The API Marketplace, Explained

7 min read

API Marketplaces are a popular way to monetize APIs, as more businesses seek to launch their API business. This blog will explore what an API marketplace is and how it operates. We will also examine some of the most popular examples of API marketplaces and their pros and cons. Finally, we will introduce an alternative to the API marketplace, the API portal, and how it can be your own API marketplace. So, with no further ado, let's take a look at the world of API marketplaces and see how they can fit your needs.

What is an API Marketplace?

Like any other marketplace on the Internet, this is a place primarily designed to sell and monetize APIs. APIs displayed on marketplaces are divided into different categories depending on the data or service they provide. And like any other items sold on a marketplace, they compete against each other.

API Marketplaces act like proxies and keys for API consumers to connect with them from the marketplace. They also can provide API documentation and terms of use.

What are examples of API Marketplaces?

RapidAPI Marketplace

Rapid API Marketplace is the largest API marketplace on the Internet. It claims to have 40,000 APIs referenced on its hub. This is a popular place for any developer looking for a specific API, and for API providers looking to monetize their API quickly as it is free of charge.

Unfortunately, some customers claim that latency is quite important, and the 20% fee on all transactions can be a barrier for many API providers. Many APIs also remain unverified.

API Layer Marketplace

API Layer Marketplace appears to be the main challenger to RapidAPI. Its API marketplace features a lot of APIs supported by API Layer itself, covering many different use cases. Compared to RapidAPI, the overall impression is that API Layer has fewer APIs to display. However,  all the external APIs are from established companies.

There is a 15% fee on all transactions.

AWS Marketplace

AWS Marketplace is a public space where companies can share and monetize software, services and APIs. This can be an easy solution for companies that are already using AWS services and the API Gateway. The overall user experience can sometimes be challenging for developers looking for a specific product.

Transaction fees are not publicly available, but they seem to vary between 13% and 20%, depending on the deployment method.

What are the pros and cons of API Marketplaces?

Pros: A quick solution to monetize on a small scale

The API Marketplace can be a good solution for the solo entrepreneur looking for a way to experiment with an API business idea. The platforms are usually free and easy to set up. Some, like RapidAPI, are well-known and developers searching for an API delivering data or a specific service are likely to use them.

If you have a personal project involving an API and you want to test the market, the API Marketplace can be a good first option.

Cons: Bad discoverability and hard to scale

On the downside, displaying APIs on a marketplace can turn out to be a short-sighted way to share and monetize an API.

The main weak spot of the API marketplace is discoverability. APIs are displayed under categories — meaning next to your direct competitors. And if the API marketplace doesn’t check them carefully, APIs from established companies can end up being displayed next to personal projects thereby lowering their value.

Fees are another pain point for API marketplace users. If the business grows, the static fee level will prove restrictive. Some marketplaces can lower the percentage fee applied to transactions, but most of them will stick to the same fee.

Branding remains quite limited too. All the APIs are displayed in the same way, with little room for customization. It is almost impossible for a company to establish itself and maintain its corporate identity on an API marketplace.

If you’re a startup or a bigger company, API marketplaces can quickly become limited. The more API consumers you will have, the more you will pay, making this option hard to scale.

The API Portal: an Alternative to the API Marketplace

What is an API Portal?

An API portal or store is a space owned by the API provider. The provider decides what type of monetization model to us, and can create API products to display different parts of its API depending on the specific use cases, thereby having a greater impact on the way the API is marketed. The API store also provides API management, documentation, logs, and insight analytics. Branding is also left to the API provider, as well as discoverability.

Unlike the API marketplace, the API portal is not limited by static fees and lack of customization, making it a more scalable option for startups and larger companies.

How the API Portal Outdoes the API Marketplace

For a while, the API Marketplace model had the upper hand for a simple reason: building a developer portal to share a company’s APIs from scratch was time-consuming and required a dedicated team. Meaning that, for a large proportion of smaller companies, having their own API Portal was beyond their reach.

But now that turnkey solutions exist, the attractiveness of the API Marketplace is challenged. The unified model of one single place to expose APIs has many shortcomings, similar to those e-commerce stores can come up against when they only sell their products on Amazon.

And even though displaying what they have to sell on Amazon is an amazing way to access millions of consumers in a click, it simultaneously exposes companies to a wide range of risks: copycats, being swamped by cheaper offers, or unfair competition from AmazonBasics.

API providers face the same issues when exposing on API Marketplaces. This is why a growing number of companies wanting to monetize APIs are turning to API Portals.

An API Portal gives the API provider total freedom to display the APIs however it wants. This can be in line with a company’s branding and connected to its main website through a custom domain name, helping establish better visibility with SEO.

Solutions like Blobr offer something similar to Shopify for e-commerce: the possibility of owning the marketplace and adapting it to meet the needs of the API provider.

Final words

API Marketplaces have their shortcomings but can be a good start for a limited number of use cases, mainly for companies wanting to try out the business potential of an API. But for companies of all sizes, the API Portal is the go-to choice when the value of an API starts to increase. It provides all the necessary features to share and/or monetize any APIs, and more flexibility and control for API providers, allowing better branding, discoverability, and scalability. With API Portal solutions like Blobr, you can create your own API portal and fully leverage the potential of your APIs.

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