Foursquare is charging its largest Web partners for use of its location data, which a number of apps and Web services use for mapping needs. The New York tech company has tens of thousands of developers accessing its network daily, and the heaviest users pay if they pass a certain threshold, according to sources.
Developer fees represent a new revenue generator for the company, which has been trying to build an advertising business and broaden its audience. It claims 50 million registered members, but it's unclear how many active users there are.
"They are selling access to their location database," said one developer of an app that uses Foursquare’s services. The developer spoke on condition of anonymity because he could not discuss partnership deals publicly.
A number of marketing apps rely on maps from Foursquare and others such as Google, AggData, Navteq and Open Street Map.
Some apps use multiple sources, and many of them charge when developers exceed a certain level of activity. The Wall Street Journal reported that Foursquare negotiates fees with less than 1 percent of 63,000 developers that rely on its data. The top users are typically only the largest of Web companies so the fees would not apply to most businesses.
"These conversations aren't necessarily a straight charge for use of the API—they are part of larger discussions—much like our relationship with Microsoft," a Foursquare rep said.
In February, Foursquare signed a $15 million licensing and investment deal for location services with Microsoft. The company has raised more than $160 million, but has had trouble turning itself into a lucrative ad business and maintaining a lofty valuation.
Foursquare’s location services are perhaps the most lucrative part of the business, co-founded in 2009 by Dennis Crowley.
It started as a free app for social media users to share their location—at restaurants, ballparks, stores. The company pioneered the check-in.
Its social app strategy recently split in two with the launch of Swarm, which focuses on check-in activity. The original Foursquare focuses more on recommendations and discovery, competing with the likes of Yelp.