Monetization APIs: The Only Hurdle?


Just because you can do something… does it mean you should do something?

Google has had monetization tools in place for Google Assistant apps since mid 2017. We haven’t seen great use made of these tools (yet) and you’d probably have to be a bit of an industry geek to even know that they’re there. Back in November, Amazon announced plans to allow audio app developers to add monetization options to their skills. A Beta is in place and a release is expected imminently.

The question is or will be whether implementing these monetization tools makes business sense.

The fact that incorporating monetization is easier doesn’t change the fact that it’s hard to create something that people will want to pay for. In our video blog we outlined three steps for monetization:

1) Create something of value

2) Find users who value what you have created

3) Monetize those users

So far, Google hasn’t built a reward system to promote its platform and no ad revenues – akin to mobile – are avaialble. Amazon has put in place a rewards system that promotes quick-in/quick-out skills. New content is favored as well as content that draws in many users for short periods of time.

The challenge is three-fold:

1. It is hard to create high value content that is used so briefly.

To be successful, you need monopoly control of the underlying IP (like a Headline News app) or you will see your work reproduced by other developers. If you build a simple, successful app, you will find your work copied. Amazon does not protect IP in the audio apps space – just check out the host of sleep sounds apps out there.

2. There is no reliable way to acquire users

Amazon controls the marketing channels that tap in most directly with Alexa skills. They are the best at steering new users to specific skills. The same holds true of Google. (More on that in another post.) Users cannot easily make recommendations to friends to try specific apps. Neither company has implemented recommendation algorithms along the lines of “Other users have also bought…” that are so common in GUIs.

3. It’s also challenging to retain existing users.

Amazon and Google could make user recall more reliable by implementing tools like audio bookmarks or histories or favorites lists. For example, we’ve documented situations where users happily play our 21BlackJack game only to be directed to different blackjack games hours or days later.

The takehome

Google has and Amazon will put monetization tools in place for developers to implement. What isn’t clear is whether either company will address the structural issues that impede efforts to create apps of value and find/keep users.

So, overall, it is hard to see the new monetization API, itself, making a substantive difference. The current popular skills will probably not fare well under monetization, and new ones would require significant development while facing a lot of uncertainty about monetary return. However, the perception that Alexa is “now open for business” might drive more people to engage. The only way to overcome the structural problems present is through innovation. With more people thinking about it, there’s a better chance that someone will create the first profitable audio app.

Posted in Alexa, Amazon, Echo, Google, Google Assistant, Google Home, Management Consulting