I still haven’t seen any information regarding how Storj is supposed to make money as a company. If you want large customers, you need to have a proven platform and sustainable business model. Right now Storj is struggling. This is not an assumption it’s pretty obvious. Just look at the basics. They pay more for the product than they sell it for. Even if they dropped sno payouts to match what they charge they still don’t make any money. They still have employees to pay, marketing expenses, expenses to run satellites, websites, this forum… where does any of this come from? If it’s just coming from reserves, how does this reasure anyone as to the longevity of the company? The Storj network has many advantages over traditional storage, but if I’m worried that the company might not be around next year it’s kind of a moot point. Regular everyday people though typically don’t consider these factors so Storj would be better off targeting the consumer market first with a profitable strategy.
As I said before, even if every sno GAVE AWAY their storage for free, it wouldn’t make much difference at this point in the game. For arguments sake let’s assume all the data is paid, and well call it 10% egress/mo.
You made a little mistake in your calulation. It is per month and I don’t think they get paid $82,250 per employee per month. Anyway it’s still not enough.
But from the Balance and Flow report the Net Network Operation Costs are only peanuts compared to the other expenses, especially the “Other”.
As I read Backblaze B2 here, many times, I am not sure why it is compared this much. It is only comparable if you just care about the price and just another Backup.
Because:
Backblaze now has multiple regions! One in Europe (Netherlands) and one is called “US-West”. Quietly the US-West is actually three separate data centers, but your data will only really land in 1 datacenter somewhere in US-West based on a few internal factors.
To be absolutely clear, if you only upload and store and pay for 1 copy of your Backblaze B2 data, it is living in one region. To get a copy in two locations you have to pay twice as much and take some actions. So if this kind of redundancy is important to you for mission critical reasons Backblaze B2 would only be half as expensive as one copy in Amazon S3, not 1/4 as expensive.
In the one copy in one region in Backblaze B2, any file is “sharded” across 20 different servers in 20 different racks in 20 different locations inside that datacenter. This helps insulate against failures like if one rack loses power (like if a power strip goes bad or a circuit breaker blows). But if a meteor hits that 1 datacenter and wipes out all of the equipment in a 1 mile blast radius, you won’t be getting that data back unless you have a backup somewhere else.
You got me… it wasn’t technically a mistake but the thought wasn’t actually finished. I cut it short because of my kids bugging me and didn’t proofread, but the point was simply to point out that the monthly income barely pays one persons yearly salary IF we essentially donated the space. Now from my work with other crypto companies, most salaries are much more than that… at least for the “big guys”. But with 10 employees, even at that rate, if Storj actually made all that money they would just barely be getting by.
As for Backblaze, I honestly can’t understand why it’s being compared to Storj all the time especially in terms of pricing. They are NOT the same product.
That was what I wanted to say. As I read it again it was maybe not clear, but i mean it don’t has to be the same price not to mention be even cheaper.
If you just care about the price and want another Backup go Backblaze. As Storj has more to offer it don’t have to be the same price level.
Sorry, I understood. I agree with you and was just reiterating the fact that they are not the same. It’s not fair to compare the two. Storj is trying to charge less than them while targeting a market that in most cases doesn’t even consider Backblaze as an option.
Step 1: slam dunk pricing that takes it away as an argument to not use Storj
Step 2: Initial customer base acquisition.
Step 3: Fix unit economics so everything that scales with growth is profitable
Step 4-10: Scale, scale and scale some more
That’s how you cover all the costs that don’t scale linearly with growth. Storj Labs has a healthy runway still. But if they don’t fix step 3, all they would be doing is scaling losses.
Analogies are great at a high level, but tend to break down at the details. You represent BlackRifle as being universally worse than anything else out there. While this is probably true for some use cases for Storj, there are many use cases in which Storj outperforms the big guys even without considering the price difference. And this isn’t from Storj PR, but from some of their actual customers. For Storj, that’s mostly large file distribution use cases where latency isn’t important. (Eg. software distribution, large scientific dataset distribution, blockchain snapshot distribution, video distribution not streaming) But also (less profitable) backup use cases. Coffee beans simply can’t represent a complex product like data storage in a reasonable way. Storj has the option to lean in to their niche while they improve the product for other use cases to expand into. I’m not sure what would be analogous to that for your coffee bean analogy. But pricing your product to fit the worst use cases is not the way to build a brand. Finding your niche and pricing it accordingly is. Then you expand from there.
Coffee bean farmers have other options, if BlackRifle isn’t profitable for them, they will disappear. And there is no brand to scale if you run out of suppliers. It’s a balancing act and yes, node operators probably have it too good right now, but you can’t just cut one side when you try to optimize. You’d need a holistic approach to optimize processes and make it fit the market on both ends.
Which are literally the only properties you mentioned in your overview…
Keep reading…
How is high speeds across the globe for large file delivery not quality?
I don’t know about your fictional BlackRifle, but Storj encourages these conversations. I have no fear mentioning Storj’s downsides here. Time to first byte being probably the biggest one.
I don’t disagree with anything in that summary. I mostly disagree with how you skip over the upsides of Storj and argue it should be bargain bin priced. I don’t think that fits the product on offer. And even you still mention that farmers will leave. That’s exactly the balancing act I was pointing to. You either drop the subsidies and see whether node operators can survive it or you find your niche, price accordingly and take less risk on losing node operators. Of course in the case of Storj there are other things to tweak too, like tuning RS settings to require lower expansion ratio’s, making repair cheaper, charging for costly services (like the gateway MT) separately. Consider for example $5 for egress when using native implementation or gateway ST and charging an additional $3 for ingress and egress for usage of the gateway MT, as this incurs egress costs for the Storj hosted gateway MT in both directions. This would cover the costs and incentivize customers to use the cheaper native implementation or a self hosted gateway ST.
All I’m saying is I really hope we don’t see just a “we’re gonna pay SNO’s less” announcement without other efforts to make the whole system more profitable.
This is why your analogy doesn’t work. Storj is capable of delivering higher and more consistent speeds globally for large files than even the giants like AWS, GCP and Azure are capable of. Furthermore it’s multi-region by default and at no extra cost. It’s nothing like the price competitors in this space. You keep consistently ignoring Storj’s strong points.
I think you can use the search function yourself as well. There are multiple lauding customer testimonials in software distribution, large scientific dataset distribution and blockchain snapshots. You can look at some case studies here: Storj Case Studies search the forum or this new thing called the world wide web for further testimonials. I don’t have them at hand at the moment either.
Imagine how little beliefs matter… You expect me to back up my stance, but rely on your belief. You can really stop with the coffee analogy, because it breaks down. Quality isn’t a single measure in the storage space. There are use cases that only care about low latency regional access and use cases that care about high speed, latency independent global distribution. Customers have specific needs and Storj can meet the needs for many use cases incredibly well, while not best suited for others. It just isn’t a simple quality vs price comparison.
No it isn’t, it could be just a good indicator of how well known the brand is.
They won’t be after scaling up. BlackRifle is growing and if they fix unit economics, that means their profit will outgrow the currently higher static costs that won’t grow linearly with scale.
I think it is about time that I also write down my thoughts. I’ve been a node operator since May 2021 and have really thought a lot of the Storj project so far.
Recently I became a Storj DCS customer and I am not really satisfied with the performance. My upload is maxed out, but my download is almost not at all and I think this is due to, please forgive me for this expression, third world countries that provide maybe 56 KBit/s for upload.
I’m happy if I can use my 250 MBit/s downstream at peak for one second, but on average we’re talking about maybe 50-70 MBit/s here. That’s clearly too slow for my 2.2 TiB backup.
My suggestion: Run speed tests in both directions on your test satellites and then categorize the nodes into tiers. If you want premium speed in a region of the world where it is safe - I’m talking here for myself and Germany, for example - you should dig deeper into your pockets.
Those who want less and, above all, inconsistent speed will pay less accordingly. And since electricity prices have already been discussed in other threads. New customers in Germany pay at least 0.40-0.65 EUR per kW/h, which is no longer unrealistic, so that you would scare away your most valuable SNOs.
You could adjust your payment for storage node operators accordingly and not generally punish those who consistently and securely provide storage for the network.
You don’t have to worry about slow nodes as they usually get eliminated by long tail cancellation. Storj is also not as fast for smaller files. But you can overcome a lot of that by downloading more of them in parallel using uplink. The topic should provide you with plenty of info on how to optimize.
As BrightSilence points out, your settings may not be optimal. Slow transfers are trimmed off and there is less incentive for those nodes to even exist as they will lose the race to much faster nodes who will earn egress. The system is fetching a percentage of the fastest available files, discarding the rest, and reconstructing the ones it doesn’t need. By leveraging increased parallelism you can achieve very high transfer numbers.
Storj claims to be competing with other S3 providers that clearly charge far more at around $23/TB and varying rates for bandwidth which are substantially higher. If this is truly the use case they want to focus on and that’s what Storj is best for then fine, but why is Storj so cheap compared to the competition? It seems Storj is priced to compete with a specific part of the market that they don’t actually cater to. This also hurts them in terms of the market they DO cater to because although it’s far cheaper it also clearly indicates the company isn’t making a profit and therefore isn’t sustainable long term. There’s to much uncertainty around it for these larger customers to make the switch despite the cost savings.
From running nodes myself for years, they tend to average around $4/TB. More TB’s cost money for hardware but more bandwidth doesn’t (with obvious limitations of course). I would still be happy with $4/TB even if my bandwidth is maxed out, especially on the outbound side since generally that’s not used for a whole lot anyway in residential situations. Since Storj is a decentralized network that takes advantage of many internet connections with otherwise idle bandwidth, why not monopolize on that. Really use that to your advantage.
Since node operators (with some acceptions I’m sure) generally don’t have any additional costs for outgoing bandwidth, why not offer that up as your selling point? Use the real advantages of the network to sell it. Let snos contribute more by taking advantage of something we already have available to give away as opposed to cutting payouts.
So what about this…
Price Storj at say $15/TB
Offer a large FREE egress allowance. Enough to WOW me but not so much that it can be overly abused.
Keep $7/TB egress for anything over free allowance. (Free allowance can vary by customer.)
Pay snos flat rate of $4/TB + egress bandwidth (if any is paid).
3 copies of data = $12 with $3/TB left for Storj (I believe it’s 3, is that correct?)
This alone, with the current data stored (assuming you could just hike up existing customers pricing) would generate $648,000/yr for Storj… and the networks still small yet.
This would generate plenty of income for Storj especially at scale.
No more subsidizing.
This would give me as a potential customer far more confidence in the sustainability of the company.
Customers in the targeted market still save ~$7/TB right off the top plus all that bandwidth cost.
Node operators have steady and predictable earnings and no longer have to worry about low egress.
Theres room to slowly reduce costs over time:
- Storj can decrease their cut as they scale as well as afford “bonuses” to encourage quicker growth.
- Sno payouts can be cut over time relative to decreasing data costs and increased storage density etc. (But don’t forget about increased energy costs.)
Someone please tell me why this wouldn’t still be a highly competitive as well as profitable strategy for the particular market Storj is trying to break into…
I like the concept, but I think those prices are too high in the current market. Storj is still trying to break through and low prices are a very good way to do that. Backblaze offers $5/TB with $10/TB egress costs. Storj could match the $5 for storage and keep SNOs at the current $1.50/TB. The expansion factor is around 2.5x on average I believe. So $3.75 would go to SNOs, Storj keeps $1.25. Though I believe they have a revenue share of 20% with channel partners… or something in that range. So that would leave only $0.25 for Storj if a channel partner brought them on board. Wasabi offers (slow) egress for free up to the amount of data stored per month. Storj could possibly replicate that and only pay SNOs for egress that is also paid for by customers. Or calculate a reasonable flat egress rate for SNOs.
The problem remains that they have to cover egress costs for their gateway MT. Which isn’t cheap. I think an added charge there is quite reasonable, since customers have the option to avoid that added charge by using the native uplink or self hosted gateway ST.
But this only works if there are enough large egress cases so there is some money to be made on that.
Realistically speaking though… Node operators do have it quite good right now. At current pricing you could make $750 profit in 5 years on an 8TB HDD of $180 after subtracting initial purchase cost and ridiculous energy costs of $0.66/kWh. I am shooting myself in the foot by saying this, but that’s kind of a ridiculous ROI. So they can afford to drop payouts a bit.
8TB HDD
Purchase cost: $180
Energy costs for 5 years: $250
Estimated revenue with current payouts over 5 years: $1180
Profit: $750
Cost as part of revenue: 36%
20TB HDD
Purchase cost: $350
Energy costs for 5 years: $250
Estimated revenue with current payouts over 5 years: $2400
Profit: $1800
Cost as part of revenue: 25%
But if they cut payouts in half, that would change ROI significantly as the costs becomes a MUCH larger part of revenue. 72% in the first example, 50% in the second. That’s already a very limited profit potential. And sure, most HDD’s will probably last beyond 5 years, but I picked that as that is generally the timeframe they can reliably be used in data center applications.
So yeah, there is some margin to play with… but it’s not as big as it might initially seem.
I agree that payouts have a little room to drop if they had to, but that still doesn’t leave anything for Storj. And comparing Storj to Backblaze and other cheap options isn’t really fair as they are not the same products. But to be honest, node operators should have it good right now. This is how you encourage network growth. The network is still small. 50 PB is peanuts. And I understand super low introductory pricing, but it appears this 4/7 pricing is THE price. Storj prices itself right down there with the absolute cheapest options.
When I buy any product personally, as a general rule of thumb I buy around the mid price point for most things. I find that’s a good balance between buying something that will underperform, and overpaying simply for the brand name. When I buy a product for a company though, this tends to shift to somewhere between mid to higher end depending on what you actually gain from the price increase. In terms of an auto repair shop I used to own I buy MAC and SnapOn tools as opposed to craftsman. They are stupid overpriced so why? Mainly the lifetime warranty, AND they come right to the shop every week. If I need things replaced or something new it’s right there.
Now… I don’t know how many of you are familiar with Harbor Freight tools but those who are will know right away what I’m getting at here. For those who don’t, Harbor Freight is the super chepo discount tool brand. Ok for some things and hobby DIY’ers but everything is make out of chinesium. One time use type crap that’s practically guaranteed to break. I don’t even buy this stuff for my garage at home. So… if I happen to be walking down the street and see some new tool place, stick my head in and see prices on par with Harbor Freight, I’m not going to give the place a second look. The salesguy could sit there telling me their tools are comparable to SnapOn and MAC until he’s blue in the face and I’m just going to laugh at him… maybe he’s telling the truth, but I have no way of knowing that. Maybe they offer lifetime warranties… but I don’t know if they’ll be around next month to honor them. I’m sure you can see where I’m going with this. I’m sure everyones heard the term “you get what you pay for”. In the case of Storj, it may not be true, but that concept will still run through peoples minds.
Managed to read the whole thread in less than 24h. I’ll give myself a clap for that - mostly because I endured all the filler posts, like in the anime.
Since Backblaze is coming up over and over again, could someone please tell me why* their products are not your competition?
If they are really not, but the Amazons’ are, why do you set price at what Backblaze has in their offer? Like if a BlackRifle decided to compete with PremiumBeans but at the prices lower than what Herbee has for their teas. Parallel/interweaved market, sure, but that’s not your competition, so why set the prices based on that?
You have my respect. I’m not sure I could have done that if I wasn’t around since the start. Also, welcome to the community!
I would say it’s not a matter of better or worse in general. Traditional storage providers tend to operate in a fairly similar way, so when comparing those you can sometime rank them on a kind of general quality basis. Storj is just a bit of a different beast, which is in some aspects better than the big guys and in some aspects worse than the price competitors. I would personally argue that that should put eventual prices somewhere inbetween the two. But because it’s kind of a new quantity, I can also see why you may want to market it as a lowest price offer at first. Just to take pricing away as an argument not to try it.
In short. Storj is great at high throughput for large files globally. But it isn’t good at time to first byte and many small files. So that means it’s great for high speed global large file distribution like software, data sets, blockchain snapshots or backups including database backups. It’s not so great (yet?) at streaming video, photo services or any other thing where latency before the first byte comes in is important. And in those extremes it outperforms the best competitors on one end and underperforms the price competitors on the other end. Does that make sense?
Isn’t this cold storage or at least close to one? And reps already stated multiple times here that Storj is not meant for that. So this won’t be a “selling point”, so it won’t contribute to scaling factor.
I know I am going Backblaze, Backblaze, Blah-blahze, but the price is directly competing with them, so I want to know exactly why that’s the case, despite stating multiple times that they offer different product(s). I know that Storj has built-in geo-redundancy and overall resiliency is quite high, but that’s not what it can do from the use-case/API perspective.
