Startup Idea #74: Small idea: Market for API access

As web services move toward open access, the use of web APIs inevitably will follow the same trend. As a service becomes popular, the burden of API calls will cause slowdowns and even crashing of the main service. While it is possible to remedy this problem by using additional servers, another approach is to design an economic solution: markets for API access.

I see this market evolving similarly to Amie Street. The initial batch of API access is free. As demand increases, the subsequent user has to pay a certain amount of fees. The fee will increase along with each additional user, until the point where the limit is hit. This is where it will get interesting.

Imagine now that there is a market where developers (or speculators) can start trading their access right like shares on the financial exchange. The opportunity here is to manage these exchanges, akin to how Intrade provides free prediction markets.

Business model? Give the software away for free. The revenue will come from aggregating the price information from these markets. Who will want these information. How about investors? The price information can be a good forecast for what are the potentially successful web services.

Alternatively, there is also an opportunity to build a derivative market on top of these exchanges. Sell these derivative instruments is going to bring in quite a large sum of $$.

Updated:
This article talks about how Twitter is relieving its access problem by restricting access. I think a better solution is the one I highlighted above.

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