The fact that the service provider is not getting any future revenue from you, even if they've fairly discounted your lifetime value, gives them the incentive to get rid of you.
Additionally it gives the wrong incentives to users to "abuse" their "unlimited" service. You saw this with AT&T's "unlimited" wireless data plans recently [2].
I know why people do it: as an alternative to raising capital. Businesses do Groupons for the same reason. In fact, I'm feeling like a broken record here [3].
The problem with Groupon (and similar "offer" sites) is they create the wrong incentives and attract the worst kind of customer. The best situation for Groupon and for businesses is for lots of people to buy the offers and then not to use them.
The lesson here is that if you want to create a sustainable and liked business, you need to align your incentives with those of your customers [4].
As a customer, stop falling for this charade.
As a business, stop taking short term cash flows for perpetual liabilities just to raise capital.
Seriously.
EDIT: regarding "unlimited" (in Karunamon's comment), he is correct: we do need to hold companies to a higher standard. For example, Australia's ACCC (I guess equivalent to the FTC but with a heavy focus on consumer rights) has cracked down on the use of "unlimited" (eg [5]).
But that just reinforces my point. In Australia pretty much all Internet plans have stated quotas. With unlimited plans you create the wrong incentives to throttle users, impose nebulous "fair use" conditions and generally whittle away at what's really "unlimited".
It's the wrong incentive system.
With Internet quotas at least you know you're getting what you pay for and your plan is priced for your usage, not some median or 95% usage that will constantly have the provider trying to throttle "power users".
[1]: http://news.ycombinator.com/item?id=3936701
[2]: http://mashable.com/2012/03/01/att-limits-unlimited-data/
[3]: http://news.ycombinator.com/item?id=2649739
[4]: http://www.accountingweb.com/blogs/ronaldbaker/firms-future/...
[5]: http://www.lifehacker.com.au/2010/12/accc-taking-tpg-to-cour...
Far from being naive and "falling" for the pricing model, my assessment was that
1) 200 shared hosting accounts (one server?) is a completely plausible lifetime offering for a successful hosting company, 2) $200 is a low risk punt, and 3) these are good guys and I think they can realistically make a go of it
TextDrive was a success, now continues to be a success as Joyent, and 200 shared hosting accounts (the state of play when I signed up) should be trivial for them to provide - even if they outsource that obligation to another provider.
I know I wasn't wrong about them being good guys (they are), but that's why I'm bewildered by today's announcement.
It may not be economically viable for them to provide these services now, but it wasn't economically viable for them to start a hosting company until we backed it. That was the deal. Joyent has an obligation to keep these services online, and if that means they need to take a bit of a hit to do that, then that's what they need to do.
Otherwise, I'm unclear how anyone would trust them again.
You are giving the average customer way too much behavioral credit. Companies abuse confidence because they can get away with it, of course.
In 2004, shared hosting with PHP/MySQL was the standard hosting package. A good quality Cpanel account at that time was about $15-$20 per month. So you've gotten an exceptionally good deal.
Around that time Dreamhost became the place to be. quickly followed by a series of lengthy outages that utterly destroyed it's reputation. Other Cpanel-powered hosts popped up, went under, merged, acquired, disappeared, reappeared, went down, never came back out.
Fast-forward to today, shared hosting is just a race-to-the-bottom barrel scraping. Margins are practically non-existent. Every kid with a bedroom computer has their own Reseller account and pretend they have their own hosting company. Pricing on that seems to be about $4 a year, but the quality is absolutely dire, and that's when the server is actually online.
Shared hosting is largely a dead industry today, it bottom-feeds because their top-end audience grew into dedicated servers, and their average and above average end customers are comfortable running their own cheap VPS. Safe in the knowledge that it's very much harder for another customer to take down everyone's website.
Shared hosting is no longer a sustainable business model. You got a great ride for your money, you got a very good deal. Now it's time to move on.
Grab yourself a VPS, and take a step up to the next curve on the online hosting technology stack. It's well past time. Good quality shared hosting, with great support is getting more and more expensive, because the market for it is dwindling down to people who can't or won't take the step up towards VPS/Dedicated servers - that means the support cost per customer rises. And that isn't a sustainable process.
If the average monthly price you paid for good quality hosting on TextDrive/Joyent is under $10 because of these packages, well done, you got a tremendously good deal. How would you have rated the service you received before you received the email/message? Think about that - consider if the support/service you received related to the per month price you've paid.
Now go out and find a web hosting offer that will give you the same quality of service, for the same monthly price - and switch to that. I get a feeling, apart from special offers that will surface because of this, you'll be hard-pressed to find an equivalent.
But seriously people, "lifetime" and "unlimited" are the two emptiest words in the language of web resource offers. You know that. I'd feel sad for you if you only got 1 years hosting for your $200 for such features.
But if you got 8 years for your initial outlay, and you still feel you deserve more... that's a text-book example of bottom-feeding. Quite the sort of customer a web hosting company wouldn't miss.
A class action? That would be amusing.
> "As a customer, stop falling for this charade."
No, theres is no reason not to take them at their word.
"lifetime" and "unlimited" need to be protected advertising words. There is no reason whatsoever to tolerate straight up lies in marketing because they are common lies.
TextDrive, Strongspace and Joyent
One-time payment of $499
We're pleased to announce a special offer that combines
three great products in our family — TextDrive,
Strongspace
How long is it good for?
As long as we exist.
I imagine Joyent benefitted from this when they were starting out. Now that they're done reaping the benefits, they no longer want to hold up their part of the bargain... but why should we let them get away with that?
Letting companies get away with this is bad not only for the buyers, but also for the companies themselves. If you scare customers away from "lifetime" purchases by making it known that companies can get away with breaking their side of the agreement, you'll make it more difficult for them to use this useful tool.
Just because you have a cause of action for breach of contract (the law recognizes the other guy should've kept his promise) does not mean you can get the remedy of specific performance (where the other guy is actually ordered to make good after all). The standard common law remedy is _in specie_ damages (the other guy has to pay up). The exact rules about when the court can compel specific performance are messy (written by lawyers), but it seems to me that basically what they all come down to is that no judge is going to say "I compel performance" if there's no feasible, relatively hassle-free way to actually, physically, compel performance. And that, in practice, tends to mean cases where the promise was title (legal ownership) to property: the judge can make the promise be kept by simply awarding the title to you. Actually getting the other guy to give you the cow or get off the land that's newly yours is a matter of property law, which has procedures such as replevy (where the Sheriff waves a gun around while you take the cow) and ejection (where the Sheriff waves a gun around telling them to get off your land.) These things can get messy enough as it is, and no judge wants to be responsible for having a sheriff waving a gun around to, say, compel somebody to give you a haircut. (And a GOOD haircut too, or else I'll shoot!) In such cases, the tricky specific performance business is transformed by the law into a straightforward money debt of the sort that can be enforced using, you guessed it, Sheriffs with guns, as well as garnishment of wages and the like. (I'm pretty sure that in the US, though, debts arising from judgments in breach of contracts cases are dischargeable in bankruptcy. Don't trust me on this, but I think it's pretty much only tax debts, student loans, and judgments for "intentional" torts that aren't dischargeable.)
All right, so after that long paragraph full of chattels and replevies and Sheriffs, if you are still reading, let's just assume that what could be had in court was monetary damages.
How much?
Oh, I would say about $500. Maybe a small multiple of that, but how are you going to convince a judge that you paid $500 for something that is worth much more than a small multiple of $500 to you?
Not just lying, but anything the court consideres "misleading or deceptive".
It's a consumer right's lawyer's wet dream - they can argue that basically any company which screws consumers is being misleading or deceptive; and it's going to be up to the company to convince the court otherwise.
Er... good? Misleading and deceptive companies get prosecuted. Good.
>> It never ceases to amaze me how many people "fall" for this "lifetime" pricing model. In fact I said the exact same thing three months ago.
>> The fact that the service provider is not getting any future revenue from you, even if they've fairly discounted your lifetime value, gives them the incentive to get rid of you."
If you ever start a company, let me know so I can be sure to NEVER bring you any of my business. The fact that you think it's okay to lie to your customers, and then blame THEM for not providing "additional revenue" is absolutely horrible. Looking at your profile it appears Google's "Don't be evil" motto would have made something of an impression on you, but I guess not.
Simple facts:
* Joyent made a promise for a service
* Joyent broke that promise
Don't buy something, especially something with an ongoing or operations component, from someone you don't trust. I think J.P. Morgan's famous quote is instructive.
There's nothing wrong with using long-term (perpetual is very long term) liability to finance growth. That's what happens when you sell equity in a start-up -- it's dead anyway if you can't launch, so that you'll eventually be paying dividends to shareholders (or otherwise returning capital to them) is often a reasonable trade. Financing early customers the same way makes sense; if you have to sell a unit of product now at a perpetual loss, you can compute the lifetime cost of that; for instance, giving pg a free lifetime email account ($500/yr) if that brings you 10k customers at $500/yr is probably a worthwhile strategy for a new high-end email hosting service.
While I agree that a "lifetime" or "unlimited X" pricing model will nearly always end up unsustainable, I think you've got your conclusion the wrong way around:
It never surprises me to see how many business end up shooting themselves in the foot, offering a "lifetime" pricing model early on.
Because really, you can't seriously take the business' side in this, when they don't make up on their promises. Doing that is wrong and dishonest.
The customer might not have been very realistic in their expectations, but the business actually broke their promise.
IMO the former is merely not very smart, while the latter is actually wrong.
I guess "dishonoring" contracts might be a cultural thing.
Also, this is not the 1Gb/1Gb service you get for $70/month, it's only 5Mb/1Mb. So, it's not so costly for them to provide it, and there's plenty of room for people to talk themselves into upgrading to the faster service.
Broken promises leave a bad taste in my mouth.
Also since you mentioned UNIX, maybe arpnetworks.com . As I recall they run Linux KVM VPS but offer OpenBSD and FreeBSD if preferred over a Linux guest.
However, $20/mo might not be the lowest price you can find for two low-traffic sites.
edit - I should point out, I host three low traffic sites on one low-end Linode instance, so that' $20/mo flat for three sites. I also use it for compiling code (I can compile code anywhere from my phone!) and testing out new features for various bits of software, so it has more use than just hosting.
http://www.webfaction.com?affiliate=hammertime
Yes, I just shamelessly put in an affiliate link, but the service really is very good. It's shared hosting but you get SSH, a smart admin panel and very reasonable prices for your memory. After a few years using it, I'm also happy to report that their technical support is excellent - timely, helpful and knowledgeable.
Edit: Obviously, any serious application would have been migrated off of Joyent long ago, but many of us have several small apps (Rails, Wordpress, etc) along with email accounts. I think it's more of an issue of migrating many small apps rather than a single large app.
I've used Slicehost (now Rackspace) successfully for a couple of years, but my pricing is probably terrible now. 256MB slice for $20/mth. I have a feeling I need to re-visit this...
I think we had one site on Textdrive that was live, and quite quickly moved to another host for obvious reasons.
I'm glad it worked fro some people, overall a poor experience for us.
Seriously. Someone in charge of PR actually wrote down and sent out an email with the sentence "your lifetime service will end on October 31, 2012."
(IANAL, TINLA).
I actually used them as a hosting provider for a while, and followed the support forums. Supporting the Lifetime offering was a challenge pretty much from the getgo, because some folks were less than neighborly with their usage of system resources, partially out of ignorance, partially out of Rails playing very poorly with shared systems, and partially because you attract an interesting type of customer with this offering. The physical hardware had some faults and probably has not improved much over time.
Meanwhile, shared hosting for Rails is, well, not a very attractive option over the last couple of years, thanks to VPSes, Heroku, Amazon, etc etc. Joyent apparently wants to exit the business.
Of note: I remember somebody asking Slicehost to match the business model and Matt shot them down saying that it was too gimmicky for his taste and wouldn't be mutually beneficial. Slicehost eventually came up with a neat solution towards the same end: they were oversubscribed, so they sorted their waiting list by the amount of non-refundable deposit you were willing to make, giving them much-needed cash flow without committing them to service for forever.
http://photodude.com/2004/06/01/textdrive-or-how-to-raise-40...
That was followed by a number of upgrade offerings ("Mixed Grill", "3 Martini Lunch") in subsequent years, extending into the Joyent merger/acquisition, that required a larger lump-sum payment.
Their pitch on lifetime service? "How long is it good for? As long as we exist."
http://web.archive.org/web/20060202181857/http://textdrive.c...
Now, you can argue in strictly financial terms that those initial customers (of whom I'm one) have probably got their money's worth, and that the hosting landscape has changed sufficiently that the lifetime products are peripheral to Joyent's main business. The counterargument is that Joyent not only acquired TextDrive's customers, but the goodwill surrounding Dean Allen's original venture, and has traded on that goodwill ever since. Clearly, they feel that's not worth much these days.
Furthermore, giving people who've had eight years of not having to think about hosting options just 80 days to migrate, with explicit notice that their servers will be shut down and wiped on October 31, strikes me as pretty cheap.
It doesn't make much sense to say that, hey, thanks for the "VC" investment when it was a risk to buy from us, but now that we're successful, you've gotten your money's worth.
Did I expect more than 6 years? Yeah, I took them at their word - "as long as we exist".
>One-time payment of $499
>We're pleased to announce a special offer that combines three great products in our family — TextDrive, Strongspace and Joyent — available for a one-time payment of just $499.
>What do you get?
>TextDrive's spectacularly feature-rich web, mail and data hosting; oceans of backup room at Strongspace; early access to the future of web-based organization, communication and productivity through the Joyent suite of interconnected applications. Perfect for a smart small business or smart individuals of any size.
>How long is it good for?
>As long as we exist.
They also offered a lifetime package known as "Mixed Grill" and "3 Martini Lunch" that bundled the hosting, Strongspace (a file storage solution based on SFTP/rsync -- now spun off to a different company) and some collaboration suite (from Joyent).
I saw it as a genius business move for them: they got upfront capital in exchange for a promise to offer a commodity that their customers would naturally outgrow. Those customers would likely be highly influential and/or become power-users. Furthermore they would be able to grow bigger than they would otherwise without having to take VC money (which at the time was harder to come by and the VC had a lot more power/control). Now we have things like Kickstarter so the idea doesn't seem so strange anymore.
They ended this service in 2011.http://en.wikipedia.org/wiki/TiVo#United_Kingdom
They no longer honour this deal in UK (which sucks, because I loved it).
http://articles.latimes.com/2012/may/05/business/la-fi-0506-...
What was worse was that Joyent changed directions, decided its then current customers weren't profitable enough (my guess shared hosting = higher per head tech support costs) and basically stagnated the service while it introduced new services. I think they did this a couple of times, and it has always made me relunctant to recommend them to friends (even ones looking for cloud services).
Sigh I hope StrongSpace will still honour the lifetime part.
BTW for readers who think lifetime account holders are being greedy, the point of the accounts was that when TextDrive/Joyent needed extra capital to expand, they offered lifetime accounts in return for quite a bit of cash up front. In part, they are where they are due to this clever bit of fund raising.
Lifetime typically means expected life of the product (see: lifetime warranties). Death is really, really complicated, so I can't imagine anybody would actually tie their products to a consumer's death.
It has this Q&A item: How long is it good for? As long as we exist.
The footer states: a Joyent company
Nothing complicated, Joyent still exists. shrug
They should of given you at least 15 years free I think.
http://web.archive.org/web/20060203030930/http://www.textdri...
Q: How long is it good for? A: As long as we exist.
Seems pretty clear cut to me.
(Not sure this is accurate, though. I did find it repeated in a forum discussing Joyent in 2006.)
"If we ever cancel this plan, we will refund your money in full."
or time-bound it, so everyone's clear - if I know I'm buying a 10 year plan, that's fine. I know I'm getting value for money, and the service provider knows they have a finite projected cost.
If their cost to provide the service is below the market cost of loaning them money, the difference is their margin. They simply need to price the "lifetime service" appropriately such that there's a market demand for it. If the price the market will pay is too little relative to their cost to provide the service, then they don't have a viable "lifetime offering."
Hi Obie,
As often happens in the software business, vendors “end of life” older platforms and migrate customers to new versions or platforms. The service you purchased a “lifetime subscription” to will no longer be supported or available from Joyent. On the other hand, we appreciate and value your business as an early customer. As such, we have created special offers specifically for you to make this transition as easy as possible. Details and promo codes were provided to you in the email.
I hope you will be able to take us up on the offer and see the benefits of our new platform.
Thanks,
------------------ Peter Yorke Senior Solutions Architect JoyentCloud.com
Dear Peter,
Thank you for your "message." I find your breach of contract totally "unacceptable" and I will see you in "court."
Michael
I suppose the question to ask is this: "Were you lying back in 2006 when you said the offer was good '[a]s long as we exist', or are you lying now? Or did you decide to renege on your promise somewhere in-between?"
You'll get the same boilerplate response, but it'll be on record.
This morning I found this Jason Hoffman post about the EOL and a possible refund here and added to my response email: http://discuss.joyent.com/viewtopic.php?pid=240955#p240955
In my case and theirs, I consider this partial refund ok because I have been using his service 8 years and now I will move my small sites to a cheaper host.
My lifetime account is where I have several important email servers, and I don't know how to migrate them. All the email says is to contact Joyent about getting migrated to one of their other product offerings. However, if I am only given 2.5 months to sort all this stuff out, I DO NOT WANT to use Joyent services. I'd love to use GMail for Business, Linode or what have you, but I don't know where to start.
"As long as we exist"
Possession is 9/10ths of the law.
Nobody is going to file a private lawsuit to enforce this (assuming there is even a leg to stand on to enforce it I haven't read the exact contractual promise..) And the other option would be a class action lawsuit where there would have to be enough class members to interest an attorney.
(Not relevant in this case but if a company was acquired the new company may have not acquired all the previous companies legal obligations but simply setup a new entity and assumed some of the assets, liabilities and obligations but not everything. When I sold a company that is how it was handled.).
They basically have let their "legacy" customers languish for a while, and after a pretty bad migration process a year or two ago, it was obvious that they really wanted to discard these old accounts - those boxes are running a version of opensolaris that's over 4 years old (snv_67).
Most of us paid quite a bit for our "lifetime" subscriptions, just to have it ripped up into a bunch of different parts that either get EOL'ed or sold off to another company (as was done with Strongspace).
If you sell a service, but decide not to provide it you should refund the money. Judging from the comments most of HN assumes if you "attempt" to provide the service you can keep the money.
Yes, I get it's a losing proposition for Joyent to live up to their obligations. So what? You either live up to them, or refund the money, it's really that simple.
I look at this the same way I look at "unlimited" internet service. Unlike a lot of the tech crowd, I have no problem whatsoever with metered bandwidth. My only quibble is that if you advertise "unlimited" you had better actually provide unlimited. If you want to charge for overages or enact caps, you don't get to call it "unlimited".
Might take them up on it as it's better than the hosting deal they are offering (given that i want nothing to do with them, anyway... dollar for dollar it seems about equal).
One disgruntled VC200
One of the few? Cool. It's not costing you that much to keep them on their lifetime plan. Surely its not worth the negative PR?
Not sure what Joyent is thinking.
Q: How long is it good for? A: As long as we exist.
I don't know how many servers they would have needed in 2007 to provide the services they sold, but surely now they could consolidate all those users onto 1/4 the machines?
What is this negative press costing them?
If you're writing that sentence and don't see a problem with it, there's no helping you. Look, many of us have been there and sold "free" things to early customers who become a pain later on, but you have to honor it. Better yet, never sell something "lifetime" without at least some kind of low recurring fee to cover nominal costs.
You got me:
"We've been analyzing customer usage of Joyent’s systems and noticed that you are one of the few customers that are still on our early products and have not migrated to our new platform, the Joyent Cloud."
So sorry about not appreciating enough your new platform because " Everyone that’s moved to our new cloud infrastructure has been pleased with the results".
About the whole "lifetime" ("As long as we exist.") thing ... Stupid me. I never get that. I mean that was meant metaphorically, right, like in marriages?
Ok then, you divorced me. Thanks that I can still sleep under your roof for one and a half month.
And yes: You keep the house. And the money. I keep my files.
I think, we can call this a true a win-win situation. Sorry, I mean "win-win".
Sincerely.
Is this normal for successful Web entrepreneurs?
Here's a very easy solution for Joyent.
Refund my money. My payment was for lifetime service. Pay me back and we'll call it quits.
----
Joyent is retiring the No.de service. If, as a Node.js developer, you prefer a Platform as a Service (PaaS) offering, we suggest that you consider our third-party partner, Nodejitsu, who offers a Node.js PaaS that runs on Joyent. Joyent continues to provide an ideal cloud infrastructure to run your Node.js applications, with performance and debugging tools that no other cloud provides. Sign up for a free trial on Nodejitsu (www.nodejitsu.com) or take advantage of Joyent Cloud's 30-Day Free Trial using this promotional code.
----
I once had a lifetime free checking account, I still have the advertising flyers from when I got it.
Well they took that away from me last year too.
I guess they just count on you getting a lawyer and lawsuit being more of a hassle than you just walking away.
When I bought it, I knew it was a gamble, and with the $500 spread over 6.5ish years, it's not a terrible ROI.
I assumed I'd lose out due to the company eventually folding, though. "As long as we exist" seemed pretty straightforward, and what I knew about them didn't leave me believing that they'd just pull the plug like this.
I've updated their Wikipedia page with a short section that I believe summarizes the situation accurately and factually, without letting my emotions creep in too much - if anyone cares to edit it, have at it. http://en.wikipedia.org/w/index.php?title=Joyent
Joyent, I'm disappointed. You had a few memorable tech disasters, but never before did I personally experience ill will from you. I had begun to trust you guys.
http://discuss.joyent.com/viewtopic.php?pid=240955#p240955
They probably should have done that on the original letter.
It doesn't come close to honoring the "as long as we exist" that we bought in for, but it's a lot better than the starting position, and Jason is talking a little about why we're being cut.
(From what I can see, it looks like cutting the lifers may have been a requirement of some of the recent VC investors. That's me reading between the lines a bit, though.)
That constitutes a contract which they are clearly trying very hard to ignore. It seems so petty given their success, available resources, and the very manageable limited bandwidth and quota'd storage space us lifetime customers are allocated.
EOLing an old lifetime product with high support costs makes sense. What they should have done was moved the "small number of customers" using Lifetime service onto a new lifetime platform using their shared hosting platform. The plan they're offering for a year seems like an adequate replacement -- the cost of providing that low tier of service forever is probably not much more than the cost of providing it for a year.
Maybe make it opt-in, so inactive accounts don't spin up on the new platform, and provide some higher level of service at a discount (so, instead of a $50/yr cloud plan for free, you could optionally get a $250/yr plan for $150/yr.)
My biggest issue with Joyent is they seem to change their services every year or two while letting their legacy customers languish. I used to have an account on a shared host. Now I have a Smart Machine, or maybe a Shared Accelerator. I'm not sure anymore and they keep changing the support website.
Now I just use them for mail but, I'm dissatisfied with that so I'm looking to move.
What I want is to pay for a service and not worry about it. It's too much work being their customer nowadays.
To make any of them work to full effect, we'd probably have to band together? Any argument as to which method is preferred? CCT
Jason Hoffman says that and other interesting things about the EOL here (read all of his posts):
Anyway, here's what I do: I register my domains at nearlyfreespeech.net. They have a somewhat limited number of different TLDs available, and at about $9 per year, are not cheap (or "free"), but certainly not exorbitant. But their integrity is rock-solid. One time I let my domain expire for a couple weeks, an alarming circumstance. But they restored it for free after I simply payed the fee (this can only work for a limited time, of course). My old (and reliable) previous host and registrar would have charged me about $200 to get it back! So the $9 is like cheap insurance.
I use asmallorange.com as my host. They charge as little as $35 per YEAR, with $0.50 per GB per month for additional bandwidth. (Both of these hosts are "pay as you go.") So if I ever have a disagreement with my host, they cannot mess with my domain name! Also, my registrar uses FreeBSD servers, while my host uses Linux, and I don’t want to deal with FreeBSD (it’s probably more stable than Linux, but I know nothing about how to use it). The smallorange service (running on Linux) is chock-full of great features, including Cpanel. They have a feature inside their Cpanel that one-click installs things like WordPress, and I used it. But I chose a one-click install password that it allowed, but that the rest of Cpanel would not allow, and that lead to problems. But their customer service was right there for me, and they immediately cleared it up. Hope this doesn't sound spammy. The main point is, if you really want service, pay as you go is the way to get it. It worked great for me.
So you essentially got "x" years of hosting plus Those money back as credits.
In case you didn't get it, Jones is the name of the shared server that I'm on. ;)