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Industry Background
To understand the core ethical dilemma, one needs to first look at how the industry evolved. Early hosting providers, the
pioneers of the industry, typically had to be technology-savvy. They would often manually set up web servers and install
websites for customers, or would build custom tools to automate many of the common setup tasks. As increasing demand
for outsourced hosting drove rapid industry growth, a critical mass of providers was achieved that justified a market for
superior third-party automation tools. Control panels (e.g. cPanel , Plesk), billing systems (e.g. Modernbill ) and other tools
offered hosting providers the ability to automate some of their common tasks, and enabled customers to service themselves
for many basic needs. The convenience of getting these best-of-breed automation tools without in-house programming led
many hosting providers to adopt the third-party solutions. In addition, the web server of choice quickly grew to be the "free"
Linux-based Apache option, with Windows being a less-popular second alternative. Other web servers quickly grew out of
favor (from a market-share viewpoint).
As hosting providers continued this technical evolution, a relatively standard menu of hosting services became common
across most vendors. The hosting infrastructure typically included either the Linux or Windows operating systems, cPanel
or Plesk control panels, and one of a few common third-party billing systems. Combined with common hardware platforms,
the offerings across industry providers became markedly similar. From a customer perspective, this evolution led to the
appearance of a commodity market.
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The Web Hosting Commodity
As common tools and platforms reduced the apparent differentiation among hosting providers, another driving force further
accelerated the industry towards a commodity market. Third-party companies began offering pre-configured web hosting
servers for-rent in secured, managed datacenters. Some of these companies were datacenters that added this service to
gain a share of a growing new market. Others were third-party companies that leased space in existing datacenters and
then re-sold it to web hosting intermediaries. The combination of relatively standard third-party tools and managed hosting
platforms significantly lowered the technical and financial barriers to entry for new web hosting companies, which led to a
plethora of new entrants to the industry. This growth accelerated the trend towards a commodity market.
The perception of a commodity market in the web hosting industry put intense pressure on vendors to find a new way to
compete. A typical reaction in a commodity market is to compete on price, either by offering a lower price for the same
product, or a higher price that includes more of a given offering (e.g. more features, or a larger quantity of a similar feature).
In the hosting industry, this amounted to companies offering more bandwidth, disk space, email accounts or other features at
lower prices than other companies.
Price is an easy differentiator to match, so a steady downward trend in pricing occurred as competitors reacted to each
other's discounting. Commensurate with the trend toward lower prices, an upward trend began in the features and quantities
offered for a given price. Soon, many companies were offering "unlimited" amounts of some features, and incredibly high
amounts of other features. For example, a quick survey of hosting companies at the time of this article showed a variety of
hosting companies offering "unlimited storage" and "unlimited bandwidth".
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