What you so condescendingly refer to as an 'entitlement attitude' is frustration with the widespread and accelerating ability to create content but the lack of ways to manage and organize it. Full stop.
HN startupers always talk about changing the world; instead of CRUDing more status updates, selling more ads or selling cheese graters online you could aim higher and solve the problems that the changing digital world is asking for. You could even use Node.js to do it!
Sure, just for images without responsibility of 6-8 9's for peoples' treasured decade of photos, you can approach the price. I believe Imgur also has, even pro accounts, a 5MB limit on file size and that brings a set of efficiencies on resources. Fine for pictures, trouble for video.
When 1-10 million people are uploading/downloading 200MB/min for video @ maybe 1MB/sec?, storage stops being the most painful problem.
This would be something of a netflix scale problem, but without some set of minimal control about formats, dynamic content throttling, etc.
I don't expect that a $5/user/month model is going to support Chase Jarvis' needs. However I do imagine that at $5/user/month 90% of users will actually be very profitable for Apple as they'll use way less than the available amount.
The fair-use limits can therefore be relatively high as they're subsidised by the majority of people who don't use that much.
My point about wanting "unlimited video" was not that I expected to store my entire film collection on there - only that as a 90-95 percentile user I want to be able to do the stuff I do every day without worrying about low limits. I don't mind if there's fair-use limit I just want to be sure that I can do a "fair" amount before hitting it.
All of this is also putting to one side the fact that this is a 20 year investment for Apple. Data costs don't seem to fall inline with Moore's law but they still fall crazy fast. It was only 10 years ago we didn't have S3. Even now if the RAW files were stored on an Amazon Glacier equivalent ($0.01/Gb/month) while screen-quality versions were stored in a hot cache you could provide high dataplans with much lower costs than putting things in tier 1 S3.
I can't get past the entitlement attitude that one should be able to archive unlimited amounts of 1080p 30fps video for $5/mo. 178MB/min. Average youtube video is 4+minutes. That's >700MB per video.
Even at scale, Amazon s3 is .055/GB, so it'd be over $5 just to store 100GB, let alone run the SaaS platform and related overhead. Sure, that's an Amazon retail price for storage, but I don't see how $5/mo. is profitable once everyone is auto-syncing cat videos and their gangam harlem thrift shop videos.