Here’s how it can happen in the new decentralized, self-serve business development model based on open APIs: Yahoo creates a generic open API. Company X finds and uses the API without ever approaching Yahoo, builds a product and follows the usage rules (for example Yahoo might require a “powered by Yahoo” logo that links back to their search services). After a while company X’s service might get popular enough to warrant a direct deal with Yahoo (think of open APIs as a self-qualifying biz dev funnel). But even if it doesn’t, Yahoo gets the benefit of having thousands of small projects build on their APIs. Added together, they can make for real scale.
Fabulous article and very forward thinking in 2007. Drives home the point that done properly, the API can help achieve incredible scale.