May 5, 2008

Your data: happily ever after

by with 4 comments

My (future) children might one day know of their grandmother by the orchard
of black walnut trees she planted, even knowing the long growth times meant
they were unlikely to yield within her lifetime. “For the next generation,” she
says.

Have you ever considered the modern day scenario for how you may be
remembered by the next generation? If one of your great grandparents had kept a
blog, even if they had only updated once every few months, would you read it at
some point in your life and be glad it was there?

When one of my university classmates died unexpectedly in a tragic accident,
his friends and family renewed his domain and prepaid his hosting arrangements
for a long time.

The challenge of long term archival of digitally stored data is not simple. If
you discovered that one of your ancestors had left you an important message,
saved on an 80s era floppy disk, could you conveniently read it today? Even if
you could find the necessary hardware, the disk is unlikely to be error free.
Even magnetic media can be damaged by time. Some commonly used optical media
often develop data errors in just a few years.

For these reasons, SpiderOak is now offering ‘forever’ accounts. You make a one
time payment, and your account remains active in perpetuity. Your SpiderOak
share rooms stay online, your data is forever accessible. The account does not
expire due to inactivity, or the death of the owner.

When the world transitions from one storage technology to the next (holographic
drives, protein memory, who knows?) SpiderOak administrators will have already
migrated your data to new devices during the normal course of everyday routine
maintenance and hardware upgrades.

Some may wonder how this is a viable business model. Is SpiderOak simply trying
to collect advance payments for impossible services, ignoring the cost of
rendering those services long term? Would this not represent a significant and
unwise liability for SpiderOak to accept?

The answer to this question is in Moore’s Law, which predicts that the capacity
of technologies double every two years. This prediction has been accurate for
decades now, and it shows no signs of changing. For example, this means that a
100 gigabyte SpiderOak account you purchased today will cost the company half
as much to maintain in two years. In four years, one forth as much, and 1/32
in 10 years. In short: the cost of fulfilling the permanent service we sell
today approaches zero after many years.

That makes sense thinking backwards also. In 1998, how much personal data might
a typical individual have accumulated? Add up all the emails, word processing
documents, low resolution (by today’s standards) digital photographs, and the
entirety of everything digital a person might have. A few gigabytes would have
been considered a rather large collection. In 1998, a 20 gigabyte hard drive
might have cost what a 500 gigabyte drive does now. Today we give 2 gigabyte
SpiderOak accounts away for free!

So, what’s a reasonable price for something timeless? There are established
formulas for the time value of money. Let’s consider a model for a 20 gigabyte
account, which we currently charge $10/mo for. That represents a payment stream
of $10 a month for two years, followed by $5 per month for two years, and $2.50
per month in years 5 and 6, and so on, all the way out to 30 years when the
projected annual cost is less than $0.01. Then I added a minimum $5/year cost
into the model, because regardless of the effects of Moore’s law, there are
still some human costs, such as providing customer service, that are never
zero.

Using this model, at a 6% rate, the present value of the 20 gig forever
account about $500. For our 100 gigabyte accounts, the present value is $2118,
and for right now we’re giving a volume discount and offering these at $1000.

You can upgrade a ‘forever’ account when you need more space just by paying the
difference in cost between what you’ve already paid, and the larger plan you
wish to purchase.

I have started inviting everyone in my family to send me genealogy records,
journals, pictures, or anything else they think would be interesting to
descendants and future historians, and I’m putting it online in my own
SpiderOak account, in share rooms known to our family. I recommend that they
save in open formats like plain text, jpeg, or HTML whenever possible, and add
as much information as they can, like who are the people in the pictures, or
what the occasion was and any story they can contribute.

It is my hope that SpiderOak is remembered by history not as just a
contemporary software company, but also as a link from one era to the next, and
from this others will know a little more about the walnuts they’re eating.

Comments
  1. Your argument is very convincing. I would buy a 'forever' account without thinking forever, provided I have that need.

    I wish you all the best with your business.

    Thanks,
    Satya

  2. Actually there isn't even a need for Moore's law to make this kind of product possible and economical. The time value of money means that there is going to be some lump sum payment on which the interest will cover the future costs of the data storage.

    This is a bit more obvious if you think about cemetery plots. You likely get to keep that piece of land for the forseable future but that doesn't make the cost absurdly large.