At first glance, it would seem that the team at flickr has a risk appetite that would probably get them banned from most all-you-can eat buffets.

They’re willing to open their API for importing/exporting photo’s to competitors, so long as the competitors reciprocate:

Re API keys for direct competitors: this is something that we’ve never had any set policy on and this thread has sparked a lot of internal debate on the team: some people felt that it was unreasonable, some people felt like it didn’t matter since Flickr should win on the basis of being the best thing out there.

I actually had a change of heart and was convinced by Eric’s position that we definitely should approve requests from direct competitors as long as they do the same. That means (a) that they need to have a full and complete API and (b) be willing to give us access.

This probably isn’t as risky as it sounds, however.

1. Flickr is obviously confident that their service is superior for most users, so the net flow of users will be to them.
2. Flickr will now have the best information of any of their competitors about market flows, since they (and only they) will have the data on all their API partner flows.
3. Flickr will now have an effective “early warning system” if a cooperating competitor develops compelling features which are siphoning off users. Since they will also know the size of the flow, they can assign a value to the cost of competing for those users and avoid net-loss efforts.
4. By providing a common link between different services, they are creating a liquidity market for photo sharing. This means that if a API partner develops a revenue model around photo hosting and sharing, then Flickr will probably be able to negotiate a back-end deal to capture some of that revenue.

   For example, I can see a photo printing service supporting the API, so they can effectively let Flickr do the uploading/hosting work, and focus on printing & delivering the images. Something like this may have already been done, but I think it’s a representative example of the sort of relationships that might become possible in this model.

What Flickr is really doing here is leveraging their currently-strong market position to ensure that they remain a central player in the photo sharing business long term.

They’re accepting risk of user emigration in exchange for information which they can use to help mitigate the risk of being overtaken or rendered irrelevant by changing market conditions or a disruptive upstart. The fact that is also has some revenue possibilities is just icing on the cake.

(from Boing-Boing)

Risk Appetite or Volatility Appetite?…

Over at “Not Bad For A Cubicle,” Thurston (who is always worth reading) manages to tickle a pet-peeve of mine in “A super-size risk appetite?” No rational business has a risk appetite. They accept risk. They may even buy risk……