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this post was submitted on 02 May 2024
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They let people believe that streaming is cheap, but it is not. A server can send streams to many people at the same time, but not so many as it seems and sever up time is a cost, in terms of energy and in terms of sysadmin time. Maintenance of the network is also expensive, especially in the US where most of the people live in low density neighbourhoods.
To that you have to add the cost of the big data servers that check everything people look at and profile their customers.
The dirty cheap subscriptions were meant to attract new customers, the service was heavily subsidized. The companies looked profitable just because other companies bought more ad space than necessary. Overadvertising is the preferred method to give stealth subsidies, but it is a cost for the other businesses of the network. After a while they have to shift those costs to the customers.
When I worked at an internet provider, Netflix sent us a cache (I'm sure they have several at that ISP now). I can't imagine it cost them more than a few thousand dollars, as it was just a bare bones box full of hard drives. We gave them free power, internet, and rack space in our data center. Every night during the slow period it would fill up with whatever they thought would stream the next day.
There was nothing to do with neighborhoods, the cache served customers all over Maine and they didn't pay us anything. Netflix's costs are more likely content and licensing.