The Business Case for Separating API Management and Monetization

APIs are no longer simply a technical asset; they are increasingly becoming a core revenue generator for businesses. As companies look to capitalize on their APIs, they face a critical decision: should they use the API monetization features bundled with their API management (APIM) gateway or opt for a separate, specialized solution?

While combining API management and monetization under one "roof" may seem convenient, this approach can create significant drawbacks. Below, I'll outline why it's often better to separate these functions and highlight the pitfalls of using a bundled solution.

Full disclosure: obviously, Revenium has some "skin in this game," but we've had a sufficient number of conversations with clients who weren't aware of the pitfalls and potential drawbacks involved in this decision, and we wanted to summarize and share the most common discussion points. In some situations, a built-in monetization solution is adequate; we will also share perspectives on that approach.

As companies look to capitalize on their APIs, they face a critical decision: should they use the API monetization features bundled with their API management (APIM) gateway or opt for a separate, specialized solution?

Different Stakeholders, Different Domains: Engineering vs. Commercial

API gateways and monetization platforms cater to different audiences. Gateways are designed to support primarily IT and engineering teams, emphasizing traffic management, security, and operational metrics. On the other hand, API monetization is a business activity involving sales, marketing, and finance teams.

Attempting to satisfy to both user groups can lead to unnecessary friction.

• Misaligned Resources: Engineers end up handling tickets for non-technical tasks like setting prices for API packages, updating marketing descriptions, or managing subscription tiers. This is a misuse of their skill set and can lead to frustration on both sides: engineers are bogged down with commercial tasks, while sales and marketing teams face delays in executing go-to-market strategies.
• Security Risks: To enable sales and marketing teams to update pricing or package details, they to be granted access to the API management environment. This broadens the attack surface and exposes sensitive gateway configurations to non-technical personnel, introducing potential security vulnerabilities..

In brief, integrating these functions brings commercial requirements into an engineering setting, resulting in inefficiencies, decreased job satisfaction, and avoidable security risks.

Specialized Needs Require Specialized Solutions

API monetization is a complex and evolving domain that requires dedicated development and product functionality that is not currently a priority for most APIM vendors.

• Lack of Focus and Investment: Gateway providers earn revenue primarily from traffic management and security features  – not monetization. As a result, monetization capabilities receive little ongoing investment or live perpetually on a product roadmap - not in the product. Basic monetization features may be present, but the nuanced, evolving needs of commercial API products are often left unmet.
• Gaps in Business-Critical Analytics: While gateways excel at delivering technical metrics like latency, error rates, and uptime, they also need to provide the necessary business analytics to manage an commercialized API product. Metrics crucial to product and sales teams—such as activation rates, abandonment rates, daily active users (DAU), and monthly active users (MAU)—are frequently missing. These insights are vital for pricing strategies, customer retention, and understanding the API's business impact.
• Slow Adaptation to New Market Needs: Capturing and monetizing tokens consumed from AI services is becoming a more common use case for API monetization, but this functionality falls far outside the typical roadmap of an APIM provider. Specialized monetization solutions are better positioned to adapt quickly to emerging needs.

Vendor Lock-In and Technology Dependence

By tying your API monetization to a specific APIM vendor, you risk entangling your business strategy with your technology stack in ways that are difficult to unwind:

• Loss of Flexibility: If your monetization strategy is deeply integrated with your APIM provider, changing platforms becomes more than a technical challenge—it becomes a business obstacle. Commercial, finance, and sales teams that depend on your current monetization setup must accept any change, making switching providers more difficult without causing significant internal disruption.
• Cross-Platform Monetization Challenges: If you need to monetize an API hosted on a different platform than your current APIM solution, you face a tough choice: re-platform the API, which will likely be met with resistance from your developers, or forgo monetization altogether. Either way, the business suffers, and your developers and engineers will be understandably frustrated.

A Real-World Perspective: How is Revenium Different?

We have observed these issues being demonstrated in real-world scenarios, prompting us to design Revenium as a distinct, specialized solution for API monetization.

Revenium helps businesses avoid the pitfalls of vendor lock-in, security risks, and misaligned responsibilities that come with bundled solutions.

We have witnessed firsthand the frustration and inefficiency that arise when companies depend on APIM vendor monetization features and wish to assist other businesses in avoiding the same mistakes.

When Does Bundled Monetization Make Sense?

If you are a small organization that will only ever use one APIM platform and your API monetization needs are simplistic and unlikely to change, the basic capabilities offered by your APIM vendor might suffice. However, if your organization meets only some of these criteria, relying on a bundled monetization solution could expose you to significant future security, operational, and strategic risks.‍

Conclusion

API monetization is a critical and specialized function that deserves a dedicated platform, separate from the complexities and constraints of your API management gateway. Keeping these two functions distinct empowers your teams to work more effectively, safeguards your technology stack, and sets your business up for long-term success.

When planning your API strategy, consider the real costs and risks associated with bundling monetization with management and make a choice that aligns with both your technical and commercial needs.

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