NEW YORK (AdAge.com) -- Looking for a good flick to watch tonight? Visit Instantwatcher, which marries New York Times critics' picks with the Netflix streaming-movie catalog. Interested in updating your music collection? Visit ArtistExplorer, which combines the Billboard charts with BestBuy.com's inventory database.
Neither Netflix nor Best Buy made the applications—but both made them possible by opening up their APIs.
You've likely been hearing a lot about APIs lately, and the concept isn't as confusing as it sounds. An open API simply means you've launched an interface that lets third-party software interact with your data; and those third parties can then mash the data up and build useful new tools on top of it.
Geoff Bremner, CEO of Modern Climate, a Minneapolis-based agency that's worked with Best Buy's API, described an API as "a wall full of electrical outlets, each with a label: customer data, pricing data, inventory. We can just plug into that and we don't have to talk to anyone in IT at Best Buy."
Open APIs allowed thousands of outside developers to create games and apps for Facebook, fueling the social network's growth and spawning the massive mobile app ecosystem we know today. Perhaps the best example of how an open API can spur innovation comes from Twitter. Soon after opening up its API, a bevy of third-party applications, from Twidroid on the Android smartphone to Tweetdeck on Adobe Air, were launched, making Twitter immeasurably more useful.
In some ways, opening up APIs means tapping into an army of technologists. Netflix opened up its API about a year and a half ago, offering developers access to its movie catalog, and 6,500 developers have registered to use it. Hundreds of apps have been born out of it, including simple things like adding movies to your queue from your phone or watching trailers, said Steve Swasey, VP-communications at Netflix. "It's stuff we want to get to but just can't because we're limited by time and money," he said.
Its most high-profile example was the $1 million Netflix Prize, awarded as part of a challenge to see who could use Netflix movie-ratings data to build a recommendation engine 10% better than Netflix's current tool.
"We paid a million dollars to a team of scientists, but we got research for about 10 cents an hour," said Mr. Swasey, of the Netflix Prize. "We had world class PhDs, computer scientists, statisticians. We could hire a few people and hope they perform or we could throw open a worldwide competition that brings in the best minds from all over the world."
Tesco in the U.K. recently opened up an API and hosted a Hack Night for developers who could create shopping-list tools and mobile apps with the grocer's data. Etsy.com has launched an API and has 45,000 developers building shopping tools and Etsy iPhone apps. And Gap opened up a limited set of its product data for iPhone developers to use as they competed to create a mobile app for the retailer.
But it's early days, and many marketers are still scared, said Armando Alves, a web strategist in the Lisbon offices of global digital shop FullSix, who's written about the topic on his blog, A Source of Inspiration. They're scared of releasing something they've previously considered proprietary or letting third parties use their logo. And, he writes, they rightfully should be asking themselves: How do we marry the need to respect legal and privacy issues while also offering up data interesting enough to entice developers to work with it? Firms such as Mashery, which help companies manage their APIs and consumer data, help the problem. But Mr. Alves sees another trend that gives him hope he'll see more open APIs from marketers: Governments have started to open up data.
"I'm curious how brands will wake up to this reality -- usually it's not the government that's ahead of the curve," he said. "It's not a competitive advantage to have some kind of data locked in if that relates to innovation."
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