|
Last week, Dan Rayburn posted that Akamai is now offering premium pricing to large customers who utilize Akamai for greater than 50% of their distributed content (Streaming Media blog).
The example Mr. Rayburn provided was Netflix, a notorious user of all three key CDN vendors (Limelight and Level 3 included). Akamai has apparently offered Netflix a rate of $0.015/Gb for several months until the rate returns to the closer-to-market rate of $0.06/Gb.
This level of pricing aggression is a deadly spiral - I am skeptical that the price will truly return to $0.06 in a few months as the second main characteristic of the CDN market (the first being a dramatic price decline) has been reduced contract periods - anecdotal evidence suggests periods as short as 1-2 weeks may be in use (peer-customer discussions).
Akamai has promoted the company's mid-pipe services (such as analytics) as a means of contract value-add, but revenue from these additional products have yet to materialize into significant revenue streams which have the capacity to offset the dramatic deterioration in pricing.
The next few quarters stand to be incredibly meaningful in the CDN market with regards to further pricing volatility and deterioration, as well as my expectation of vendor consolidation before a more stable pricing trend can be re-established.
Only registered users can write comments.
Please login or register. |
