Microsoft has liberalised its API licensing terms, in an effort to drum up support for Windows Live web services, including Live Search.

Microsoft is releasing new terms for the following services: Windows Live Contacts, Windows Live Photo, Silverlight Streaming, Windows Live Search, Windows Live Virtual Earth and Windows Live ID. The terms are published on the Windows Live Dev site.

The revisions are aimed at helping small web-based companies get off the ground and use Microsoft's infrastructure, said Whitney Burk, a spokeswoman for Microsoft's Online Services Group.

"We're saying to all those small guys out there, bet your business on Microsoft," she said. "If you become the next YouTube, great news for you and great news for us."

There will be fees after certain usage limits are reached. Burk acknowledged that Microsoft hopes to develop a broad partner community around Windows Live so eventually the company will earn revenue through this new API structure.

Microsoft began its ambitious rebranding and relaunch of the former MSN in November 2005. The initiative is part of the company's Online Services Business, the revenues of which grew slightly in Microsoft's recently reported 2007 fiscal third quarter, from $562 million last year to $623 million this year.

Most observers agree Microsoft faces a tough battle to grow this business, which is primarily being ramped up to drive advertising revenue to compete with Google and Yahoo. Company executives have said it is a long-term investment and they are willing to be patient to achieve growth.

The APIs do have an online advertising component, Burk said. API users can set up a revenue-sharing plan with Microsoft by offering advertising through services built on the company's APIs, she said.

It's the first time Microsoft is allowing its Windows Search API to be used commercially, Burk said. Businesses can now use the API to query Windows Live Search for free for up to 25,000 searches per month, she said. Previously there would be a fee.

Currently, the APIs for Windows Live services are in beta and available for free, although some have limits. Once they emerge from that state, they will still be available for free, but some will have surcharges and limits, Burk said.

Virtual Earth is available for free for as many as 3 million map tiles a month, according to Microsoft. Silverlight Streaming, a service launched this week for multimedia streaming and hosting, is free up to 4GB of storage and unlimited outbound streaming, with no limit on the number of users who can view streams.

For Windows Live Contacts, Windows Live Spaces and Windows Live ID, once the APIs are out of beta, Microsoft will charge 25 cents per user, per year for anything above 1 million unique users per month, Burk said.

Microsoft has 30 billion contacts and 500 million addresses stored for its web-based services, Burk said. Companies that use the Windows Live Contacts, Windows Live Spaces and Windows Live ID APIs will have access to these.

In addition to the APIs available now, Microsoft will release a Web IM Presence API for integrating Windows Live IM and user presence into sites in the next two months, Burk said. All the APIs should be in full release some time next year.