When users upload photos and videos, we first move them to our own servers. In the background, we send the data to S3. If Amazon S3 goes down, we can buffer data for up to two days before we notice. By buffering, we remove the real time requirements of Amazon S3 being up for our users to upload data. We can’t buffer indefinitely, but we are betting than an Amazon S3 outage longer than 2 days is very rare. We always believed short outages would occur. In fact this, is is not the first one.

For serving photos and videos, we act as our own content distribution network (CDN) and cache the hot data. That means that users can view most recent photos and videos, including what was recently uploaded.

All this caching and buffering is done outside of Amazon. We don’t use Amazon’s compute cloud (EC2) for that. We have considered moving more of our system to Amazon Web Services. It is unfortunate that EC2 was built to require S3 to be up in order for to it run. New instances are loaded from S3. So an S3 outage is correlated with an EC2 outage.

Photo and video sharing services that did not plan for S3 outages were completely down yesterday. We estimate that most of the cost savings for our business comes from outsourcing the storage. While we could save some additional money by using EC2, it is not as dramatic as the S3 savings. Hence, we will have to carefully consider before we put all our eggs in that basket.

A personal computer is best as an internet terminal, replaceable with a different computer as needed, provided you install the necessary software. And I believe in the long run most consumers won’t buy general purpose computers. But we live in the here and now.

I am not 100% converted to cloud computing in my personal life yet. There is lots of legacy stuff I setup years ago. At home I have a Mac Pro desktop with 3 drives running the latest version of Leopard. Two of the drives were purchased about 3 years ago at the exact same time: 450 GB Western Digital SATA drives. I installed them in my Mac Pro (the Pro has 4 bays) and setup a software RAID 1 (full mirror).

On my personal RAID I keep my iPhoto library (I sometimes use iPhoto as part of my workflow), my iTunes collection, in progress iMovie projects and a VMWare Windows XP instance.

Well, I got back from a business trip to find that I had basically lost the whole RAID. The RAID was not mounted. I rebooted and it mounted. I checked on it in Disk Utility and found that one of the drives were marked FAILED and the other was marked S.M.A.R.T. failure, which is a early warning system built into drives telling you it is about to fail. The RAID was marked “degraded,” which means not providing redundancy, and some information in the Disk Utility interface recommended that I replace the one drive that was hanging on and move the data ASAP. I tried, but got errors when copying the files.

So I lost all the data. No big deal. The music is on an iPod, although a few months of ITMS purchases are not synched. The photos I care about are all on Phanfare and the VMWare instance is just a standard XP config with MS Office and some other files.

But I was really trying to NOT to lose that data. I had a RAID, the drives were fairly new, the home office is climate controlled, the computer is rarely moved, we have smoke alarms and heat sensors and the computer is on a UPS to protect it from vagaries in the power grid. And yet I lost it all.

Morale of the story: Keep your stuff in the cloud. I am going to find a service that will keep my iTunes collection (anyone have experience with mp3tunes.com?) in the cloud. And I am going to finally pull the trigger and stop maintaining personal files like tax records on home servers (that is not my only RAID- the other one is a DELL HW RAID in the basement waiting for a flood).

I tried Jungle Disk and it looks pretty good. Jungle disk is a SW layer that sits atop Amazon S3 and lets you store your files on S3 and pay only Amazon’s rates for storage and bandwidth. (Note that I don’t think the average consumer needs the complexity of Jungle Disk and personal S3 accounts, but some of the underlying applications I use don’t yet have good enough online services).

If I can’t manage to keep my data intact at home, I suspect you can’t either and frankly, why try? There is simply no comparison with the type of monitoring, redundancy and security you can get from an online service versus rolling your own in your basement.

We did this as a result of overwhelming feedback from our customers that they want to share without requiring people to register to view.

We are also enabling email invites to view that to go unregistered users. Collectively, these two changes will make the social networking features in Phanfare optional. Use them if you want them.

For those keeping track, we made a set of changes to Phanfare in December, collectively known as Phanfare 2.0, that traded the old website hosting model for one that layered social networking on top of Phanfare. We did this out of a belief that social networks, like facebook, are a fun and collaborative way to share photos and videos.

What our customers told us though was that they valued Phanfare because it was not a walled garden and that the strict social networking permission model was too constrained for them. We took a hard look at what makes the Phanfare service special and decided that being an open platform for storing your photos and videos in the cloud was our core. The social networking within Phanfare remains for those who want to use it. At the same time, we have enabled our customers to display their photos and videos on other social networks if they please.

To that end, we recently released the Phanfare facebook app that will allow you to pick and choose which albums you display to your Facebook friends.

Personally, I actually like the social networking features of Phanfare 2.0 and use them with close friends and family. But I also publish a subset of my albums from Phanfare to my facebook profile. And I enjoy my Phanfare photos on my living room TV via our media server that integrates with the Playstation III and Xbox 360. And I have my screensavers set to show content from friend and family albums.

Aside from open public albums, we also released another user-facing feature today: Editing of photos in Picnik.

We have always had fairly full featured editing in our downloadable applications, and now with the Picnik integration, you can edit photos on the web too. Tell us what you think of it.