Pricing spare resources and options?
Hey, The recent comments on Mojo Nation prompted me to look at their site again. I don't see much guidance on how to set prices for network services. There's a mention someplace that business customers will build pricing schemes on top of Mojo Nation, but not much indication of what these schemes might be. So what is the "right" way to price resources? (Preferably beyond the obvious "supply and demand.") Fleet announced at Hettinga's DCSB that they were developing some kind of spare resource market. I couldn't make it. Does anyone know whether they addressed this point? A related question - I ran into a friend of mine who had just finished an internship in options trading. He suggested it might be worth looking at options on spare disk space or other resources, as a means of figuring out how to make Mojo-type systems eventually profitable in the real world. Now I have a copy of Natenberg's _Option Volatility and Pricing_ to look at... -David
At 01:44 PM 11/18/2001 -0500, dmolnar wrote:
The recent comments on Mojo Nation prompted me to look at their site again. I don't see much guidance on how to set prices for network services. There's a mention someplace that business customers will build pricing schemes on top of Mojo Nation, but not much indication of what these schemes might be.
So what is the "right" way to price resources? (Preferably beyond the obvious "supply and demand.")
Unfortunately, one of the evolutionary steps in Mojo Nation's development has been their abandonment, for the most part, of user-visible and user-configurable economics; they deliberately made it difficult to see how many Mojo are held by the local broker, and relatively unlikely that a broker will be able to earn significant Mojo by careful pricing - recent clients are configured such that the economic brakes on resource usage are sharply curtailed or removed entirely. It's my impression that, given the changes in the venture capital and software markets, they've refocused their efforts away from P2P filesharing and towards speedy realtime content delivery, whereby people with limited net connections can maximize their incoming bandwidth by pulling (or getting pushes) from multiple other parties simultaneously, somewhat similar to what Morpheus/Kazaa are doing, or what Bram Cohen (a Mojo Nation alumnus) is doing with BitTorrent. The economics seemed to attract people who wanted to experiment with pricing, etc., but that wasn't necessarily a market or constituency which is interesting to investors or businesspeople.
A related question - I ran into a friend of mine who had just finished an internship in options trading. He suggested it might be worth looking at options on spare disk space or other resources, as a means of figuring out how to make Mojo-type systems eventually profitable in the real world. Now I have a copy of Natenberg's _Option Volatility and Pricing_ to look at...
It seems like there ought to be an interesting market here, but I know and worked with several people (with good financial backgrounds) who flogged this for awhile and never got anywhere. I guess a big part of the problem is that there's such a big difference in the perceived value of a megabyte/month of online storage .. if you're on the provider side, you think that's pretty expensive, as you've got the investment & etc required in building a data center, providing bandwidth to reach customers, paying staff, etc - but if you're on the customer side, you look at an 80 Gb drive at Fry's in the Sunday newspaper for $160 and think about a $500 1.5mb/s frame relay connection, and wonder why the service guys want $3 per Mb/month .. and then the Mojo guys come along and make it sound like the people with the cheap frame relay connections and commodity PC hardware ought to be able to set up data centers in their back bedrooms or on their old laptops, but so far all of the business models proposed involve paying those guys up front for an indefinite period of storage, so there's no strong incentive to actually store the data for long, especially not if you can resell that same disk space 3 or 4 or 50 times. Seems like the guys who really have hard data about options for bandwidth and disk usage are the disaster recovery guys. And that market hasn't been so great lately either, Comdisco declared bankruptcy and is their disaster recovery unit is getting swallowed up by Sungard, I think. Anyway, yeah, the Enron guys thought there was something interesting to be done in bandwidth futures, too, but I don't know if they ever really got anything done before their demise beyond some demonstration projects. -- Greg Broiles -- gbroiles@parrhesia.com -- PGP 0x26E4488c or 0x94245961 5000 dead in NYC? National tragedy. 1000 detained incommunicado without trial, expanded surveillance? National disgrace.
On 18 Nov 2001, at 22:30, Greg Broiles wrote:
It seems like there ought to be an interesting market here, but I know and worked with several people (with good financial backgrounds) who flogged this for awhile and never got anywhere. I guess a big part of the problem is that there's such a big difference in the perceived value of a megabyte/month of online storage .. if you're on the provider side, you think that's pretty expensive, as you've got the investment & etc required in building a data center, providing bandwidth to reach customers, paying staff, etc - but if you're on the customer side, you look at an 80 Gb drive at Fry's in the Sunday newspaper for $160 and think about a $500 1.5mb/s frame relay connection, and wonder why the service guys want $3 per Mb/month ..
They STILL want this kind of price? I remember back in 96 looking at some prices for web hosting and thinking "hmm, these guys are getting their investment back in about 2 weeks, and everything after that is profit. That can't last".
and then the Mojo guys come along and make it sound like the people with the cheap frame relay connections and commodity PC hardware ought to be able to set up data centers in their back bedrooms or on their old laptops, but so far all of the business models proposed involve paying those guys up front for an indefinite period of storage, so there's no strong incentive to actually store the data for long, especially not if you can resell that same disk space 3 or 4 or 50 times.
I played around with MN for a while, one of the things that disapointed me was that you tend to lose mojo just by running the client. It seemed to me that the idea that everything you do should involve a cost one way or another was a mistake, it seemed to me that the housekeeping/say hello kind of stuff shuld be free. Publishing also, since 1) there's no guarentee that the site you publish blocks to will keep them for any nonzero length of time and 2) Theoretically the people you publish to will expect to make their "profit" from other people requesting those blocks. Of course, it's unlikely that Mojo will actually ever cost/be worth anything, but that's beside the point; assuming that pretty much invalidates the whole system. A distributed backup/storage system seems like it ought to be pretty easy to develop, but of course up front payment doesn't work at all. You'd need some kind of challenge/response system to verify that the storers are actually keeping the data, you'd need lots of redundancy since it doesn't really help you to know that some bozo dumped the only copy of your critical data, but if you have like 20 copies out there and you continually verify that they're all keeping your data (if some of tem lose it, just replace those guys) it seems like you should be safer than you would be using a standard commercial service. And at the prices you mention earlier, vastly cheaper.
Greg Broiles -- gbroiles@parrhesia.com -- PGP 0x26E4488c or 0x94245961
George
participants (3)
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dmolnar
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georgemw@speakeasy.net
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Greg Broiles