On grandfathering pre-paid DNS accounts...
Many of our customers have asked some hard questions about or recent announcements related to Akamai. As most customers are probably not aware, we’ve decided to make the driving forces behind the change public and disclose new facts about the Zerigo DNS business model.
Do you value your customers?
All of our customers have been a hard win in a tight market – of course we value their business! There is no reason we should not.
So why the heck are you doing this?
The reality is that our operational business model fundamentally changed in 2012 when we had to evolve our infrastructure to meet new costs of doing business, as a retail low-cost DNS service provider. As you can see at zerigostatus.com, our service track record for 2012 and 2013, from an operations standpoint, was less than ideal – and we are not proud of it. We had failed to scale our network capacity to create enough headroom for DDOS attacks, as did other service providers in our market during this same period.
Zerigo’s strength was, and has always been, with our service consumption layer – our user interface, customer API and self-service subscription management. Customers (like yourself) probably endured those service hiccups because you valued our product strengths in these other areas. We thought that the natural way for us to advance our business would be to partner with a large infrastructure player who offered the infrastructure strengths we lacked, hence this next step.
We also considered infrastructure options from multiple low-cost DNS service providers as well as raw infrastructure solutions, but we realized that those roads would lead us to a very similar place: in the end, our customers would continue to suffer through the same infrastructure-related headaches: DDOS vulnerability, update reliability and lack of global reach – although no, they probably would not suffer the same type of price increase.
So we made the decision just to do it right and move our entire DNS infrastructure to Akamai – after carefully examining the new model and the costs associated. With Akamai, our operational issues should be almost entirely resolved and we could see this as of December 3rd, as we had reflected 20k customer zones into the Akamai eDNS network. Our tests show that the network is quite large and spread across multiple IPv4 AnyCast strings spanning 200 data centers in many different countries, and will provide a differentiated service.
We will move 100% of the paying customer base into Akamai by January 31st of this year – and yes, we realize we will have fewer customers. But at the end of the day we’ll be able to properly support those accounts, and the quality of service will be representative of what we would want for our own DNS service. We understand that those who care about their DNS service will probably evaluate other providers, but at the end of the day we’re banking on the fact that they will realize the method to our madness and actually stay with us.
Why not grandfather pre-paid services?
Simply put, we can’t afford it. With the shift in the operational model of our business, it doesn’t make any financial sense for us to operate the pre-paid service at a loss. Our cost basis with Akamai is different (per zone) and, after doing the math, we decided that it makes sense to abide by our terms of service and provide credits to those who cancel their accounts, for the unused balance of the service. Otherwise, the customers with large numbers of zones would leave us with a negative margin at Akamai. This has understandably made some people angry, but at the end of the day it didn’t make sense for us to pay Akamai’s service fee for those customers. We really are sorry, but we cannot do it.
This migration is truly a pivotal point in our business – and, unfortunately, it is an ugly one at that, as your $19 per year service fee will go to $13 per month so we can improve the DNS infrastructure massively and not suck in 2014. We would prefer to provide outstanding service, than a cheap, yet unreliable substitute.
Please do write us back if you have additional comments. We will listen.