Tracking the Growth of the API Economy Art Anthony April 18, 2016 APIs are nothing new. Salesforce and eBay first allowed access to their web APIs in the year 2000, and other organizations were tinkering with the idea of exposing endpoints even before that. The past few years, however, have seen such explosive growth that the API space is evolving more rapidly than ever before. Like “big data” and “the cloud” did before them, APIs are enjoying mass exposure and appeal to individuals beyond core groups of developers who deal with them on a daily basis. But how does this growth compare with forecasts a few years ago? Is it sustainable? And why exactly has the space grown so rapidly? Growth by the Numbers Back in 2012, GetElastic and Monetate estimated that we would see 30,000 APIs by 2016. As it turns out, these estimates were a little on the high side. The ProgrammableWeb directory of APIs reported that in 2015, just shy of 2,000 APIs were added to the site. This works out to around 40 APIs being added per week, and the total number of APIs represented on the directory currently stands at around 15,000. Note that these numbers may be deceptive for a couple of reasons. First, there are now other API directories that need to be taken into account. For example, APIhound estimates there are 50,000 public web APIs, and APIs.io tracks over 1,000. Although there is certainly much overlap, some of these APIs may not yet reside in the manually curated PW.com directory. More importantly, none of these numbers take into consideration the wealth of private or partner APIs that exist, which some estimate may even outnumber the public total. Some organizations only bundle access to their API through premium accounts, effectively making them less visible. These may not always be listed on app marketplaces because information about them is scarce or actively kept hidden, a discrepancy that Craig Burton has identified: “[The] key thing to consider here is that these numbers are based on publicly available APIs and do not reflect any private API growth at all… In all likelihood, any glitches that we see in Open API growth are expected to happen as the private sector catches up or even surpasses Open API growth.” Another thing that early projections may not have taken into account is that so many developers would trust consuming third party APIs rather than building internal solutions themselves. For example, there’s only one MailChimp API but ProgrammableWeb cites 15 mashups that have been built using it. The Birth of B2D Writing for the Graydon blog, Alice Payne posits B2D, or “business to developer”, as a new form of marketing that has emerged primarily as a result of APIs. If you’re reading this post, you’re undoubtedly already aware that APIs are big business. But what you may not know, and what many early API growth projections did not necessarily take into account, is just how dominant some APIs are in their spaces today. Look at the rate of API calls for any popular API in recent years and you’ll see a graph shape that displays rapid growth: Source: MailChimp Source: Netflix The Netflix API has since turned private so there’s no fresh data to compare, but MailChimp more than quintupled the amount of API requests they handle each day to more than 50 million by 2015 and 80 million by the beginning of 2016. They also have a development fund worth 1 million dollars devoted to encouraging up and coming devs to build using their API. Given all of this, it’s easy to see why so many devs are compelled to use dominant APIs that are already out there and have established a good reputation rather than trusting a newer, smaller API provider. On the other side of the coin, this also accounts for why some would-be API providers haven’t bothered trying to compete with the big players in the market. Essentially, emerging monopolies in the space could account for a leveling effect of the exponential growth ratio of APIs, but doesn’t at all translate to a capping of actual total API calls. Growth by Sectors The growth of the API economy isn’t due to any one factor, rather a perfect storm of sectors emerging that all rely on APIs to some degree. Below we take a look at a few of the major ones, which are particularly important because they’ve helped to demonstrate the usefulness of APIs to the general population. API consumer market APIs are no longer viewed as complicated, stuffy services that only experienced developers can use. Apps like IFTTT and Zapier are interesting because they’ve opened up the functionality of APIs to non-devs. If you’ve ever seen someone cross-posting on Instagram, Facebook, and Twitter simultaneously then you’ve likely seen IFTTT in action. While it’s true that many hugely popular apps make use of APIs, they usually do so in such a way that the average consumer probably doesn’t realize it. Zapier and IFTTT are among the first to transparently use APIs in a way that the average Internet user can understand. In the same way that Myspace enabled a generation of amateur coders by allowing the use of HTML to create custom profile pages, IFTTT and Zapier are creating amateur API consumers by encouraging them to create their own recipes or Zaps. What makes this particularly important is that it’s going on at the same time as the emergence of the Internet of Things. IoT The Internet of Things is a notable use for APIs because it represents another area in which the general public will become more familiar with the inner workings of APIs. We’ve previously written at length on how APIs drive the IoT, and others have too, but it bears repeating just how important the relationship is, especially as IoT design is still evolving. Time will tell exactly how prevalent IoT enabled devices become, but the rapid adoption of smart wearables hooked up to Nike+, Amazon’s Echo, and so on suggests that there’s definitely an audience for the sort of hyperconnected world that the Internet of Things promises. In fact, 44% of API providers surveyed by Smartbear in 2016 believe that IoT will drive the most API growth in the next two years. FinTech Finance is typically an area that has been very slow to warm up to new technology, sticking with tried and tested methods that have been around for years. However, enough banks and financial institutions have embraced change that there are some exciting developments in FinTech. APIs are changing the face of personal banking – as well as that of the financial space more generally – with quicker onboarding processes, partnerships and better integration with other services representing just a few of the changes that have taken place in recent years. APIs also have a vital role to play in the world of cryptocurrency, such as with Block.io, who use APIs to provide a wallet that can store Litecoin, Dogecoin and bitcoin in one place, as well as enabling users to build apps to process transactions, forward payments and create different types of secure wallets. Social Networks There are billions of smartphones in use across the world, with over 200 million in the U.S. alone, and countless mobile services are built on APIs to the extent that they rely on them to function properly. The data below is a few years old but demonstrates, even then, how important APIs are to the social space. Source: API Frenzy – SlideShare Apps like iAlien and TweetDeck, mobile clients for Reddit and Twitter, only came into existence thanks to open APIs from the two sites. Reddit didn’t even offer an official mobile app for a long time, and TweetDeck was ultimately acquired by Twitter in 2011 after being identified as a key factor in the company’s mobile growth. As social networks continue to appear, grow and evolve, third party developers and APIs will continue to play a vital role in the process of expansion via mobile and desktop apps. Also Read Ten New Breeds of Businesses That Have Emerged out of the API Economy B2B Products and Services The B2B space is another area in which APIs continue to have a significant impact. A common growth technique for startups and other growing companies is to create integrations with other organizations, either by manually linking up their APIs or through a third party like OneSaaS, often with the aim of reducing the amount of time that has to be spent on entering data more than once. Another thing to consider is the way in which some organizations include access to their API as a perk to customers above certain price points. For example, Salesforce allows integration via web service API only to Enterprise and Unlimited customers. It’s worth noting that they generate 50% of their revenue through APIs. Integration, and thus APIs as well, continues to be a key factor for B2B organizations and the idea of “connectedness” is one that persists. 41.4% of those surveyed by Smartbear responded that integration with existing tools is the first thing they look at when assessing the potential for using an API, and 39% cite better interaction between products/services they use as the second most important issue they deal with when using tools in the workplace. Final Thoughts Some of the numbers above suggest that API growth is slowing down, but this is nowhere near true to the degree that you might deduce. Source: ProgrammableWeb Notice the way that the above graph, which looked exponential in 2013, starts to level out towards the end. This is a trend that continued into 2014 and into 2016, but it could actually be argued that this is a good thing. “Hockey stick growth” is often unsustainable and, in the case of APIs, might indicate a glut of subpar or unreliable products. Given the importance of uptime and scalability in the API space, that could be damaging to the reputation of APIs as a whole. It could be said that the API space is maturing, growing horizontally rather than vertically. The trend honeymoon, during which many organizations jumped on the open API bandwagon because it was seen as “the thing to do” … only to abandon/retire them soon after, is over but the usage of APIs continues to explode. The number of APIs may not be growing at the rate that was predicted a few years ago, though it’s not too far off, but their usage and the surrounding economy of services shows no signs of stalling. With the mainstreaming of APIs through popular services that make use of them, organizations making APIs a serious factor in their business model and the progress of mobile technology and the Internet of Things, there’s little doubt that the space will continue to grow and flourish at a rapid pace.