2007 Online Video Delivery and Storage Pricing Guide

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Pricing. It remains one of the topics our readers ask us about the most, due largely to the fact that service providers change their pricing from deal to deal and rarely stick to their own rate card. This can leave the customer very confused when shopping for the best combination of price and service from multiple providers, since it can be difficult to make an apples-to-apples comparison. Since some organizations need to deliver lots of video, while others—like nonprofits and small businesses—may need to deliver only a few videos, this article will cover real pricing numbers from both large, globally focused content delivery networks as well as smaller regional service providers.

To start with, what’s the difference between a content delivery network and a service provider? That answer all depends on whom you ask. It seems everyone has a difference of opinion on what makes a content delivery network (CDN). Typically, most people use the term CDN when referring to the large delivery networks that focus on delivering massive amounts of data from many locations all over the globe. These CDNs usually go after large media, enterprise, and government organizations and focus on high-capacity, high-volume needs. The term "service provider" is usually used when describing those delivery networks that offer services based on a small geographic region. That said, the term CDN is just a marketing term. There is no rule that says in order for a company to call themselves a CDN they have to have x amount of capacity or x number of locations. So the term is generic as it’s used today.

So how does one compare one provider to another in an equal setting? I always use the example of how one shops for a car. Compare the features and functionality and don’t shop on price alone. Shopping for a content delivery network or service provider is done in the same way. If you are a small business, small nonprofit, or just require a small amount of storage and delivery, it would not make sense for you to deal with a CDN that focuses on global delivery with a monthly minimum commitment of $2,500—just as you would not look at a two-seater Porsche if you needed seating for four with a large trunk.

Many factors affect the price you pay for the delivery of audio and video content via streaming and downloads. With this in mind, let’s look at the two biggest factors that affect the price that are relevant to all delivery providers—bandwidth commit and storage—and what you can do to help get the best price.

Commitment Issues
For the majority of vendors, your commit—the volume of GBs of bandwidth or transfer you pay for each month, whether you use it or not—is the single biggest factor they use to determine pricing. The more you are willing to commit to each month at the start of the contract, the more the vendor will be willing to discount the pricing per GB. If you have already been delivering content online, chances are you already know the volume you do on a monthly basis and the growth patterns you are seeing. If you know these numbers, you have to decide what your growth will be and if you want to commit to a higher delivery volume up front and get a better price. The upside is you get a better deal; the downside is that you may pay for something you don’t end up using, something no customer likes.

If you are new to delivering content online and have no traffic data, it’s a bit of a guessing game. Service providers typically won’t cut you any discount up front, since they have no idea if you’ll be a "$500 a month" customer or a "$5,000 a month" customer who should get discounted pricing. To a new customer, I suggest not committing to anything. Sign a three-month deal, test the waters, see what type of traffic you do, and then decide if you should sign a long-term deal that gives you a break on pricing. This also offers an opportunity to test the service provider and rate their customer service and products, such as the reporting data they provide.

Regional service providers tend to be a lot more flexible than the large CDNs in terms of your monthly commit and, in many cases, require no commit at all. It’s easier for them to do this since they know that chances are you are not going to be doing a large amount of delivery to start with.

When pushed, most providers will allow you to commit to bandwidth on a quarterly rather than monthly basis. This will help level your quarterly commit rate if you have one low month and one high month in the same quarter. If you are doing more than 10TB a month, the service provider will probably be willing to do a quarterly commit contract and, if they want your business badly enough, you can get this type of arrangement for even smaller deals. Again, for smaller delivery needs, it’s easier to negotiate with smaller service providers as they tend to be more flexible and many times have delivery packages you can buy for a flat fee per month that include a certain level of storage and delivery.

Your monthly bandwidth and storage volume are not the only factors vendors use to determine pricing. The length of the contract, geographic location of the content delivery, and, of course, anything unique to your business are other factors taken into account. As always, my advice when dealing with vendors is to shop around, get references, ask about customer service, and—most important—don’t buy on price alone. The delivery space is so consolidated these days that you can very easily get four or five quotes from vendors all in the same day.

It is also important that you make sure the vendor educates you and answers any questions you have with answers you can understand. If you don’t understand any aspect of content delivery, such as calculating bandwidth and storage volumes or how to link to the video files you have, and the vendor does not seem like they have the time to educate you, or chooses not to, then it’s time to move on, no matter how good their pricing may be.

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