But then I realized that the better way would be to do it as a continuous dutch auction. I would specify the most per instance-hour I was willing to pay, and EC2 works out the lowest price across the entire universe of currently outstanding bids that will completely fill the capacity available for these things. As more people come into the system and bid for capacity, my instance-hour price I am paying can rise or fall based on everyone else's bids, and I could have my instances shut down if the current market clearing price rises higher than my set max bid.
There is competition to EC2 coming online soon. Eventually, someone is going to try this charging model.
If I was to build an EC2-like system, it's the charging model I would use. It would most perfectly capture and monetize my value to my users, giving me the largest possible income for the value I am providing, which I can use to build more capacity. It would also give me a much better and smoother signal to how much my users like my system, other than "there is more capacity than is being used, I overbuilt" or "I'm oversubscribed, and at 100% utilization, I need to build out more".
As long as *anyone* bids into the auction, for more than the equipment capital and power cost of running their jobs, and yet doesn't get any cycles, because someone richer has outbid them, that signals to me, the grid operator, that it will be worth investing in more grid.
And now Amazon AWS EC2 has done exactly this very thing, calling it "Spot Instances", in parallel with their existing "per instance hour" pricing model, which basically puts a maximum cap on the auction price.
Am I the only person to publicly predict this?