Why Is Akamai Charging More For Streaming Video Delivery Versus HTTP Delivery?

Over the last few weeks, I am getting more and more customers asking me why Akamai is quoting one price for streaming delivery and another price for HTTP based video delivery. Am I'm not talking Flash streaming where some CDNs still charge an Adobe license fee. Even with Windows Media, Akamai is charging a higher price to deliver content via a streaming media protocol as opposed to delivering content via HTTP.

I don't know of any other CDN in the market that is pricing video delivery this way and as a result, I see Akamai not winning a lot of new deals in the market as customers don't understand why they should be "penalized" for doing streaming over downloads. Why would Akamai care what protocol a customer is using? Does it cost Akamai more to deliver streaming on their network versus downloads? It shouldn't. If this was simply about Akamai charging more for their services, no problem. It's a free economy and if you can get more for your services, more power to you. But that is not what this is about. This is about Akamai charging more for one protocol over another and not explaining to customers why they are the only CDN in the market doing this.

I asked Akamai for more details on this so that when customers call me I can educated them on Akamai's pricing strategy. Unfortunately, all Akamai wanted to say on the subject was "we don't discuss pricing specifics publicly." I can understand if you don't want to "publicly" discuss it, but clearly Akamai is not even discussing it with potential new customers or I wouldn't have so many content owners asking me for an explanation.

This is a bad practice on Akamai's part not only because of the effect it has on them winning new deals, but also because of the impact is has on the industry. As an industry, we need to move away from the idea that content owners need to make decisions based on protocols. Should a customer really care and have to decide on what protocol their CDN is using? Absolutely not. All they want to do is use the best combination of technology and protocols based on the type of content they have for the device it is being played back on. The pricing and bundling of content delivery services should be made as simple and easy as possible for customers. Every other CDN other than Akamai has already done this in the market and charges one rate for streaming or downloading video content.

Comments

[Rob Sandie]

It comes down to the fact that Windows Streaming (silverlight, etc) requires a Windows machine, which costs more then a cheap Linux Machine using Openource Squid and sending HTTP traffic.

[Dan Rayburn]

Hi Rob, I don't buy that as the reason. If it was that much more expensive, then the other CDNs would have to charge more as well, which they don't. And if it was that simple, then why wouldn't Akamai simply say that to customers? Akamai has no problem telling a customer that wants Flash streaming that it is more expensive due to the Adobe license fee. Why not say that for Windows Media streaming as well?

And the license fee per Windows server is cheaper than the license fee the CDNs have to pay to Adobe over time. I believe it is simply Akamai trying to charge customers more for streaming and making it sound like streaming is more complex or difficult to do, hence the higher fee.

[Michael Donnovan]

I believe it has to do more with how they choose to deploy their servers/operate their network. In the case of HTTP delivery, they can leverage their lower cost edge servers where they don't pay for bandwidth. In the case of streaming, they have a more concentrated network platform that uses "public" regions where they pay for the outbound traffic, hence higher costs.

[damien wetzel]

I have 2 potential explanations:

1) with http download for video viewing, the end user having a rapid dsl line will use much more banwith than what he really sees (i estimate this ratio at 1/6, ie: you look for 1MB of movie and the content pay for 6 at akami), so much more money fall in the akamai pockets :) why would they encourage streaming where the customer pays what the eyeball sees and no more,it is amazing the numbers of akamai customers i meet that are un ware of this fundamental point impacting a lot their CDN budget.

2) akamai traffic is mainly http caching traffic, their streaming network is not that big or developped and streaming will always be a low margins market compared to http caching and applications acceleration and all their funky marketing products

my 2c comments

[David Muller]

I asked this question in a panel at SMW and both Limelight and CDN Networks said there was no additional cost although afterward Limelight said they needed to give some clarification on this. The streaming I am talking about is with Adobe Media Server.

[Dan Rayburn]

Hi Damien, I would have to disagree with your notion that Akamai's network is mainly for HTTP and caching and that their streaming network is not that big or developed. During any given day, Akamai is serving a few hundred thousand simultaneous live streams. And when it comes to live events, which is all streaming based, Akamai delivers some of the largest events on the web. So their network is clearly setup for large volume streaming.

[damien wetzel]

hi dan,
what i want to say is that i believe that in volume the part of http traffic is much higher than the streaming part, their network
has never been designed for streaming and as michael donnovan said,
i don't think they are putting streaming servers at the edge but rather in centralized points where they need to buy the bandwith.
they have the power to make big events for sure but i believe they
will have much more though competition on the streaming side than on the caching side.so i would think that they don't care a lot with streaming.but that's my opinion which could turn to be false of course.

[Mark cuban]

isnt it as simple as streaming is latency conscious, http for downloads is not ?

[Rob]

Not designed for streaming? That's just marketing stupidity. Akamai has been streaming since 98 or 99. That's about 8x longer then most CDN's have even been in business.

In terms of their network topology, of course the streaming elements of their network are smaller. That's because streaming isn't as widely consumed as caching. Duh.

No I'm not an employee.

[Steve Lerner]

The answer: constrained supply. Not referring to any particular vendor, but if a vendor has fewer servers, software, and support for any particular service than another, they may seek higher prices due to constrained supply.

The other possible answer is if a vendor considers a service to be premium, and charges more for it.

There is nothing wrong with selling premium services- unless of course no one will buy them.

[damien wetzel]

rob,
I have deployed the akamai network in europe up to 2003,
at that time streaming was not big in the network except the steve jobs keynote no big live events.
streaming has really rose the last 2 years.
akamai like microsoft has the inconvenient of being the first player with old technologies they can't change that simply, they are like mamouths in a rapidly changing landscape.

[Chris Diacov]

Maybe they are not charging MORE for streaming traffic - just charging LESS for HTTP traffic? I agree with the first point Damien makes - the wasteful nature of HTTP delivery (especially in the absence of bandwidth throttling) makes for increased profits even at lower margins. In addition, HTTP traffic in general is much more "pliable" - better suited for traffic shaping and less affected by the latency / routing. So (at least theoretically) it's cheaper for them to deliver HTTP traffic and they are passing on the savings? :)