The Low-Down on Mash-Ups

You've likely heard of musical mash-ups, digitally combining two or more songs from different genres together, say Lawrence Welk and Wu-Tang Clan. Though not as entertaining, mash-ups in the e-commerce world do exist, but in this case they involve noodling around with third-party Web-based services to create something pragmatic, for instance a local mapping feature. And, while these amalgamated programs are more practical than their musical counterparts, they are gaining in popularity — and in some cases are even becoming profitable.

While using third-party application program interfaces (APIs) to create e-commerce, search, or information sites is not new (Amazon has been licensing its API via its Associates program since 1996), these mash-up sites are proliferating and getting much more sophisticated of late — and generating a good amount of attention. There are at least a half-dozen sites dedicated to mash-ups, including Mashable!which posts mash-up news and reviews, and ProgrammableWeb, which is more technical and keep readers "up to date with the latest on mash-ups and the new Web 2.0 APIs."

While some people make mash-ups for fun, others do it to earn extra money or simply to help drive more traffic to their sites. Ecommerce-Guide.com talked to a leading retail analyst, a mash-up owner/developer, and the founder of ProgrammableWeb to get the low-down on mash-ups.

eBay + Yahoo! Maps + OpenLaszlo = Cooqy
Robert Yeager, the founder of Cooqy, a Web 2.0 Web site that launched in March 2006 for surfing eBay auctions, is an advocate of mash-ups. A technology industry veteran with 20 years of experience, Yeager jumped on the opportunity to use eBay's API when the company made it available for free in November 2005. The result, which came about as an entry to the eBay Developer Challenge, was Cooqy. The site not only allows users to surf eBay auctions faster but allows them to view up to 48 items side-by-side without scrolling, find auction bargains with tools not available on eBay and inspect all item photos with built-in magnifiers. Cooqy also displays item locations using the Yahoo! Maps API.

"I think mash-ups like Cooqy provide an incredible opportunity to small entrepreneurs," says Yeager. That free API from eBay "made it possible for Cooqy to come into existence very rapidly. It was really built by one person, sort of part time, in just a few weeks. So what's happening is the new Web 2.0 businesses are able to get off the ground much faster and with much less investment and overhead than before."

And not only has eBay been good to Cooqy but Cooqy has been very good to eBay, helping to drive traffic to the site (for which it gets a fee as a registered eBay affiliate).

"What Cooqy's done with eBay's API is taken it and improved upon it," explains Yeager. "For example, in Cooqy shoppers can do a search and include the shipping price. That kind of search just isn't allowed or provided on eBay itself. Cooqy kind of levels the playing field for eBay shoppers. That's a good thing about a mash-up. You can take an API and improve upon it, add value to it, and as you add other APIs you get new concepts and [continue to] add value."

And for Yeager, running his mash-up couldn't be much easier. "I engineered it so it has managed hosting," he explains. "So Cooqy really runs itself. I don't have to be involved too much for it to generate revenue." It's been doing just that, says Yeager, with the company becoming profitable three months after launching and constantly adding new services and widgets, including one for MySpace users.

"The value add of different APIs collectively can provide shoppers and sellers with new tools," says Yeager. "I think that Cooqy is really trailblazing what's called E-commerce 2.0 with rich Internet applications for shopping on the Internet."

The Affiliate Route
If you're thinking of making a mash-up, the affiliate route may be the way to also making some money. For Yeager, being an eBay affiliate was the right decision. "I heartily recommend it," he says, and for good reason.

Amazon's Associates program has over one million members and up to 50 percent of eBay's listing come from affiliates using its API, according to John Musser, the founder of ProgrammableWeb. Clearly, this means a lot of people are using mash-ups, or at least Amazon- and eBay-based ones.

For Amazon and eBay, it means more revenue derived from traffic brought in by affiliate members. One Amazon Associates program member, Associate-O-Matic, even allows would-be associates/mash-up developers to "build a custom Amazon.com Associate Store with 1000's of items in minutes" for free. (A more robust version is $99 for the first year, and only $20 each year thereafter).

Musser definitely sees money to be made (albeit maybe not a lot of money) in being an Amazon or eBay affiliate. "I know mash-up developers who are making money from eBay transactions getting routed through their site," he says. "One of my favorite examples is iPod Radar," which uses APIs from Amazon, eBay, and Google, among others. "It doesn't really take a lot of effort to build or run it, and [the owner] gets affiliate [fees] from both eBay and Amazon."

That's not to say that all affiliate mash-ups are going to bring in big bucks. If you are considering this option you should check out both Amazon and eBay's affiliate program sites and fee structures, and have a business model in mind, before you embark on your mash-up.

Mash-ups: Hobby or Business?
Although ProgrammableWeb lists over 1,100 mash-ups with nearly three new ones being added daily, these sites do not pose a real challenge to the traditional retail e-commerce site model, according to Patti Freeman Evans, senior retail analyst at JupiterResearch. Indeed, Freeman Evans doesn't see most mash-ups as true e-commerce sites. "You're basically a traffic arbitrageur or you're a new search experience that lets people discover products and then you may get a cut of the revenue, but you're really an affiliate then," she says.

"I think what we are seeing is people — developers — who are interested in creating new experiences using APIs," says Freeman Evans. "I see it as developers taking an opportunity to create a new discovery tool rather than someone who really wants to run [an online] retail business."

Part of the problem is that while many APIs, like those from Google, Yahoo!, and MapQuest, are free, they don't allow the mash-up sites to charge for access to that content (typically maps), though they can generate revenue from hosting ads on their sites.

Clearly, there is debate among industry watchers as to what an e-commerce mash-up is — a hobby versus a business, a cool new search tool versus a traditional retail site — and whether they can generate any significant profit. Like you would with any startup business idea, "you have to do an old-fashioned ROI analysis of what's this going to cost me to build versus what I'm going to get out of it," says Musser, whose site tracks "shopping" mash-ups, among others.

Regardless of whether mash-ups prove to be profitable on a large scale, Musser says they will continue to thrive. "The genie is out of the bottle to the extent that people are going to be using more and more APIs of higher and higher value," says Musser. "Don't take the APIs that one sees today as where this will be a year from now or two years from now."

Jennifer Lonoff Schiff is a regular contributor to ECommerce-Guide.com and writes about business and technology.

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