Wednesday, May 28, 2008

CDNs On The Ropes

If you work for a Content Delivery Network (CDN) you might want to shop your resume at Google. Current CDN bandwidth rates are running between $1.60 and $.85 per Gig. That makes for a very tidy margin when buying commodity bandwidth at $.06-08 per Gig. With the introduction of Google Apps Engine pricing of $.09-.11 per Gig the game has just changed. Google is starting a bidding war with Amazon for the Platform as a Service (PaaS) market and the collateral damage will be the CDNs.

I recently reexamined the benefit of migrating our video storage and streaming from Amazon to one of the top CDNs but could not come up with a valid reason to increase my streaming costs by 500%. The classic argument from the CDNs is that with thousands of regional edge nodes, my content will be delivered quickly and locally. The reality is that quality of service in streaming services is often less about the number of hops to the server and more about the through-put of the last mile to the consumer. If there is a 250ms lag at the beginning of the connection but the stream stays connected during the live of the download it's transparent to the user but let that same video file start buffering and the customer is going to complain. Bottom line, the CDN brings one big value, the ability to scale to big loads if your content goes viral. We did the math, we can build out a nice scaling infrastructure and still have money left over on Amazon. Let's face it, most of our applications will never have 10,000 requests per hour.

The destructive cycle of technology always weeds out products with relatively high profit to value ratios. As the PaaS solutions come online, more developers will be able to access the low cost commodity pricing and it's going to drive down the value of CDNs significantly.


Dan Rayburn ( said...

"Current CDN bandwidth rates are running between $1.60 and $.85 per Gig." For what volume?

At high volumes, we're seeing pricing in the market as low as $0.04 per GB delivered, which is even lower than Google's service. (see Google is not a CDN for video. It does not support streaming, nor does Amazon, they don't have Flash Media Servers, don't have a global reach and many of the other features needed by content owners.

Amazon may be a good for for smaller customers who don't have as many needs, but for content creators who need to manage the ecosystem for video, Amazon and Google won't be a solution. They are not a fair apples to apples comparison to CDNs.

Daniella Newmark said...

This is a great article for those wanting to use Google App Engine or Amazon S3 as a quasi CDN. I would not recommend any of these solutions as a true CDN as they are not an edge based solutions (providing downloads from servers closer to the user). The analytical reporting on objects stored in these services is very poor. Caching of objects using proper headers and etags is something you must build custom and requires great knowledge of browser caching strategies.

Anything free or cheap always has its drawbacks but for content that is not crucial to you business it will work fine. I would recommend many of the month-to-month CDN's that are out on the market for content that is critical to your business.

Daniella Newmark

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