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Content Delivery Pricing Goes Crazy: Commentary
If the price for content delivery is dropping drastically, then why are so many companies paying such exorbitant rates?

Stab my eyes out and THEN ask me to sign the contract...

So I have seen the sector play the zero sum game with content delivery pricing for over a decade now. Pricing falls and falls. The drop off may now be more like the tail of a logarithm, but there's still fierce competition out there... or so one would think... 

I still gasp in astonishment when I see contracts where clients are paying Akamai 50 pence per GB (that's U.K. pence, so around $0.75 US). Even with Amazon posting pricing of $0.10 on its public rate card, I am astounded that some players are still getting away with these 1998 pricing schemes and more astounded that clients are so lax about renegotiation.

So today, when a provider I know mentioned a price that they were bidding, I nearly shot myself in the head when I found out what that pricing was...

£8 PER GB. That's $12.80 PER GB.

For real...

In its own right that is simply INCREDIBLE...

I was astonished. Naturally I stepped up and said I'd be happy to sell them the service if they want it at that price, even though it's over a year since I shuttered my own CDN. My logic was that if they wanted me to deliver this at even £7.99 per GB, I could build a CDN and still make the money back in a few GB of traffic.

I'm still astonished by this pricing... 

I was sitting on the train home today reflecting on this.

If the going rate is $0.15 per GB and this provider wins this £8 per GB deal, then think of it this way: the price of petrol today in the U.K. is about £1.30/litre. It costs about £70 to fill a car.

If the petrol pump was to do an overpricing deal of the same magnitude as this provider is doing, then we would see a price of around £69/litre for the petrol. This would then result in a tank of fuel costing around £3,770. Expensive, eh?

I'll update you if they win the deal, but perhaps there is hope yet for margin increases in the sector.

Then again, it could result in costs of around $25 to $50 to deliver a film online. I'm not sure if that's exactly a sustainable model now, is it? 

I'd be keen to hear of other ridiculous prices -- more for the sheer amusement than any other reason...