Wednesday, December 19th, 2012

Crowdfunded web hosting

Let's start 2013 with a new hosting concept, one that will essentially change the way you pay for hosting. This is a project I have been wanting to start-up for many months now, but just never had the time. So, rather than merely booting up this project, I am proposing it here on my blog to see how much interest it sparks. Firstly, since I am a Canadian, I do not have access to kickstarter, or I would use their wonderful services to kick start this idea.

Imagine just paying a single one-time charge to host a website. This charge will cover that websites hosting needs for the lifetime of that website. How will this work? It works by using something called interest, which grows on many types of bank accounts. If there is enough money in a high interest savings account, the interest will pay for the underlying hosting service, such as Amazon EC2 or Rackspace Cloud. The objective of such a hosting solution is not to make profit, but rather to provide life-time hosting to many users.

Essentially, each hosting member is an investor, their one-time charge is immediately deposited into a high interest saving account. The amount gained through interest will increase with every new user into the hosting platform, thus making it possible for the hosting platform to grow in the cloud.

If the hosting service were to obtain 5,000 users whom paid $200 as their one-time charge, the high interest saving account will already have $1,000,000, and will be making $200,000 annually for server hosting costs on a 1.2000% interest rate. As the service and users grow, so will the annual return from the high saving account, creating a self-sustainable hosting solution. The one-time cost will vary depending on how many initial users there will be.

Would you use such a hosting service?

Comment #1: Posted 8 years, 10 months ago by Benjamin Riggs

Very interesting idea. Unfortunately, the devil is in the details (not to mention a cadre of lawyers if the TOS aren't rock solid).

Comment #2: Posted 8 years, 10 months ago by Stephan

1.2% of $1M is $12K/year income not $200K/yr... probably not enough to pay for everything 5,000 websites need.

Comment #3: Posted 8 years, 10 months ago by Anonymous

Also, is a system that depends in the corrupted finance system... Variable interest rates, complex accountability, insane management costs related with the money, and not the purpose...

I think a foundation can do the work very well (using a already proven yearly or monthly fee).

Comment #4: Posted 8 years, 10 months ago by Jonathan Street

1.2% of $200 is $2.40. That isn't going to get each of those 5,000 users much hosting. Not so much EC2 as godaddy hosting. Even then the $2.40 you need to cover hosting for an entire year wouldn't stretch to a single month.

If you did want EC2 or rackspace level hosting, say $20/month, you would need to put $20k on the table.

Comment #5: Posted 8 years, 10 months ago by Joe

Conversely, although $200K/yr may be sufficient to pay hosting for 5000 sites, $200K represents 20% interest per annum, and I'd like to see where Kevin (or anyone for that matter) is going to get that kind of consistent yearly return.

Comment #6: Posted 8 years, 10 months ago by Confounding

I've been pondering something similar - the problem is even with a higher interest rate, you still need an impressive amount of capital in your "hosting endowment". You also have to have a critical mass of people to get said capital, and you need them not to be abusing the system.

Comment #7: Posted 8 years, 6 months ago by Kevin Veroneau

I have checked again at my local bank, and the interest rate is 1.200%, and using an interest rate calculator for a saving account, since the interest at my bank is calculated on the daily balance and paid monthly... That creates a little over $1,000/mo. to use for paying for operating costs. Rackspace Cloud can offer a 30GB RAM server for just about $800/mo. I think I'll go for multiple servers though. Not all users are going to use a large amount of resources, some will use more than others. I am quiet sure there is a way to full off this idea, if implemented correctly.

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