Ask HN: How does the economy of bandwidth work in the era of Web 2.0

[potatofish]

I should say in advance that while I am pretty savvy on low level software, I haven't been paying much attention to the Internet for many years (like over 8) and I am trying to understand the way things work today.

I am having a hard time understanding how it's economically feasible to run a high volume Web 2.0 site. What I mean is, take for instance a cloud based provider like Rackspace, which offers bandwidth for 20 cents per GB. Now say you have a default home page that is roughly half a meg in size, which when you account for all of the doohikies in the Web 2.0 era, is not totally out of the question. With those 2 variables in place, you're spending 20 cents for every ~2050 visitors.

Do the current online advertising rates cover the costs or would this be losing money in terms of bandwidth costs? Put aside all other costs for the moment. Perhaps the better question is, what kind of advertising scenario would be needed to even break even in such a scenario?

[cperciva]

say you have a default home page that is roughly half a meg in size, which when you account for all of the doohikies in the Web 2.0 era, is not totally out of the question

Don't forget about caching. The first time someone comes to your multimedia-bloated website he might need to download 500 kB, but as long as you don't screw up too badly future visits will require far less traffic.

[potatofish]

This is a good point. I was wondering about it, things have changed since I did web development back in the late 90's. Has caching changed much? When you say "screw up", is there any thing I should look to avoid doing? Maybe this is also a good time to ask, what is a reasonable size for a main page, and pages beneath it? I see some really big page sizes almost everywhere I look. Small pages seem to be the exception, not the norm these days. Isn't that the whole point of Web 2.0? To deliver near desktop like experiences, or better?

[_delirium]

Advertising rates vary a ton, so it's hard to answer in general. But in many areas you can get much more than the $0.10 per thousand impressions you cite as a breakeven point on bandwidth. It's not unheard-of to get $10-30 per thousand impressions, at which point your bandwidth costs are <= 1% of advertising revenues. I get $20 myself on one site, though it's admittedly low-volume, so it's quite possible it'd go down a lot if the visitors increased beyond the current niche of very relevant users.

[potatofish]

Thanks for this answer. Is there a resource that covers in general what advertising rates are expected to be in different situations and with which ad networks?

[wmf]

I suspect that a combination of advertising and freemium can cover those costs. Also consider that most hosting providers have huge markup on bandwidth, which costs $2-5/Mbps/month wholesale — that's more like one cent per GB. If you're big enough to buy wholesale you can afford to have a much richer site.

[potatofish]

OK, so if I understand you, the 20c/GB is not what you'd expect to pay for a site that does good volume and buys the bandwidth by the bulk, so to speak? Not sure if this is the right place to ask, but who provides cloud services with better bandwidth rates? Or is it something that Rackspace might negotiate over?

[wmf]

Amazon has volume discounts so the price automatically decreases from 15c/GB to 8c/GB as you transfer more. I don't know of any clouds that let you bring your own transit; you'd probably have to move up to a rack or cage (which may also make CPU time cheaper).