kidmercury

API is the acronym given to the term "Application Programming Interface." APIs allow computer programs to "talk" to each other. For instance, on my trading site, my site talks with Google Translates API, and thus utilizes Google's translation technology to translate the web pages on my site into foreign languages.

What's in it for Google? A few things:

1. When I hook my web site up to Google Translate's API, Google gets a closer look at my web pages, and what words I am looking to translate. By processing this information, Google creates new information, which it can use to refine its algorithms.

2. They could charge me for using the API.

3. They could embed advertising.

Of course, the larger issue here is who gets to say how the API is used? Meaning can Google just inject ads in there any time they please? Could they intentionally mistranslate things for their own amusement?

The answer is both yes and no: yes they can do it, but not if they plan on having people use their API. As technology develops and entirely new services are created simply by grabbing and remixing APIs (you can check out a whole bunch of stuff built this way over at Programmable Web), the rules behind APIs will become more important. I believe entire technology ecosystems will develop with different technology rules. Each ecosystem will be appropriate based on what people value -- some folks will want different technology rights than others.

Why does this matter? Because increasingly you are going to have to work with APIs to remain competitive (it is just the same as working with others, the advantage is that it allows you to accomplish much more), the rules behind APIs will become more important. Specifically, profits are going to be created, and while not always, I think increasingly companies will want a stake in the profits their APIs generate. The rules behind this, in my opinion, will dictate how ecosystems on the web evolve.

I would also add that local communities are where transactions will occur. Craigslist is the crowning achievement in this regard; they build local communities, and enable local transactions. However, I am referring to local not only in the geographical sense, but also in the conceptual sense; people who are fans of a very niche topic are a small, local community as well. Musicians with their own cult following are my favorite example.

And if the transaction is occuring in local communities, what's that mean for big "catch all" type of communities like MySpace, Facebook, Twitter, YouTube, etc? Well, it means they won't be getting a piece of the transaction. Unless, of course, they do it through their API. But that remains a dicey prospect, and I remain skeptical if any of them can pull it off -- I think the ideal API is basically a full-blown content management system, a lot like what Ning has in mind, though I favor the open source route and the server independence it offers. In either event, I don't see truly revolutionary APIs yet, with the exception of Google Adsense (the Google ads you see on people's web sites), if one regards that as an API.

Ultimately, the catch all communities are not as powerful as they think, and the little communities built on top of the "catch all" communities will find it easier than they think to walk away. It is the little, local community that is in charge on the Internet -- not the big, massive, annoying central government, which is in charge in the "real" world (meaning the world of lies). And that revolution in governance is at the heart of the revolution the Internet is here to bring us.