OpenSource Connections
Category: Uncategorized
An article in this mornings Reuters reported that LinkedIn has finally decided to open up its closed system to the rest of the world by creating a developer API and opening itself up to Business Week. This is a critical move for LinkedIn to keep up with other social networking sites, as, previously, its information was proprietary and difficult to access. The website, a business networking site, played on the idea of six degrees of separation by showing a persons contacts and their contacts contacts, ad infinitum, but requiring a paid subscription to get beyond a second degree of separation. While it is uncertain how much revenue LinkedIn was making through paid subscriptions, the exposures and inventory that they could create through opening up their information seems to be much higher.
As Don Tapscott and Anthony Williams pointed out in Wikinomics, by opening up information for repurposing, a company or website creates the opportunity to have much more exposure than it could by maintaining a closed, proprietary system. As we have previously discussed, no company can hope to keep all of its needed resources internally, and by creating developer APIs, LinkedIn has now opened itself up to the creativity of developers and consumers who want to use the information and present it in ways that LinkedIn does not, has not, and probably has not thought of.
Is LinkedIn going to cannibalize its own revenue by opening itself up? Only time will tell, but I think that it will not; instead, I think that it will find its revenues dramatically increase. By creating APIs and appropriate terms and conditions for the use of the data, LinkedIn will generate many more pageviews than it has before, and the advertising revenues will far outpace its subscription revenues. Subscription revenues may indeed go up because of the increased exposure. Furthermore, more consumers will be able to use LinkedIns information, making it a more valuable brand. The stumbling block will be if the closed nature of LinkedIn has made it lose customers that it will not be able to regain, but, fortunately for LinkedIn and its users, I do not think that it is too late…LinkedIns open API will prevent it from jumping the shark.