Hosts Going Out of Business

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Posted by neumannu47, 05-28-2011, 10:28 AM
Please help me understand some of the inner workings of the hosting and reseller business. As I understand it, most hosts ("host") buy space and bandwidth from larger providers ("provider") and resell it to resellers. When the host stops paying his bill, the provider usually just pulls the plug leaving the resellers and their customers out in the cold. The provider rarely if ever intervenes in the business of the host to help the reseller and its customers retrieve their data. Is it possible that a provider, after not being paid, would change the passwords on the host's accounts and leave the sites up such that the host would not be able to do anything but sit back, watch, and wait for the servers to self destruct? As I have commented before, there is something very wrong with the entire business model that allows intermediate companies (hosts) to create a business, abandon it, and leave so many people in trouble. It has happened to me enough that I seem to be able to sense problems before they become crippling. (Those are famous last words, of course.) It seems to me that there needs to be some sort of self-policing by the industry. This forum is a major resource for distributing information that could help avoid problem hosts, but not every reseller or customer knows to come here. If a host and a provider had a publicly stated agreement to the effect that, "If host is unable or unwilling to continue its business operations, provider will, for a period of 30 days, provide access to data on its servers for host clients who can establish their right to receive that data," people would be much more comfortable doing business with smaller hosts. Before you say this idea is unworkable, most large companies and the government will not do business with sole-source suppliers. The risk of a company going out of business and stranding a project is just too great. In essence, with no backup plan, a host is a sole-source supplier. There is no recourse by the reseller or its customers if the host evaporates, except to pursue the owners of the host legally. (If a host is not organized as a business entity with limited liability, such as a corporation or a limited liability company, the owner is personally liable for damages resulting from the breach of its agreements with its customers. While the owner may not have any assets presently, a judgment in many states is good for ten years, and then it is renewable. In many cases, the only way to escape a judgment is personal bankruptcy, which is very painful for a very long time.) Maybe the only solution is to stick with very large companies, like HostGator. However, large companies fail, as well. Small business is the lifeblood of a growing economy. It's good to support small businesses when possible, but the risk may exceed the reward, when it comes to web hosting. As far as I'm concerned, a published contingency plan between a host and a provider would be a great marketing tool. If I were in the hosting business, I would have such an arrangement, and I would offer it as a comfort builder for potential customers. Food for thought. I would like to hear your comments.
Posted by theSEOmaniac, 05-28-2011, 10:48 AM
There is always this liability issue. There are a lot of people in the world that will not make ends meet, lose a server, and thus terminate clients before their due dates. They then mention its covered in their terms of service. This is why you trust businesses with a reputation, thats almost the entire basis of this site.
Posted by jweeb, 05-28-2011, 01:24 PM
Firstly, we have to first understand which level is the provider at. - Do they own the datacenters? - Do they own the servers at the datacenters? - Or do they purchase a VPS/Dedicated or Reseller plan? If they do, where does their provider buy their hosting or servers / co-lo from? - Like you mention, there could be some web hosting providers who are several levels down the road. Secondly, smaller or bigger player, I feel that there is no difference. Bigger players tend to face more public scrutiny, given that they tend to be more well-known. However, small players can sometimes provide even better services and continuity than bigger players. What matters most, is that the management of the company is truly concerned about putting its clients first.
Posted by Server Management, 05-28-2011, 01:31 PM
Every business in every industry has a risk of going out of business or simply going bankrupt through incorrect management of expenses, etc This is the main reason why I only deal with trusted providers who have a well known presents in the industry which I need said service.
Posted by Asher S, 05-28-2011, 02:58 PM
People should look for more established hosts in my opinion. With so many respectable and reputable hosts around here on WHT alone, why would anyone want to risk their businesses just for saving a couple of dollars? And going with extremely large companies is not the most brilliant idea either. They don't offer personalized support, they don't cater to individual problems. If they do, it is quite rare. Just my 0.02.
Posted by TomTomson, 05-28-2011, 03:15 PM
With the increasing number of Alpha and Master Reseller Accounts it's getting even more difficult to determine the provider level. It's really important to research your future webhost carefully. WHT is an excellent source for webhosting related information. Tom Tomson
Posted by MikeDVB, 05-28-2011, 03:48 PM
No matter who you choose, if you have your own backups, a contingency plan, and you don't spend more than you could stand to lose you don't have much to worry about. Any provider at any level could go belly up as could any manufacturer, supplier, etc... You need to insulate yourself from that if your site is important to you. I do agree that there does need to be some sort of accreditation for hosts or something similar but that won't necessarily stop bad providers from existing and/or disappearing it will just decrease the number of cheap one-man startups that may appear large but ultimately are doomed to fail.
Posted by hostultimo, 05-28-2011, 03:48 PM
While reading the op's post I felt the main concern was that of securing your data from being inaccessible by a web host etc. If that is so, one thing we do is tend to have offline back-ups of our clients' data so in the event of our own provider was to go out of business, we would always have recent back-ups of their data. It is very hard for someone who does not know much about the online processes to be left for dead when a provider goes out of business. Always take precautions yourself with your data by regularly taking back-ups of your site and database yourself as to prevent any pertinent information from being lost or corrupted. An example of this is that we currently have back-ups of our client area that goes back to 2 years. This helps when we need to review or alter something or some of our own information have been corrupted due to transferring or any other event. Always take precautions and do it your self. Never trust your host, supplier, providers, or anyone but yourself. I don't even trust my own hard drive so I have 2. Lol. There is a funny story behind this as well but it pertains to web design so I wouldn't mention it right now. Take care
Posted by Forward Web, 05-28-2011, 04:15 PM
That's not really much of a solution, if you really analyze the level of service some of the bigger companies provide, its mediocre at best. I think Mike provided the best advice, and thats just making sure you keep your own set of back-ups. Next to that, its all about just doing your DD before signing up with your web hosting, take a look at how long they have been in business. I have always felt that the longer a company has been in business, the smaller the chances of that company going belly up overnight.
Posted by neumannu47, 05-28-2011, 04:31 PM
Does cPanel include the ability to do off-site backups of individual sites on a periodic basis? If so, my concerns would decrease. If not, that functionality would be great. You hosting gurus can write crons or scrips that us non-gurus don't know how to do. With DNSMadeEasy, which I use, I can switch DNS in a hurry. If I had automated backups less than 24 hours old, most of my fears would be addressed. A new host can be up and going in an hour. Even though there may be smart technical solutions to many problems, I still think the industry would benefit from cleaning itself up.
Posted by joecruz, 05-28-2011, 04:39 PM
Most Managed Providers offer offsite backups. Taking backups every week yourself is more then enough if your provder offers daily offsite backups. In the worst case u will lose seven days of work which is not the end of the world i guess
Posted by JixHost, 05-28-2011, 10:52 PM
One should look for a host that's growing.
Posted by boonchuan, 05-28-2011, 11:10 PM
This is one of the main reasons why we do not encourage resellers for a long time but rather ask them to get managed servers. Too many resellers disappear, sometimes with the money of the customers and with domains registered under themselves. Too many just disappear. In the end we have to help their customers solve the issues in whatever ways we can.
Posted by neumannu47, 05-28-2011, 11:38 PM
How are we to know? It's amazing how a teenager who's good at website design can make himself look like Godaddy on the web. Unfortunately, too many of the providers are very poor business people who don't start out to create problems for their customers but end up doing so any way. They drastically underestimate the money needed to keep their doors open. EVERY provider I've used has had good reviews at the beginning and has offered tremendous amounts of help. As time has worn on, these guys run into financial problems and lose sight of their customers. I asked one of my providers how he functioned having to put up with so many complaints. His response was, "I'm immune to them." And he is. One of my providers started out with a great attitude. The business seems to have made him bitter. We've almost come to words. It's not the best relationship. It's not always true, but when I see a deterioration of the service and attitude of a host, I immediately assume that money is the problem.
Posted by JixHost, 05-28-2011, 11:45 PM
This is one tool -> http://www.webhosting.info/webhosts/...ns/EXAMPLE.COM Replace "example.com" for the host desired to look up. The numbers show low, however do follow the general direction accurately. Last edited by writespeak; 05-31-2011 at 09:05 AM. Reason: Changed to example.com
Posted by HostXNow_Chris, 05-29-2011, 04:22 AM
I agree with Mike and Fern. Last edited by writespeak; 05-31-2011 at 09:06 AM.
Posted by HostXNow_Chris, 05-29-2011, 04:26 AM
Well that isn't very accurate. It shows I have 20 domains http://www.webhosting.info/webhosts/...ns/example.com where as I actually have 100+ domains. Last edited by writespeak; 05-31-2011 at 09:08 AM. Reason: example.com
Posted by Sparrow-Sean, 05-29-2011, 05:06 AM
Actually they are quite accurate when updated at the time, however, it does not updated daily as I have noticed Last edited by writespeak; 05-31-2011 at 09:17 AM. Reason: example.com
Posted by JLHC, 05-29-2011, 06:00 AM
Well the problem with it is that it only monitors domain who are using your main domain's nameservers. We now host about 5000 websites but it is only showing 1800+. Last edited by writespeak; 05-31-2011 at 09:17 AM.
Posted by neumannu47, 05-29-2011, 07:36 AM
The company that just went belly up on me has been in business at least since 2004. Seven years is a long time in the web business. Mike, how do you handle off-site backups? As far as accreditation is concerned, why doesn't WHT create an accreditation process? The community here could create a rating scale and rate each host numerically based on the number of factors met. Some factors might be weighed more heavily than others. Industries that don't self-regulate eventually invite governmental intervention. When the government gets involved, nobody wins. Politicians, as a rule, are not technically savvy. That characterization may change over time as younger people get older and run for office. One representative or senator who has been screwed by a provider disappearing and stranding customers could do a lot of damage introducing legislation to control the industry. The other representatives and senators are very likely to just go along with the legislation because they're not technical enough to know the difference. Case in point: The recent proposed changes in the US patent laws that are almost certainly going to be enacted into law were championed by two staffers of a US senator. Whether the changes are beneficial or detrimental remains to be seen. We'll know when it's too late.
Posted by HostXNow_Chris, 05-29-2011, 07:59 AM
I am more on about the backups. Mike hit the nail on the head so to speak. Any company can go belly up no matter how long they have been in business. The best thing you can do is make your own offsite backups. It seems to be the Alpha/Master Resellers and the new startups doing extreme overselling are the ones that do not last long. I am sure more and more people know to stay away from those services now. The only two providers offering Alpha/Master Reseller services that have stuck around so far are SemoWeb and K-Disk. Not knocking VPSLatch but look at the costs/specs they were offering for their VPSs until HostDime took over. That was just a quick way of Adam doing well. How anybody could not see that is beyond me. Use your brain LOL. As long as there are consumers out there thinking they can pay pennies for large amounts of resources and think the service will be good at the same time uptime/performance wise there will always be new startups taking advantage of that and making a quick profit and then just disappearing days/weeks/months/years later. It is so easy to setup quick business plan and get Corporate Membership/Sticky threads at WHT and oversell like crazy and be quids in in no time at all and then just disappear when service starts to deteriorate due to overselling/overloading server resources, etc. And the owner never faces any real bad consequences. I can see why so many do it. Also WHT allow it. I doubt they are going evaluate whether the provider is going to be scamming or not as it would take too much time to work out their business plan, etc. Luckily hosting forums like WHT do educate the consumers more though. But whether you know how it all works or not the best thing you can do is make your OWN offsite backups so you easily move to another provider should your current one disappear. Last edited by bear; 06-05-2011 at 10:56 PM. Reason: by request
Posted by indifferent, 05-29-2011, 08:01 AM
There is already an accreditation for hosts/businesses, ISO, Microsoft, BBB, Truste, etc. I like dealing with smaller hosting companies personally when it comes to shared hosting as the speed is better. Though, when looking at a data center I ussually stick with Softlayer or The Planet "recently merged with Softlayer". Any business can go belly up. The first years are beyond difficult. The thing that determines success is not price. It is the service.
Posted by HostDime Dennis, 05-29-2011, 09:23 AM
What "Zoom Active" says here is actually a very good point. When I am personally deciding on a retailer to do business with or a company to buy a service from, I always check out the Better Business Bureau to get more information about their business practices. It's a bit like an "accreditation" for all businesses and general. Just a glimpse of a few big names on the BBB are below: Softlayer HostGator There you can really find out more about the companies in question and learn about how they handle their business on a whole. Last edited by Sheps; 05-29-2011 at 12:09 PM.
Posted by Dustin B Cisneros, 05-29-2011, 10:57 AM
Then again that isn't accurate for white label providers Last edited by writespeak; 05-31-2011 at 09:18 AM. Reason: example.com
Posted by Arcdigital, 05-29-2011, 12:25 PM
Sorry to play devil's advocate, but what if the "provider" goes out of business? Then a bunch of hosts are out and it isn't necessarily their fault.
Posted by Server Management, 05-29-2011, 01:12 PM
I hear that to get within the BBB all you have to do is pony up aload of cash and hey-presto then your a member... Doesnt say much about the whole BBB thing, Other then you can run their if something is amiss...
Posted by TomTomson, 05-29-2011, 04:11 PM
The BBB information about a company are quite useful to check the number of complaints that have been filed with the BBB and how the company has resolved these complaints. These information together with the BBB rating gives you a first overview about a company and whether to expect some problems when doing business with them. Of course you should not make a business decision based only on the BBB rating. Always do your own research and check all available information about a company. Tom Tomson
Posted by TomTomson, 05-29-2011, 04:25 PM
It should be part of their business plan to choose a reliable hosting provider and to have a backup solution ready if their provider goes out of business. Tom Tomson
Posted by M Bacon, 05-29-2011, 04:52 PM
Always backup. Any company can just go away all the sudden. You could see a company years in business get sold or just suddenly vanish without a trace.
Posted by JixHost, 05-29-2011, 07:58 PM
It shows low for us as well. It shows 1.8k domains for us when we are at over 20k.
Posted by TonyB, 05-29-2011, 09:49 PM
It seems pretty accurate for us: http://www.webhosting.info/webhosts/...ns/EXAMPLE.COM We do not host any web sites in fact our site probably doesn't actually exist. Those posts about people being hosted by us cannot be true. Now seriously to the OP businesses go out of business all the time for various reasons. It's about minimizing your risk of impact as best you can. So maybe as you grow you and don't want to use dedicated servers you diversify your providers. Or if you're always going to be small you keep backups. If you choose wisely then your chances of them going out of business diminishes. This risk just does not exist at the reseller hosting level either. Their datacenter could go out of business for some reason. The datacenter could have their vendors go out of business affecting their business. Everyone deals with these issues and you just try to be prepared the best you can. Some of the what ifs it's just not possible but those are just calculated risks you need to take. Last edited by writespeak; 05-31-2011 at 09:20 AM. Reason: example.com
Posted by MikeDVB, 05-30-2011, 12:23 AM
Absolutely right - it's important that you minimize your risks as much as possible in every aspect of doing business. Keeping your own backups, making sure that you don't spend more than you can afford to lose, not relying upon any one provider or facility, will all go a long way towards making sure that no one provider or vendor will take your business out of action. Even in a worst case situation, if you do what you need to do you can bounce back and recover. Last edited by writespeak; 05-31-2011 at 09:20 AM. Reason: example.com
Posted by neumannu47, 05-30-2011, 08:40 AM
Of the 30+ domains I host, not one "client" manages his own domain. It's something I do for family and friends who don't know what a server is. What is the best way to backup up 30+ domains off-site using cPanel or WHT? Semoweb did a fabulous job of getting us moved, but we got lucky. The server is dying slowly instead of disappearing all at once. (Can anyone explain that scenario? Why wouldn't the upstream provider just pull the plug?) Only one of the sites was critical, and Semoweb was able to grab it with no loss of data. If I may expand this discussion a little, beyond a server suddenly disappearing, what are the advance warning signs of a failing provider? Here are my thoughts in no certain order. 1. No or slow response to support tickets. 2. Support chat always off line. 3. No answer on the support phone line. 4. No response to emails. 5. Dissolution of corporation for failure to pay taxes. 6. Server crash that takes two days to get back online. 7. Impatient or snarky responses from the owner. 8. One-in-a-lifetime deals for payment in advance. 9. Taking the forum off-line when there are major server problems. Your thoughts?
Posted by CodyRo, 05-30-2011, 01:06 PM
You're sort of forking the thread - try posting this here or report your own post and ask a mod to move it for you .
Posted by MannDude, 05-30-2011, 01:09 PM
I think that the best course of action, for both the provider of the unpaid reseller account and for the clients of a reseller is this: Example: We provide a client with a reseller account, of which after 4 months they stop paying and drop contact with us. As suggested in this thread, instead of terminating the account after a prolonged unpaid period keep the services online. After 30 days of no contact or payment, the parent company could then ACQUIRE the Reseller's clients and import their data into our own billing system. This way the clients who would otherwise lose service due to a Reseller's inability to pay their bill would not lose service, and the parent company would earn back what is due to them from the clients of the reseller. Resellers are essentially middle-men, and when they disappear or leave their clients in the dark I think it would be appropriate for the parent company to be able to step in and remove the non-paying / non-contactable middle man and take over their client base after a prolonged period of no contact or payment made on their part. The last thing this world needs is more fly-by-night hosts and negative reviews on WHT about 'companies' that just disappear. The sad fact is a lot of resellers believe that web hosting is a turn-key operation, a way to make some easy and fast cash and quickly become discouraged when they realize the amount of effort involved in successfully running a business. Even if they only have 5 clients, these individuals should not be left in the dark due to the reseller's inability to manage priorities. The parent company should be able to step in and continue to provide them their service. I think the clients would be happy, so long as current plans/pricing were honored, etc. Thoughts? Last edited by MannDude; 05-30-2011 at 01:13 PM.
Posted by MikeDVB, 05-30-2011, 01:24 PM
If you have root access you can set up cPanel backups on a daily/weekly/monthly basis and you can have them stored on a separate drive or even FTP'd to an external target. If you don't have root access you can do the same as above using a script like this one on a cron: http://forums.cpanel.net/f49/update-...lp-135265.html There's no real way of knowing unfortunately. Which could also indicate that you're simply not getting their responses or their responses are going to your spam box, if you're not checking the help desk directly. Not all providers use live chat for support, some use it for sales only and since it tends to not be the best medium for actually providing *support* many providers do not make it a priority. Do they call you back, did you leave a voice mail? Maybe all of the operators were busy and your call timed out due to this. Essentially the same as no responses to tickets from above, unless for some reason you're emailing somebody directly for support which isn't a good idea anyways. Well, yeah, that's probably a sign that a business is in trouble either way be it a hosting provider or not. Depending on what that crash is, that may be normal. I mean as an example if the server literally catches fire and they don't have an extra piece of equipment on-hand and have to order new hardware, build and configure, and then restore data to it - it could easily take 2+ days. I don't know how that would be a sign of a business going out of business - it could simply be a sign that the owner was using a mobile device and was being short and to the point when you took it as snarky and impatient due to not knowing the full details of the situation. It could be a sign of bad cash-flow or it could be a sign of a company trying to obtain some capital to expand without having to sell parts of their company to investors. Or it could be that the large influx of traffic due to those checking the forums during major server problems caused the server hosting the forums to go offline. Posted