Pinterest is being touted as a web ecosystem platform that may potentially rival FaceBook. To be a web ecosystem platform, an online website property publishes an API enabling an ecosystem of 3rd developers. Once Pinterest publishes an API, 3rd party developers could extend core Pinterest functionality, enrich the user experience, and accelerate user adoption. According to recent reports, Silicon Valley entrepreneurs and investors are ready to ride user interest in Pinterest:
“When the API is available, Adam Ludwin at RRE, says he’s interested in entrepreneurs who can build on top of the platform, who can “close the loop” and figure out a way to monetize the interest around products on Pinterest. He’s interested in startups that will provide tools to facilitate transactions on and through Pinterest.”
But exposing an API can lead other companies capturing revenue otherwise directed to Pinterest. As reported recently by Jay Yarow, Pinterest
“might not release it [API] for a while, says an industry source familiar with Pinterest’s plans. This source says that Pinterest fears having a ‘Twitter problem.’”
What is the Twitter problem?
Twitter, the widely successful ‘open data’ messaging company, recently encountered head-on conflict with its ecosystem partners. Twitter’s open API and liberal terms of service yielded numerous ‘partnering’ organizations, who extended Twitter and made the basic service more usable through 3rd party applications. The problem for Twitter? Twitter didn’t have mechanisms in place to monetize their user base, had their customer ownership diluted, and the company increasingly saw external companies making money from their extensions. The solution, Twitter embarked on a costly and time consuming defensive strategy to buy Twitter clients, locked down access to their API, and disenfranchised the 3rd party developer community.
Om Malik of GigaOm rightly points out that the Twitter’s easy access policies were based on not defining their business model and then making appropriate decisions. Had Twitter been aware of its options and consequences from the early days, they may have defined a clearer ecosystem strategy. For example, Om states
“If Twitter at some point thought of itself as a media network, then its business model option would have included controlling the front end(s) to the service. Instead, it didn’t do any of those things. One logical explanation is that the service itself was evolving as it went along.”
While Pinterest is playing smart by moving cautiously, how should Pinterest effectively monetize user interest and create an engaging ecosystem?
An Ecosystem Platform Recommendation for Pinterest
With data APIs, users are always one step removed from the platform company. Intermediary applications (between the data provider and end user) have the opportunity to reshape the customer relationship. Rather than rely solely on data APIs, we have seen forward-thinking organizations create ecosystem platforms revolving around user experience APIs and domain specific hosting environments. With user experience APIs, the platform company can create an ‘Apple experience’; maintaining customer ownership by controlling the ‘look and feel’ and by authorizing third party extensions. Add in a 3rd party application hosting environment‘ (similar to SalesForce.com), and the ecosystem platform can manage Quality of Service (QoS), share monetization revenue, and enforce compliance regulations (e.g. PCI Security Standards, HIPAA, European Union Directive on Data Protection of 1995).
Instead of simply publishing data APIs, Pinterest could manage and host 3rd party applications within a multi-tenant cloud ecosystem platform. WSO2 clients are using WSO2 API Management and WSO2 AppFactory, a cloud ecosystem platform, to deploy context-aware APIs, rapidly provision 3rd party application projects, automate governance approval tasks, ensure regulatory compliance, monetize user interactions, and host applications that seamlessly extend the user experience.
The ecosystem platform environment also provides an opportunity for Pinterest’s partners to deeply embed their business capabilities within Pinterest’s application (similar to Force.com, eBay sellers, or Amazon Store environments). By hosting all business partners as tenant applications within a multi-tenant environment, the ecosystem environment more readily aggregate and share business information. Figure 3 illustrates how a complete middleware platform, API management, and Platform as a Service can be composed as an ecosystem platform.
Figure 1: Ecosystem Platform Environment
Pinterest is playing smart by moving cautiously and fully evaluating business models and core features before opening up their platform. To effectively monetize user interest and create an engaging ecosystem, we recommend Pinterest create ecosystem platforms revolving around user experience APIs and a domain specific hosting environment. WSO2 AppFactory, a cloud ecosystem platform, will enable Pinterest to deploy context-aware APIs, rapidly provision 3rd party application projects, automate governance approval tasks, ensure regulatory compliance, monetize user interactions, and host 3rd party applications that seamlessly extend the user experience.