better service for your customers.
The interesting thing with the data they have is that you could probably predict market movement to some extent, and then help to understand what industry is to invest in.
Going back to the title of the podcast, we'll look into Apple and what Apple has done. Apple acquired a company called Shazam, in 2018. This acquisition was driven by several factors. First off the technology was already integrated into the Apple eco system to some extent. This allowed us to identify which song is playing. What I think Apple wanted to achieve by acquiring Shazam was to fully integrate the technology into its ecosystem and offer us a more seamless experience. Shazam has a massive database of music and audio. Which could help apple improve its music recommendation algorithms and enhance the user experience of Apple's music streaming service. Apple music. A third reason for buying it is that they may have been interested in Shazams advertising and affiliate marketing capabilities to enhance their own advertising efforts and generate additional revenue streams.
And finally, my guess is they bought Shazam as a strategic move to prevent, for instance, Spotify from acquiring a company and potentially integrating the technology into Spotify. Shazam will allow apple to improve its technology. Enhance its music streaming service and strengthen its position in the digital music market.
The way Shazam works is via an app. Or they used to have an app. They might still have an app. And then would you use your devices microphone, you would capture a sample of the audio playing and then it would compare it to a database for music. Shazam would tell you, this is the song that's playing.
Now, this is interesting. How can you make money? From an idea like this. My guess is that Shazams business model, at least in the early days was primarily based on advertising and partnerships. So you would have a free version which had limited functionality, and then you would have a paid version of the app with additional features.
Shazam also had a business model centered around advertising and partnerships, with a free version of the app having limited functionality and a paid version with additional features. Shazam partnered with music labels and artists to offer exclusive content promotions and merchandise to users who Shazamed their music. They also generated revenue through affiliate marketing, earning a commission on any purchase made through links to services like Apple Music or Spotify. Now I suspect they also had a significant, big data monetization in place. I would be astonished if there were not a payday behind that. And they, that enabled record labels to observe emerging trends and determined which artists they should promote more vigorously in real time. Based on how people were using their app that could predict which music. People were listening to and which new music people were trying to figure out the name of. They could probably heat map a certain song is popular in New York, but not really that popular in let's say Oslo or in Stockholm.
And this is. A pretty good use case for big data. And an interesting thing to think about.
This would also help you target advertising based on users, listening histories and interests. And now remember they didn't have music or any physical products. They just built a service. On top of public companies or APIs.
So moving on to successfully transition an organization into a digital platform business. The leaders of the company must cultivate an open-minded mentality that welcomes innovative ideas and fresh perspectives. You need to adopt a flexible approach towards technology that enables the development and launch of new digital platforms as well as strategic partnerships. It's also crucial to implement the system for managing. Digital assets. This system could include processes for creating new assets. Updating existing assets. I'm retiring obsolete assets.
You probably need to restructure your organization and redesign compensation plans to prioritize digital platforms over standalone products and services. You need to devise a novel method of handling risk and intellectual property rights that align with a digital business model. In which critical assets are shared with partners.
By embracing an open mindset and adopting a malleable stance on the technology, actively managing key digital assets, reorganizing around platforms and mitigating risks, in innovative ways. Companies can successfully transform themselves into a digital platform business. However, this transformation requires effort from leaders and willingness from employers to pivot towards the new digital first mentality.
I understand that if you are in the business of selling dairy products you're probably not going to be a digital, only company. It still remains true that you need to do some organizational changes at the very least, you need to have a business product owner for digital assets.
Cmpanies that fail to understand that APIs are a software product in their own rights and do not manage them with the same care and strategic oversight as they do their other offerings, they will ultimately struggle.
Treating an API simply as a technical capability, rather than full products with life cycles, roadmaps and business models is a recipe for missing opportunities.
And seeding the ground to more API savvy competitors. APIs they're not just technical interfaces sitting in the background that enable applications to integrate with data and services. They are vital means of reaching new customer segments, forging partnerships, generating revenue, and improving operational efficiency.
By recognizing APIs as strategic assets and weaving them into broader business and technology strategies, companies can gain significant competitive advantages and achieve innovation at scale. This includes building more powerful partnerships, releasing new offerings, and scaling faster with greater flexibility. Furthermore, integrating APIs can provide deeper insight into the needs of customers and partners.
In short, companies that fail to do so risk falling further and further behind in today's digital marketplace. As you can hear, this is more of a people and process problem than a technology problem. The technology is available. The technology is mature. Using the technology correctly - that's a different story.
So for this podcast. I've discussed the importance of application programming interfaces, or APIs for businesses. I've talked about how businesses and companies can successfully transition into a digital platform company. However companies must treat API strategic products rather than just technical tools. You need to actively manage API is by creating, updating, and retiring them. So to become a digital platform company and succeed with APIs, you mus adopt an open and flexible mentality. You should restructure around digital platforms and digital platform teams. And you need to find new ways to handle the risk.
So this episode was meant to give you some ideas to chew on. I'd be up for chatting about your API APIs and where you are at building them. I talk to you soon.