The link I keep posting in conversations like this is the one where we wrote about the antagonistic relationship that "free", almost free, and flat-rate service providers enter you into:

http://blog.kozubik.com/john_kozubik/2009/11/flat-rate-stora...

It's different with dropbox, though, since their pricing (beyond the free 2GB) is not flat rate ... you really do pay more the more you use ...

Although I suppose that if the range is 10-200 GB, and you're paying $9 (or whatever) there is a pretty strong incentive to keep you as close to the bottom of that range as possible - and you can bank on their policies and system behaviors to reflect that incentive.

But the real worry with dropbox is just the unsustainable business model. It was illustrated so well with the backblaze-costco-drivearound-silliness - storage really costs something, and it's price sensitive enough that you'll drive around all week ripping desktop drives out of USB enclosures ... and if you're giving that away in a bubble 1.0 "anything for customers" model you should be worried.

Consider doing the math on how many paid users need to exist to subsidize each free user. Suppose each free user uses, say, 20% of their space and does every single available promotion, yielding 20GB of space. This means each free user uses 4GB (a huge overestimate, I suspect.) This means that given S3 storage rates (and if Dropbox doesn't have better than the public rates, they're doing it wrong), each free user costs Dropbox $0.22 per month. Let's say that each paid user uses half their space, and that all the users are only using the 100GB plans. Then paid users cost them $2.75 per month. This also assumes that absolutely no data is deduped.

Now, let's assume that Dropbox pockets a quarter of the money to pay salary, other business overhead, and so on. This means that Dropbox needs a conversion rate of about 4% to be profitable. Sounds completely reasonable and sustainable to me, especially given how generous my storage numbers are.

I don't think that this is point of Dropbox way of managing things. They just want to spread the word. Why should they pay big bucks for advertising when they can use their own product to promote the service?

I still pay for things that I need and use. Advertising a link on a site isn't free either.

I don't want to sound like a dick but aren't you admitting I am right?

Yes, you are getting dropbox credits by performing marketing for them, in whichever way is good for you. This might be advantageous to you but it is wrong to call it "free", at best you are paying with some kind of barter.

You're right about one thing: pay for things that you're actually using. That's what modern economy is all about and that's why we had (still have?) a recession.

I don't use or need more than 4GB of Dropbox space. I found promoting a service that I use daily good for me, people that follow me and good for Dropbox because they're getting more quality users from me than from other sources.

The thing you're wrong about is that there isn't really any difference for Dropbox if they offer 20GB, 10GB or 100KB for free. They are still getting payed from people and corporations that use way more than us. That free quantity they offer is negligible.