[quote=BGinRB]Regardless, the improvements in processing power are offset by the advancement in services.[/quote]

I don’t disagree with what you’ve said, but from personal experience (I’ve been running a webhosting business for 7 years), costs have lowered exponentially for us over that time and I don’t forsee that slowing down any time soon.

Facebook/Twitter couldn’t have existed at their current size 5 years ago — that would have been too expensive. But the lowering cost of hardware and increased efficiency of software (VPS, cloud computing, etc) are making operating costs drop significantly at increasing rates.

I’ll give you a few examples. My record label used to host free MP3s from our website, and we ended up paying hundreds of dollars a month in bandwidth costs. We’ve since moved all of our media files to Amazon’s S3 service and check out what our bill was this month: $2.53

As for webhosting, to get started you used to have to purchase a machine (rackmount servers are expensive, $2000-$3000 for a decent one), rent rackspace in a data center ($300-$2000/month), and pay hundreds of dollars a month in hosting/bandwidth costs to keep your server running. Nowadays you can go to a VPS service like Slicehost and get an equivalent setup for somewhere around $20-60/month depending on your needs. No hardware costs, no software costs, just a scalable virtual server that does the same job for a fraction of the price. And if your Slice isn’t fast enough for your needs, you can upgrade it in 5 minutes with the click of a button. No need to purchase new hardware and spend all the time installing/configuring/migrating/deploying it. Even more, these solutions are just in their infancy — in 5 years we’ll have webhosting options that cost pennies on the dollar compared to what they cost today.

Hell, in 5 years we’ll all have web servers on our phones allowing everyone to serve their personal websites/blogs/etc from their pocket.