CDN Pricing Data: What The CDNs Are Actually Charging For Delivery

(Note: Visit www.cdnpricing.com for the most up to date pricing) In the last few weeks, we've seen a lot of analysts and others commenting on CDN "pricing wars" but none of them are mentioning any actual numbers on what the CDNs are charging or showing any real data on the pricing trends. So with that in mind, I'll detail what the going rates are today, how they have changed from last quarter and who it's affecting most in the market. In many cases, the pricing wars are not as drastic as many make it out to be, as many times, services are not being compared equally. Also, a lot of customers still don't know what the going rates are and are still signing contracts at high rates.

As an example of customers who don't know the going rate, last week two content companies each of whom do over 100TB a month in streaming delivery called me asking for data on pricing trends. In both cases they said they were paying just above $0.40 per GB with Akamai. They simply didn't know that the going rate for 100TB a month is on average, between $0.12 - $0.19 at Limelight Networks, Internap or Mirror Image. And I'm talking straight vanilla delivery of video via streaming and progressive download, not some custom need or custom requirement.

In many cases, Akamai is still getting paid 2x what the going industry rate is when charging customers on a monthly per GB delivered model. Now Akamai and others may say that Akamai is charging more due to a different level of service, reach etc.... but that can only be determined as being true or not true by the customer themselves who are comparing the same product from one CDN to another. That being said, Akamai is feeling the pressure to reduce it's pricing as more and more customers see that the pricing gap between Akamai and everyone else in the market has been so wide, for so long. Yes, two years ago Akamai was the only game in town for certain sized deals. But today, no one can argue that when it comes specifically to content delivery for video, there is more than just one option. With more providers in the market and some customers using a dual-vendor strategy, Akamai is no longer the only game in town for most deals.

Over the past 60-90 days, Akamai been aggressively cutting their pricing in half on large deals to be able to keep the business. While they are not matching the lowest pricing in the market, they are coming close to it on large deals, classified as over 100TB a month. I've heard from at least six customers in this time frame who have confirmed their pricing to me as being half what it was last year with Akamai on large deals. In some of these cases, when they negotiated these contracts six months or a year ago, the Akamai pricing was still the same. It's only in the last 60-90 days that Akamai has really started to reduce pricing on larger deals due to pressure in the market.

I'm also hearing that two year deals are not being signed as much and that customers are doing quarterly and yearly bandwidth commits with all the CDNs, instead of monthly commits. Another trend I am seeing is not bandwidth commits, but rather revenue commits where a company promises to spend X amount of dollars on any service with the provider over the course of a year. This practice is not new, but I am seeing more of them and they are more common with Akamai since they offer more than just CDN services. In many cases, the bundling of services other than content delivery for video is a major reason why many of the streaming only CDNs lose business. It may not be because their service is not as good as an Akamai, it's that they don't offer other products like whole site hosting, application delivery and other non-CDN products. For some customers this does not matter but for others it does and it's a deal breaker.

Every week, customers from the media and entertainment, broadcast, government and enterprise verticals call me asking for pricing data. They want to know who is out there, what they charge and what the going rate in the industry is. From all I have seen in actual contracts, RFP responses and pricing negotiations, Internap, Limelight Networks and Mirror Image are all about the same price wise. In many cases, Internap is a bit higher in pricing but I see most of that from the legacy VitalStream side and once Internap is finished integrating VitalStream into their network, I am curious to see if their pricing changes. It should go down since Internap owns the network and VitalStream didn't.

CDNetworks and EdgeCast would not share any actual pricing information with me so I can't say if they are around the industry average or are more expensive. And since they are new in the space, I have yet to see a customer who uses them or has included them in an RFP so I'll have to wait to see what they are charging. Panther Express is undercutting all of the CDNs out there on pricing BUT keep in mind, that they only support HTTP delivery, not content delivered via streaming media protocols. And there is a difference since HTTP is easier to deliver and costs less to scale. NaviSite's pricing I have not seen in awhile so I can't speak to their average rate. Since Doug Mow left the company I haven't heard anything from them or seen any RFPs that they have been included in. Same goes for VeriSign. I don't see them being included in RFPs and I have not heard of any customers of late that have signed with them. That's not to say that no U.S. customers have, but of the ones who call, none of them were using VeriSign. As for CacheLogic, they are working on a pricing model that charges customers not per GB delivered but per asset, so I really have no way to fairly compare them to the others since it's a different pricing metric. Level 3 is not yet offering streaming media delivery so we'll have to wait till Q4 of this year when their service goes live.

As for Amazon's S3 service, they don't do delivery. If you are interested in reading more about what Amazon does and does not do for CDN, read my post from two weeks ago entitled "Amazon Not Providing Content Delivery For Streaming."

Outside of the smaller regional service providers who are going after smaller customers, it leaves you with the P2P players and also companies like Move Networks. Keep in mind, many people think Move Networks distributes their own content - they don't. They use Mirror Image, Akamai and Limelight Networks to deliver their customers content. So I can't really compare Move Networks pricing to the CDNs since Move Networks uses them and it would not be a fair comparison anyway. The bottom line with Move Networks is that you pay a little more than you pay now to a CDN in order to use the Move Networks platform, that's the value they are offering, their platform and technology, not delivery. (My profile with Move Networks will be posted this week as well as an audio interview they did with Forrester)

That leaves you with the P2P players who to date, have not grabbed much market share or convinced content owners to move from CDN to P2P. In many cases, the P2P delivery networks are selling with the attitude of P2P "replacing" CDN instead of selling it as a compliment. Remember, it's about using the right form(s) of delivery based on the type of content you have, the format it is in, who the viewer is and the device it's being played back on.

So with all that being said, below is what the going rate is for streaming media delivery. These figures are based on actual contracts and RFPs I have seen in the market and comes from customers telling me on a weekly basis what they are paying. Since last quarters pricing, which I detailed here, the biggest change is at the 50TB+ per month commitment. Anything below 50TB+ has pretty much been level all year. Only above 50TB+ and really at 100TB+ is where the price has dropped from last quarter.

• 1TB: High, $2.00GB, Low $1.50GB (no change)
• 5TB: High, $1.60GB, Low $0.95GB (no change)
• 10TB: High, $1.20GB, Low $0.89GB (no change)
• 25TB: High, $0.95GB, Low $0.75GB (no change)
• 50TB: High, $0.50GB, Low, $0.40GB (Q2 high was $0.65GB, low $0.45GB)
• 100TB: High, $0.24GB, Low, $0.15GB (Q2 high was $0.29GB, low $0.19GB)
• Above 100TB: It's all over the map. I've seen it as low as $0.12GB.

Note that these are what the going rates are, not necessarily the rates that ALL customers are being charged. Also, I know some people are going to write in and say my hosting provider or co-lo facility gives me a cheaper per GB rate. But I am talking CDNs here, which I classify as those who serve video content via streaming media protocols from multiple locations in the U.S. and at least one other region of the world like Europe and/or Asia.

I've always felt that as a whole, CDNs try to keep their pricing too secret. Doing a little bit of work, it's not hard for anyone to find out what any provider charges and how that compares to the market. Yes, there are situations where the above numbers do not apply when it comes to a customer needing something specialized or custom, but that's not most of the time. I would encourage all CDN vendors to share more of their pricing data and metrics with the industry since it's not a secret anyway. What is the average per GB price that a CDN charges between all of it's contracts? Of the customers you sign up each quarter, how many of them are specific to CDN services and out of those, what percentage are specific to  the delivery of video? There are a lot of metrics like this that providers could break out in the market.

Any provider who wants to use my blog as a way to share real data on pricing or any other aspect of their business, with actual numbers or ranges, you're welcome to do so in the comments section or you can write me directly and I will publish it or write a story about it with your input.

Comments

[U.M]

Hi,

Can you please post the names of the P2P
style service providers you referred to here and any other data you might have on their service?

Thanks!

[Eric]

Didn't you mean to say "I've always felt that as a whole, CDNs try to keep their pricing too SECRET"? Particularly since you follow by saying: "I would encourage all CDN vendors to share more of their pricing data and metrics with the industry since it's not a secret anyway."

[Tom]

I noticed the ad on this page for Limelight Networks and you seem to have singled out Akamai as the company that seems to be trying to take advantage of their customers. Any connection there?

[Steve]

How about pricing based on 95th percentile $ per Mbps commitments? Does anyone have any data on that?

[Dan Rayburn]

Tom, you can try to infer anything you like, but facts are facts.

Even Akamai during their last earnings period said, "We are feeling some pricing pressure as well and driving some caution on guidance. The pressure we see is from the larger content providers who are pushing higher quality and higher quantity."

And a week before my post, you had at least half a dozen analysts who all put out coverage of Akamai saying the same thing about them reducing pricing due to pricing pressure.

Om over at gigaom.com did a post a week before mine as well entitled "Akamai & the CDN Price Wars"
http://gigaom.com/2007/08/06/cdn-price-wars/

This is not new news. Anyone who talks to customers regularly and sees what their pricing is would come to the same conclusion. Also, Akamai has been a sponsor of this blog before.

[Jonathan]

By default we bill on 95th percentile, we do provide transfer pricing, but that is less a CDN http download way of charging than for true live streaming. I have read and been told by the likes of ramprate that live streaming is only about 10% of the market, and 95th percentile is unheard of.

[Steve]

As a +100TB/month account, I'd say that 95th percentile is too dangerous.

You either charge per TB (forget GB's) so customers can peak and pay for volume, and don't go bankrupt for peaks above 95%, or offer flat-fee hosting with a fixed cap on concurrent number of users.

We took the smartest route: flatfee pricing for our standard traffic and pay-per-TB for peaks above the flat-fee commit. Standard traffic pricing is as low as 50 dollars per TB (recalculated). Peaks cost 250 dollars per TB.

As for trends: we migrated back from CDN to centralized mediafarm hosting. Turned out that overall CDN QoS is actually lower (because of too many user redirects in a certain area to remote areas with poor interconnects) than a powerful centralized farm with guaranteed global connections.

CDN's primary redirection efforts are based on staying below their 95% instead of offering their customers the best QoS. And the actual capacity of CDN's outside of the USA is bad...

[ojmd]

I was shopping for CDN services earlier this year and wound up going with Mirror Image. Our commitment level was in the range of 5-10tb/month. Pricing was $.40/gb. Additionally, their pricing structure is very customer friendly. Specifically, you can carry unused bandwidth forward to the next month, and they don't charge a penalty if you go over your commitment. In essence, you're buying a certain amount of bandwidth over the course of a year. You can use it up however you want.
Here's some of my experience with other vendors:
* Vital Stream was ridiculous. Base prices were high, and they wanted a 50% premium on bandwidth if we went over our monthly commitment, and there was no rollover flexibility. So you either buy more than you need and throw away the excess each month, or risk paying through the nose if you go over your commitment.
* Limelight was willing to match Mirror Image's pricing, but it took a lot of haggling. They were our second choice. The sales rep was aggressive but knowledgeable, helpful, and reliable.
* Navisite got very aggressive at the end, but they held out too long and missed the cut.
* Akamai wanted $.70/gb and wasn't willing to budge much. They acknowledged up front that they would be more expensive and didn't seem too concerned about it.

Mirror Image's final price was not much lower than their original bid. All the other vendors were willing to drop their prices significantly. It's not a huge factor, but I did appreciate that Mirror Image didn't try to initially give me a sucker price, then cut it by 50%. My takeaway (which applies to just about any negotiation) is that you can get significant price concessions from most of the vendors if you comparison shop and make it clear that you have other options that are just as good.

[damien wetzel]

Hello Dan,
You should be more specific about what
you include in the basic cdn streaming pricing,
since flash streaming is known to be much more
expensive than windows or real streaming which both tend to be priced similarly to http download

[Dan Rayburn]

Hi Damien, if you look on my blog, I have many posts talking to the differences in cost between Flash and the other formats for streaming delivery. This recent post about pricing is not talking to any one specific format over another and does not mention formats at all on purpose.

Thanks

--Dan

[Ryan P]

Why would Internaps cost for delivery be lower because they 'own the network'. Their whole model (and claimed advantage) is based around the fact that they _only_ buy transit from other Tier-1 vendors, and blend it with their secret sauce version of bgp. They do not peer. They do not have a backbone. They don't really 'own the network'.

Since they only buy transit, companies like LLNW (and AKAM) have a much lower cost basis for traffic.

LVLT on the other hand will kill AKAM and LLNW when it comes to cost basis.

I buy a lot of transit but am evaluating various CDN offerings for a 500TB commit. Pricing is quite variable but does not even come close to what I can do 'in-house'. I think this is why we see such a rapid drop off in price points at the 200TB+ level.

Haven't talked to Edgecast or Synccast. Eager to see what is so different about Edgecast HD delivery. Got my eye on companies like Panther Express, Voxel, LLNW.

[damien wetzel]

Hello Ryan,

You are right internap doesn't own their network but I would say why should they. As they buy transit in big quantities, they negociate low prices. Those prices are equal or maybe less to the Capex/OPex costs of the T1 selling those pipes.

Furthermore contrary to LL or L3 they don't suffer
the single point of failure. If for ex L3 network encounters issues,thoses are repercuted on their CDN. That's not the case when you CDN uses many differents T1s

Cheers

[Marco Parente]

Hi Dan, you mention above that your blog has many posts talking to the differences in cost between Flash and the other formats for streaming delivery. Can you please direct me to these posts since I cannot locate them. Also, do you talk about specific CDN pricing for Flash streaming delivery on these posts?

[Dan Rayburn]

Sure, there are mentions in many posts but this one entitled "Microsoft's Silverlight Platform Focused On Lowering Cost Of Content Creation & Delivery" talks the most to it.

http://blog.streamingmedia.com/the_business_of_online_vi/2007/04/silverlight_pla.html

For Flash pricing overages, it depends on the provider but as I mention in the posts, it's typically 20-30% more on average than WM.

[spenser]

Absolutely wonderful!

I've been floating around the internet for ages looking for this type of overview.

So, I've bookmarked it to be able to read follow ups. *AND* saved it off to disk in case I lose the bookmark.

[Erik Herz]

Prices are fluctuating significantly which makes it hard for CDN sales reps to publish pricing. That said, until the end of November, I will openly offer the following from VeriSign: No set up fee, no monthly volume commitment, $1 per GB stored (and globally replicated), 25 cents per GB for HTTP delivery. All content that is uploaded for HTTP delivery is also available via our secure P2P delivery protocol (Kontiki) at a price of 15 cents per GB. Please drop me a line if you are interested.

Erik
eherz@verisign.com

[Dan Rayburn]

Erik, normally I would not allow your post to stay as it is a sales pitch for your company, which I don't allow on the blog, BUT, since you actually give out real pricing numbers, I will let it stay. Thanks.

[Erik Herz]

Great! Thanks! I would like to see similar "pitches" from the other CDNs. Maybe cdnpricing.com can be the exception just to try to encourage as much openness as possible from all CDNs! I agree that this will be a good thing for our industry.

[Rob]

Hi Dan,

thanks for such interesting info. May I ask you to include some info about Flash streaming pricing into your articles?

I thought Flash streaming pricing might be interesting to know for most of your readers.

Thank you