There has been all sorts of commentary recently about the new world of Web 2.0 applications and mashups built on "free" API's. Somewhere in all the excitement, people seem to have forgotten Robert Heinlein's famous warning:TANSTAAFL ("There Ain't No Such Thing As A Free Lunch..."). While mashups based on free API use are often innovative and sometimes delightful, the providers of the APIs being exploited in the mashups will eventually need to find some way to monetize the services they are providing or to at least limit the cost of providing these valuable services.
Google demonstrates what we can expect to soon see from other "Web 2.0" free API service providers. On April 11, Google announced on their AdWords blog that they will soon start charging a nominal fee for user of their AdWords API. They explain that they wish to "level playing field that encourages efficient coding and application design". Certainly, one could get crass and suggest that they are doing this "just for the money," however, the fees look to be so low that it is hard to believe that they will generate what Google would consider to be a significant revenue stream. It is easier to believe that Google has discovered something very similar to the "Tragedy of the Commons" in free API usage patterns. If a service is provided free, users of that service are simply not motivated to conserve or be efficient in their use of the service. Low efficiencies or excessive use of a free service impacts only the provider of the free service -- not the consumers of that service. Thus, Google is charging in order to move to its consumers some of the burden of use and thus some motivation to conserve. By aligning the interests of consumers more with those of the producer, it is hoped that all will benefit. The theory is good. Time will tell if it works.
