The benefits of having an affiliate program are well documented. Savvy ecommerce site owners can analyse the marketing strategies of successful affiliates and copy them for greater revenue. Merchants can also hide behind fake affiliate accounts while using blackhat and email spam to promote their products.
Having an API is just as good as having an affiliate program if you don’t operate a merchant site. BlogStorm uses the Yahoo API to track links and thousands of other sites create applications far cooler than those offered by the parent company.
If Yahoo, Google or any other company decided that an application running of their API was becoming too popular they could code a copycat version within weeks and gain more traction than the original quite easily.
Alexa recently added a bunch of new features to the Alexa charts after Alexaholic started to gain more and more users. Eventually Alexa blocked Alexaholic resulting in a PR disaster.
Today we see that Digg has a picture section, courtesy of a clever programmer and the Digg API. Digg has promised a picture section by October so there is plenty of time for digpicz.com to gain traction in the meantime. No doubt Digg programmers will be keen to see their users reaction to digpicz.com and have over a month to analyse feedback and improve their picture section accordingly.
The Digg management team has more awareness of reputation management than most web companies so they probably won’t try to shut down the digpicz.com but it must be reassuring for them to know they could if they had to.