Tuesday, March 31, 2020

Archival Cloud Storage Pricing

Although there are significant technological risks to data stored for the long term, its most important vulnerability is to interruptions in the money supply. The current pandemic is likely to cause archives to suffer significant interruptions in the money supply.

In Cloud For Preservation I described how much of the motivation for using cloud services was their month-by-month pay-for-what-you-use billing, which transforms capital expenditures (CapEx) into operational expenditures (OpEx). Organizations typically find OpEx much easier to justify than CapEx because:
  • The numbers they look at are smaller, even if what they add up to over time is greater.
  • OpEx is less of a commitment, since it can be decreased if circumstances change.
Unfortunately, the lower the commitment the higher the risk to long-term preservation. Since it doesn't deliver immediate returns, it is likely to be first on the chopping block. Thus both reducing storage cost and increasing its predictability are important for sustainable digital preservation. Below the fold I revisit this issue.

For more than 6 years I've been pointing out that Amazon's margins on its S3 storage service are extortionate, using first local storage and later Backblaze as example competitors. Another issue I raised in Cloud For Preservation was the effect of the lock-in period. The cost and time involved in getting the data out make the customer vulnerable to price hikes. Since cloud storage pricing is normally on a month-by-month basis these can happen with a month's notice.

Another of the risks month-by-month billing poses was detailed by Backblaze CEO in Backblaze Durability is 99.999999999% — And Why It Doesn’t Matter:
Some customers pay by credit card. We don’t have the math behind it, but we believe there’s a greater than 1 in a million chance that the following events could occur:
  • You change your credit card provider. The credit card on file is invalid when the vendor tries to bill it.
  • Your email service provider thinks billing emails are SPAM. You don’t see the emails coming from your vendor saying there is a problem.
  • You do not answer phone calls from numbers you do not recognize; Customer Support is trying to call you from a blocked number; they are trying to leave voicemails but the mailbox is full.
If all those things are true, it’s possible that your data gets deleted simply because the system is operating as designed.
I commented in What Does Data "Durability" Mean?:
Thus Backblaze believes that the probability of losing all your objects due to billing problems is more than 10-6, which makes the difference between 8 and 11 nines of durability of a single object irrelevant.
For the last few years, Wasabi's entire pitch has been that it is 5-6 times cheaper than S3. I used Wasabi among the examples in my report on Cloud For Preservation, in part because their lack of egress charges means a remarkably short lock-in period:

Storage-only Services
Service In Store Out Total Lock-in
Wasabi $2,495 $59,880 $2,495 $64,870 0.5
Backblaze B2 $2,504 $60,000 $12,504 $75,008 2.5
Now, Chris Mellor's Wasabi intros price-fixing – in a good way – for cost-conscious cloud storage customers reports that Wasabi is addressing not just the total cost but also its predictability:
Wasabi, a cloud storage startup, has devised a pricing model whereby customers buy capacity up-front in return for lower charges.

Wasabi’s Reserved Capacity Storage (RCS) provides enterprises with price predictability and one-time billing. The deal sees storage costs cut by up to 27 per cent compared with pay-as-you-go when customers commit to fixed price terms of up to five years. Customers pay only for storage that is reserved; there are no fees for data egress, API requests or data retrieval.
...
Wasabi said its research shows many customers prefer the predictability of a fixed price purchase order. The company thinks RCS will be useful for backups, second copies of data, and archives.
Because archives come in fixed-size chunks, a fixed-price term contract appears to make sense. You are going to use exactly a chunks worth of data every month, so the use-it-or-lose it economics of RCS don't matter.

If you have a 100TB archive at Wasabi on their pay-as-you-go plan with premium support it will cost $38,456 over 5 years. If you pay up front for RCS, assuming you get the 27% discount at this level (the discount details aren't clear from this page) it would cost $28,072, a difference of $10,383. So if the organization's internal cost of capital is more than 7.4%, which it is likely to be, RCS is going to be adjudged more expensive than pay-as-you-go Wasabi, even ignoring the decreased flexibility.

The way organizations account for OpEx and CapEx continues to be a barrier to sustainable digital preservation.

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