The Redheaded Penguin

This turned into a really really long blog post about Dreamhost, Lunarpages, and my view on “issues” both companies have had in the past few months… Basically, the”respect” I used to have for Lunarpages has long since disappeared and they continually remind me why I left.

Those that follow the web hosting industry probably know by now about the billing “mishap” at Dreamhost a few days ago. Short version is that when trying to figure out why they weren’t bringing in as much money as usual, they found a “glitch” with their billing program. Feeling a little over confident in their billing program’s robustness, they started entering dates manually to rectify the problem. Well, with the new year underway, they accidentally entered dates as Dec 2008 (instead of 2007). As a result, the billing program acting like it thought it should decided to automatically rectify all of these people who hadn’t paid in 2008…. to the tune of somewhere around $7.5 million. Accounts set to automatically renew with credit card accounts, banking accounts, etc. were all charged automatically… (UPDATE: Actual total of “real” charges was apparently closer to $2.5 million since some charges failed to “go through”.)

Saying “oops” was definitely an understatement as many of their customers appear to keep very little in their checking accounts and have their credit cards pushed to the limits. Bills for several hundred dollars didn’t help either. They quickly spotted the problem within a few hours, realized what was causing it, and set out to rectify the issue. Problem was that the damage was already done with customers being overdrawn, over the limit, etc. Many customers were, to put it mildly, unhappy about the situation. The “official” blog post about the issue from Josh didn’t go over very well either. Josh is apparently known for using humor in sometimes inappropriate ways, and his blog post was one of those. I learned pretty quickly to take the posts at Dreamhost with a grain of salt because of the humor and that behind that humor is a dedicated group of people working hard to get things done… they just like to have fun doing it. They are refunding everyone for the “pre-billing” and are working to help reimburse customers for additional charges from banks, credit card companies, etc. that resulted from overdraft/over the limit/etc type charges. So, although the “humor” in their post didn’t go over well and was probably inappropriate given the seriousness of the issue to many of their customers, they do appear to be doing the “right” thing and make amends for their mistake. (UPDATE: The’ve also added additional posts in a more “professional” manner, apologizing for the “joking” tone of the initial post.)

Lunarpages though has taken this opportunity to try and convince customers to leave Dreamhost and switch to them instead. Part of this, in my opinion, is retaliation against Dreamhost’s actions back with Lunarpages hijacked domain names to generate ad revenue. The Lunarpages hijacking of domain names (and more their response/handling of the issue) is actually what caused me to switch to Dreamhost in the first place, so I thought it interesting how the tables were trying to be turned. But, there are some major differences in my mind which is why I will be staying with Dreamhost and never returning to Lunarpages (unless there are some major changes in management and things go really bad for me at Dreamhost). So, I can hear you asking, “What are those differences? Please elaborate.”

Well, here is my understanding based on posts to their discussion forum and communication with both customers and staff at Lunarpages. Lunarpages started looking at the cost of their offer to provide free web hosting to k-12 education websites. A great offer and a noble cause. Anyway, the cost of doing this was high enough they decided they needed a new way of generating income to help offset the expense. Since Lunarpages had already made massive (perhaps even excessive) upgrades to their hosting plans while decreasing the cost, there wasn’t much they could do on that front to bring in more money. They had, in my opinion, already oversold themselves and overloaded their support staff so really couldn’t tap that source any further. So, they began to look at advertising revenue. They realized that many of their customers were using the “default” page not found (404) error page. Someone had the “bright” idea of placing ads on this standard page. This way, anytime anyone followed an out-dated/broken/etc link for ANY site hosted with Lunarpages, they would see the ads, except those sites that had their own custom 404 error message like I had setup. Anyway, rather than managing the selling of their own ads, they found a company that would serve the ads in a frame on the page. So, Lunarpages setup the template and tied into this ad network in hopes of starting to generate additional ad revenue for themselves. Now, these ad pages included links to some questionable sites, had a “search site” box that would take users away from the site they thought they were visiting and searching, and sometimes even had links to competitor websites. It is important to realize at this point that the ad pages (there were 3 or 4 different designs) appeared to be coming from the website requested (ie domain.com and not Lunarpages.com). This is where the “hijacking” of the domain names part of the story comes into play. Now, okay, not the best approach in my mind, but if customers knew this would be happening and that setting up a custom 404 page would let them “opt out”, no big deal I guess… but “oops” they didn’t tell their customers they were doing this.

In fact, this first gained attention because customers started posting questions about it on their “famed” customer support forums. Customers thought their sites had been hacked when they started seeing this and went into a panic. So, Lunarpages trying to calm their customer’s fears said “no, you weren’t hacked… we did it to help cover the costs of providing free hosting to US k-12 education sites.” Well, this really didn’t go over very well when people realized it was their own hosting company, that they were paying money to, had taken it upon themselves to hijack their domain names. What gave Lunarpages the right to earn money using the domain names paid for by customers? Well, people asked that question… so Lunarpages quickly changed their Terms of Service agreement to grant themselves the right to do it. (Changes to Lunarpages TOS apparently go into effect immediately, at least in Lunarpages eyes.) This in turn led to even more outrage by customers. In fact, one long term and loyal customer who was very active on their support forums was outraged enough that she felt it necessary to inform other users about the issue so they could “opt out” if they so desired. Lunarpages decided that this user was a “spammer” and banned her from the forums completely. Threads and posts about the issue began to be locked and moved into a “private”, employee-only area. Private Messages sent via the forum began to be (or continued to be?) monitored by Lunarpages staff. All of their volunteer moderators were stripped of moderator status with little warning. And the saga continued for close to a week or longer.

Then, Lunarpages did a complete reversal. Well, sort of. The changes to the TOS were removed and the 404 error pages returned to standard default. Word began to spread internally that this was just a “test” and to basically deny that it had ever happened or was as wide spread as it was. Basically, they tried to cover it up and pretend it never happened. They couldn’t announce to their customers that it was no longer “in place” because they never officially acknowledged to most of their users that they had done it. So basically, Lunarpages did something many viewed as unethical, tried to explain it away, offended and/or banned some of their loyal customers, then tried to deny that anything had happened. (I won’t go into a long list of other issues I have with Lunarpages at this point because this post is already way too long…)

Dreamhost, hearing of the issue, offered Lunarpages customers an offer for a free year of webhosting if they switched over using the “Lunarpages Refugee” code. After a very quick and simply verification, LP customers were able to get an ENTIRE YEAR free hosting with Dreamhost. I took them up on that offer, and despite some server slowness issues at the start, overall I’ve been happy with them.

So, now the situation is “reversed” or so Lunarpages is saying while trying to take users away from Dreamhost… with a $40 credit apparently, which I believe works out to be a little under half a year’s worth of hosting. I’ve already described what Dreamhost did (inaccurate billing, over-billing, etc.) But the big difference? Dreamhost came out and said “we screwed up… big time.” They then set out to try and make things right as best they could. Now, some weren’t happy with how they said they screwed up, but the fact is they admitted to it openly.

So, do you see the contrast? For me it isn’t about the “money” (though if I had been one of those who was out a few thousand dollars I might view that differently). To me it is about the honesty and integrity of the company and the people behind it. Lunarpages makes a mistake that angers customers and they try to cover it up and deny it. Dreamhost makes a mistake that angers customers and they admit it and try to make things right as best they can.

I can understand why many of Dreamhost’s customers are upset and thinking about switching to a different host. For what it’s worth, I’m not sure if I’ll stick with them after this free year or not, though right now I probably will. But, if you happen to be one of those people looking to switch and are tempted by Lunarpages’ offer (as if anyone other than my parents, wife, and dog actually read this blog), I’d strongly recommend you re-think things and consider other options besides Lunarpages. I was happy there for a while, despite the repeated dDOS attacks and other downtimes I experienced, so you might be happy and content there… but keep in mind that, in my opinion, they aren’t as concerned about their customers and “making things right” as some other hosting companies are…. expect them to lie to you more than they are honest with you. And don’t be surprised if they convince you to say they are great while they are secretly stabbing you in the back…