[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).