I attended a hackathon a little while ago that had an interesting cash arrangement (I'm not naming names as I signed an NDA, and in all honesty I am not sure what I can and cannot say). It was an invite-only event, and each team attending was paid $5,000. The winning team was paid $15,000. The company holding the hackathon owned the rights to any work done.

I think this is a great arrangement. Developers get paid a reasonable sum for a weekend's worth of work, and the company holding the hackathon gets 7 or 8 app concepts pitched to them at the end of 48 hours. It probably costs them a lot less than getting one concept the traditional way. Cutting out the middleman, I suppose.

To answer the post itself: I think it's all about visibility. I have discovered APIs through hackathon sponsors before that I have consequently used later on. Maybe one week later, maybe one year later. But it means they are on my radar.