What Happens to the Data When An Online Storage Site Closes?

Online storage sites, the toast of the Internet circa 2006, are shutting down in droves, putting the data and images of their users in jeopardy.

Online storage services that have announced closings in the past ten months include big names in tech: AOL (Xdrive and AOL Pictures), Hewlett-Packard (Upline), Sony (Image Station), and Yahoo (Briefcase). Plenty of lesser-known online storage firms also have kicked the bucket, including Digital Railroad and Streamload MediaMax, which turned into The Linkup.

Using these sites used to be a no-brainer--you just uploaded your summer-vacation pictures or your business files and then shared or used them anytime you wished. Now you have to wonder: Will my information still be around tomorrow?

When a Convenience Turns Into a Crisis

Canadian freelance photographer Ryan Pyle lost thousands of digital photos when Digital Railroad abruptly shut down last October. The online storage service posted a note to its Web site (text of note) stating that it ran out of money and would have to close. Digital Railroad gave customers 24 hours to remove their images before the files would be destroyed.

Pyle, who is based in Shanghai, China, lost over 7000 images that he had painstakingly edited, created captions for, keyword-tagged, and uploaded as part of his professional online archive. Pyle says the original digital images were safely stored locally, but the hundreds of hours he had spent creating an online portfolio were gone.

"One day everything was fine, and the next I had 24 hours to get all my images off of the company's servers," Pyle says. Access to Digital Railroad following notification of the deadline was severely limited at first, as a crush of customers rushed to save images hosted on the company's servers, according to Pyle. Pyle says he was able to retrieve fewer than a dozen of his images. He quit his efforts to save his portfolio at 2 a.m.

Cloud Computing Loses Some Steam

The failures of popular online storage services are giving cloud computing a black eye. For years Internet companies invited people to store photos and data online, promoting the services as smart alternatives to storing data on a local PC or backup drive. AOL once stated in its Xdrive service's marketing literature: "You'll never have to worry that a computer crash or virus will destroy all your files because they will always be safe 'n' sound up on Xdrive." Xdrive officially closed in mid-January.

The bloom is off online storage, according to Kurt Scherf, vice president and principal analyst with market research firm Park Associates. He says the online storage market is in the bust stage. "It comes down to economics," Scherf says. He notes that too many online storage firms are chasing after too few dollars. "There isn't a lot of money to be made by parking someone else's data on your servers," he says. "Companies without a business model are going to fail."

Is Free a Good Business Model?

AOL spokesperson Allie Burns says that the AOL Pictures service couldn't financially justify its own existence. Over the past year, AOL as a company has undergone some painful cost-saving cuts. "We took a look at what products didn't make sense to maintain. And ultimately we needed to reduce cost," she says.

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