Developing a mashup can be a lot of fun and it's usually low cost, because you're using (semi) open tools and data. Forget fun though for a minute - is there a business in mashups? There are obvious benefits for the data providers, for example both Google and craigslist benefit from increased traffic to their sites. In most cases that leads to increased revenue as well. But what's in it for the mashup developer, apart from publicity and prestige?

Findory developer Greg Linden listed some problems with mashups as a business on his blog near the end of 2005. He noted that mashups have no service guarantees, there are usually limits on the queries of APIs and limits on commercial use of the APIs, mashups can be numbingly slow, and there are no barriers to entry.

Although Greg concluded that "there is no business model for mashups", in fact there are a number of ways in which mashup developers can monetize their products. The most obvious is advertising.

Advertising

Simplyhired.com is a 'vertical search for jobs' mashup, getting data from job boards, company pages, online classifieds, and other data sources. It also mashes in Google Maps, LinkedIn and PayScale.com. When a user searches for a job - say, a chef position in Seattle - they not only get a list of available chef jobs in Seattle, but on the right of the results are "sponsored listings"

I assume SimplyHired has agreements with the data owners, in which they licence access to the data for commercial means (if anyone can confirm that, please do in the comments). In any case I expect SimplyHired is earning a tidy sum with onsite advertising, because the results are highly contextual and job-seekers would probably be tempted by "send your resume now" ads.

Lead generation and affiliate programs

Another potential business model for mashups is lead generation and/or affiliate programs. Adam Trachtenberg, a developer from eBay, developed a mashup called Dude, Where's My Used Car? (previously known as 'eBay Motors & Google Maps'). It is a mashup of data from eBay Motors listings and - you guessed it - Google Maps, using the APIs of those two companies. What it does is enable users to find vehicles for sale in a location near them. The data in this mash-up is not stored on the host's server, unlike with Housing Maps for example, but is served up in real time.

Explaining his mashup at the 2005 Web 2.0 Conference, Adam said it gave the user experiences they wouldn't normally get on eBay - primarily the visual mapping experience. But crucially the mashup still does a lot of things users can do on the eBay website, for example adding a watchlist onto their eBay profile.

There is also an eBay affiliate program, which is a possible source of revenue for Adam in the future. As of writing, he hasn't implemented the affiliate feature - noting in his To Do list that he needs to add Affiliate link tracking and more information on eBay Developers and Affiliate Programs.

How would the affiliate program work? Well this mashup essentially creates lead generations for eBay, because all results are directed to the eBay Motors website for details on purchasing the vehicle. It's similar to how HousingMaps directs users to craigslist to complete their transaction. Except that eBay actually has an affiliate program, which would allow Adam to earn a kind of 'lead generation' fee each time a user clicks through to eBay Motors and completes a transaction.

Transactional mashups

As mashups mature, we will probably see more examples of 'transactional' mashups - i.e. full-fledged web applications in which users can not only view (read) mashed up data, but do transactions with that data within the mashup.

Taking the eBay Motors example above, what if users could actually complete the purchase of a car from within the mashup itself - instead of being directed to the eBay website. The value would remain the same for eBay, who get the same cut of the action. Indeed they may find purchases increase, because the user can do everything from the one place (the mashup site). It would almost certainly mean more value for the mashup, because users would be able to do more things on the mashup site - which gives more monetization opportunities (e.g. advertising).

In an August 2005 blog post Technology VC Peter Rip speculated that advertising networks such as Google and Yahoo/Overture will eventually create "settlement network models" to enable transactional mashups. While he was talking specifically about advertising networks, there is no reason why this model can't be extended to web applications such as eBay Motors. The elements of a settlement network model would initially be:

"…bundling (1) contracts to police gaming and (2) payment settlement systems to enable the shared value model…"

Enabling transactions in mashups extends to enterprise applications too. In January 2006 Phil Wainewright wrote about a company called NetSuite, a provider of CRM software. NetSuite stores transactional data, such as orders and stock levels, which according to CEO Zach Nelson "makes it a natural choice for creating composite applications - or mashups, as the Web x.0 generation has it - with other services."

Other business models

Other possible business models for mashups include:

  • subscriptions
  • pay-per-transaction
  • premium services
  • charging businesses but not individuals
  • etc. 

None of these business models I've outlined here has yet been fully proven. But then it can fairly be said that business models for mashups in general are still being explored and there are no easy monetization answers yet.

Flickr pics: The first one is by ancawonka, from the Yahoo! party at eTech 06. The second Flickr pic is by Dave McClure, from the 2005 Web 2.0 Conference session on mashups (which I attended). Pictured are eBay's Adam Trachtenberg, Yahoo's Jeffrey McManus and Google/HousingMap's Paul Rademacher.