Rage4 "Prey-as-you-go" extortioncast DNS business model

Discussion in 'Hosting Talk & Reviews' started by texteditor, Aug 14, 2014.

  1. texteditor

    texteditor Premium Buffalo-based Hosting

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    First, as a preface, let me state that due to being an IWstack customer I have an unlimited Rage4 partner account so this does not affect me at this time.

    As many of you know, gbshouse's anycast DNS service Rage4, very popular among and spawned out of the "cheap VPS" community, has always offered a freemium service, offering roughly 250k free queries per month, then charging something like 1 euro per million queries thereafter.

    Now, this kind of business model is not at all uncommon, save for two big differences in Rage4's system - first that pre-paying/"crediting" accounts is not possible, only after-billing-period charging is done; and secondly that Rage4 does not 'cut off' free-tier members after their 250k queries. These two, combined, means that Rage4 DNS allows free-tier members' accounts to accrue charges to their account without any certainty of payment.

    This is all well and good if Rage4's owners are content with eating whatever losses they might incur by providing more free service than originally promised, but in the second public thread I've seen gbshouse complain about the matter, Rage4 now plans on sending collections agencies after its users.

    This seems to be one of the most horribly unethical things I've seen from a hosting company, which is saying something since the hosting industry is awash with scumbags
     
    Last edited by a moderator: Aug 14, 2014
  2. staticsafe

    staticsafe New Member

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    Hey,

    Have you taken a look at Amazon AWS lately? You will find a similar business model. :)
     
  3. sv01

    sv01 Slow but sure

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    It's sad that we need to chase people (including few LET users) for few Euro.

    This :)


    These two, combined, means that Rage4 DNS allows free-tier members' accounts to accrue charges to their account without any certainty of payment.
    maybe this is the right time to left :)
     
  4. puffrfish

    puffrfish New Member Verified Provider

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    I'm not so sure pay-as-you-go DNS services are such a good idea. It's important to consider that these kinds of services can be easily abused, especially when there is no way to limit the amount of queries you can be billed for. While you may normally have a low amount of queries, someone who does not like you could rack you up a large bill quite easily.

    DDoS attacks can be annoying just by themselves but when they cost you hundreds at your DNS provider it makes it sting even more. I would suggest taking this into consideration when using any pay-as-you-go DNS service. It's not a hypothetical situation either as I know of a couple people it has happened to with the provider unwilling to "forgive" them.
     
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  5. staticsafe

    staticsafe New Member

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    I'm inclined to agree with this. I'm not a big fan of services like Rage4 and Amazon's Route 53, pay-as-you-go being one of the reasons. There are "nicer" business models for selling authoritative DNS services, take a look at DNSMadeEasy/Dyn.
     
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  6. nunim

    nunim VPS Junkie

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    I never liked the pay by query model as there is no way to generate your own reports/track your own queries to know if you're being cheated or not.  You're essentially at the mercy of your provider's billing and you have no way to prove if the queries they're billing you are legitimate or not.
     
  7. Francisco

    Francisco Company Lube Verified Provider

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    So is it just that people want affordable anycast?

    Francisco
     
  8. texteditor

    texteditor Premium Buffalo-based Hosting

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    I'd like to see more affordable flat-rate anycast providers and/or providers that allow you to credit an account and then have more granular PAYG pricing.

    Doing "Freemium" without cutting off heavy free users or asking for a billing method up-front (like AWS) and then going to collection agencies is just shameful though
     
    Francisco likes this.
  9. splitice

    splitice Just a little bit crazy... Verified Provider

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    Have you talked to Piotr? He is a nice guy and I am sure you could work something out.

    Generally he is also willing to discuss features if there is a demand and a viable use case (we got some done on the API side). Perhaps even a "free-only" (cuttoff at limit) switch or something.
     
    Asim likes this.
  10. GIANT_CRAB

    GIANT_CRAB New Member

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    I'm using free anycast by Cloudflare, does that count?
     
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  11. gbshouse

    gbshouse New Member

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    Howdy

    First of all as stated in LET thread the DNS is just one part of our business. @texteditor please read whole thread (and previous ones [like this http://lowendtalk.com/discussion/10223/unprofessional-business-clients-partners#latest]) and you will see that:

    1. "We do not chase small amounts (like 2-3€), I agree that's not worth. But 10-15 customers with unpaid 50€ and more gives you significant amount of money worth taking care of."

    2. "It's sad that we need to chase people (including few LET users) for few Euro." was sai partialy in context of this and my previous thread (see #1).

    3. Fact: 99.5% of our profit comes from flat fee based business accounts,

    4. Fact: beside DNS we operate 2 more services and run software house

    5. Fact: most of the business use collection agancies on certain point - I was just looking for suggestions as our current one is not the best

    6. Fact: that's true that we do not block the users after they exceed the free usage tier and it's 100% by design. The DNS is most crucial part of Internet ecosystem and it must be up and running

    7. "Doing "Freemium" without cutting off heavy free users or asking for a billing method up-front (like AWS) and then going to collection agencies is just shameful though" - I've exaplained why we haven't introduced the creadit card support (it's just to expensive as most of the payment and micro ones). I never said that we plan to go straight to collection agancies so please just stop.

    8. @texteditor I'm not sure how old are you but there is no need to be rude "because @gbshouse is a fucking moron". It's enough to ask why do we stick to this business model and what our numbers are.
     
    Last edited by a moderator: Aug 15, 2014
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  12. AThomasHowe

    AThomasHowe New Member

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    Debt collectors on 50 EUR lol, as if. If you still own the debt and they act for you, they have no power. If you sell the debt to them they will buy it at like 20% or less of it's cost price, meaning that you will recover less than 10 EUR from this whole ordeal. Not worth it and a horrible customer relations nightmare.
     
    Last edited by a moderator: Aug 15, 2014
  13. gbshouse

    gbshouse New Member

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    @AThomasHowe - the request for debt collection agencies recommendations was sent from our financial team. I just looked into the numbers and the 50€ is just a filter value. From 12 customers 10 of them owe us more than 500€ and probably they were involved in some illegal activity (our financial team works close with authorities on this issue). Right now we have two options: sell the debt to collection agency or hire local lawyers. In our opinion selling the debt will be more cost efficient.

    Guys - we are providing the service to you (even this forum use our DNS service) and I'm sure that all of you (maybe except @texteditor) know that we are not a scam.
     
    Last edited by a moderator: Aug 15, 2014
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  14. AThomasHowe

    AThomasHowe New Member

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    500 EUR on purpose and you might be getting somewhere. You do need an off switch and I think if you wanted to try people in court some countries may have a legal issue with you overcharging by 500 EUR on an otherwise free product.

    Really it's hard to say without context. If they're stealing from you with malicious intent, go for it... but for all we know, this could be some pissed off guy buying a DNS attack for $5 and costing his enemy 500 EUR in charges.

    If you sell the debt be prepared to lose a lot of that money. They will buy the debt for much less so they can make a profit and so they have the option to strike a deal with the person who owes money - "pay xx% of the whole debt and we'll leave you alone".
     
  15. MartinD

    MartinD Retired Staff Retired Staff Verified Provider

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    Not sure you can say it's unethical in all honesty. I mean, if they tell you that you're entitled to 250k queries per month free, then make sure that's all you're getting or monitor the hits. No unexpected bills then.. no?
     
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  16. Nyr

    Nyr New Member

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    This. If you don't like the terms, don't use the service. It was pretty clear upfront and I'm sure they can do some kind of flat rate if you need to use millions of queries which get up to 500€.
     
  17. puffrfish

    puffrfish New Member Verified Provider

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    I think the confusion with Rage4 specifically is because of two things:

    - They don't take a payment method upfront, which would help tell the customer that yes, you will be billed after the free usage is up

    - Due to the language describing the free service on the site

    "with free usage tier of 250 000 requests per month per domain" is not really the best way to put it, when in reality it's "with the first 250,000 requests per month per domain free"

    Since they're not requiring a card yet letting you rack up a bill (requiring a card would help the user to understand they are going to be billed for anything after the free usage) as well as not providing a way to limit your queries to stay within the free usage/keep your bill to a reasonable amount in the case of abuse (even Amazon offers this) it is truly an unpleasant way to do business.

    Perhaps these people who have "walked" on their bill are those that have experienced some kind of attack or abuse, and never thought they would need to plan for such a large payment to this DNS service. Someone with a legitimate amount of large traffic would be far more likely to have the means to pay and would have no problem paying for such service.

    Yes, customers are responsible for being informed and I encourage anyone who has the opportunity to inform someone of the pitfalls of a DNS service with these kinds of billing practices. Especially when they are considering debt collectors to help "fix" their business model.

    I would encourage Rage4 to consider the possibility of changing things around to better suit their customers and make sure they are informed of their responsibilities rather than treating them as enemies. Surprise bills for a service the customer thought was free or huge bills for a service they thought was going to be inexpensive is not something that makes a good impression, and to make matters worse I don't think any business would make a good impression asking about debt collection agencies on a public forum.
     
    lbft likes this.
  18. eva2000

    eva2000 Active Member

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    @gbshouse not sure if your system already does this, but wouldn't it help to have notification email reminders bi-weekly or something as well as on first log into their control panels when a customer reaches 50%, 75% and 90% of their free 250,000 quota outlining they are near their limits and they will be charged for excesses ?
     
  19. gbshouse

    gbshouse New Member

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    @Nyr - yes, we do flat fee based packages, hell we even have unlimited package (Rage4 HT 50) with fixed fee of 50€/domain/month (even for users which generates 11 digit number of request per domain/month)

    @eva2000 - we are in the middle of adding such functionality :)

    @puffrfish - in most cases in situations where the bill is high or unexpected (by accident or as a result of the attack and when there is contact) we work close with our users to resolve the issue for example by increasing the free usage tier or splitting the bill - but in this case we know that there was "conspiracy" and there is no contact possibility
     
  20. eva2000

    eva2000 Active Member

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    Nice

    add 2 factor authentication login support that links to a registered mobile number and also do push notifications to mobile at preset threshold percentages too :)