An API-related news item that caught my interest earlier today speaks volumes about the nature of the burgeoning API market. Kobo (a seller of eBook readers), has decided to stop using the open book recommendation and review API provided by Goodreads. The reason? The social site for avid readers was acquired a few months ago by Amazon, which just happens to lead the eBook reader market with its Kindle product.
Acquisitions impacting business partnerships isn’t a new concept. But this event is significant because it highlights a few truths in the Web API space…
APIs Can Change Hands
At one time, Kobo was using a public API offered by a company that had developed a review and recommendation engine that was a serious competitor to Amazon’s. But – post-acquisition – Kobo found itself in the awkward position of doing business with its main competitor. Not a deal-breaker in itself but it shifted the relationship enough that Kobo had to walk away.
APIs Need to be Mutually Beneficial
Doing business with a competitor is a normal part of most large operations and when your competitor casts as massive a shadow as Amazon does, it becomes almost unavoidable. But public API consumers like Kobo can find themselves in the unenviable position of not having any leverage when consuming a free API. To support a long-lasting business relationship, it is important that both sides benefit from the contract. Kobo’s benefit was obvious – offering readers a high-quality recommendation and review interface translated to a richer user experience and increased sales potential.
So, what did Goodreads get out of the arrangement? From the site’s public terms of service, it appears that marketability and branding were big drivers, as API consumers must display Goodreads branding and links to comply. Kobo may have made a special commercial arrangement with the Goodreads site in order to use its API commercially but it is unlikely to have been one that would have benefited Amazon enough to make it worth supporting a competitor. Once Amazon purchased the Goodreads company and its data, the balance of benefit shifted towards Kobo.
API Providers Can Lose Customers
What I find most fascinating about this story is the fact that Kobo stopped using the Goodreads API before Amazon forced it to. As far as I can tell, the terms haven’t changed significantly, the data is still available and Amazon has stated that it plans to keep the API open for Kobo. Despite all this, Kobo made a decision to walk away. Perhaps taking a hit on features now made more sense than being at the mercy of one of its biggest competitors. For API providers, it is a reminder that your consumers aren’t forced to continue using your APIs. In the future, providers may find that keeping consumers happy becomes just as important as finding them in the first place.
API Consumers Need to Consider the Worst
After Amazon acquired Goodreads, some apprehensive users sought out alternative sites. While some of these reading sites offer APIs, it appears Kobo has decided to harvest data on its own, having recently announced its entrance into the social reading arena. Putting aside the chances of success, this strategic move highlights the need for businesses to plan for data and service disruption. It means considering the potential impact of having the API you’ve built a business on disappear, even if temporarily. As any lawyer will tell you, planning for divorce before you get married is just common sense.
This decision may be a turning point for one of the companies in this story but that isn’t why I found it interesting. Instead, it is a stark reminder that market forces can have a great impact on the APIs we are learning to rely upon. We often focus on the technical and design aspects of Web APIs but we mustn’t forget that they exist within a dynamic market and both providers and consumers need to be vigilant about handling change.