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Mark Grossman

Web Hosting Agreements

21 December 2000

Once you've built your company's website, you have to deal with hosting it. You could have your in-house IT folks handle it, but many companies will choose to outsource hosting.

If you do outsource it, you'll need to focus on your agreement with the hosting company to insure that you're getting what you expect.

You know how this works. The sales people promise you the world. They tell you that you get a pipe as big as the Alaska pipeline with triple redundancy in case of a problem, 24 by 7 by 365 tech support, no downtime and a commitment to maintain the latest technology.

Then, when you get the agreement (you know, the one that they say is just their "routine" form), it turns out that your huge pipe is more like a 56k modem (which you'll share with other websites they host). The redundancy is "Uhhh, like, you know, we can call the phone company if there's a problem, and we have three different cell phones to make the call with so it's triple redundancy." That round-the-clock tech support turns out to be a pager. And, as for that commitment to maintain the latest technology, well -- the contract is silent on that one.

Experience tells me that once you get the contracting phase of your deal, your mission will be to turn their "form" which, on a good day is tilted toward them, and on a bad day borders on illiteracy, into a fair contract that properly and clearly expresses the deal. Rarely is this as easy a task as you would imagine.

The first item in your contract should be a full and detailed description of the scope of the services that they'll provide to you. Here, you're into nitty gritty stuff like security measures and performance levels. Your agreement should have enough details so that you know that if they do what the contract says they'll do, that your transactions will be safe and that a large number of simultaneous users will be able to get to your site.

You will want provisions explaining the type of access you'll have to your own data and the procedure for updating your site. Will the hosting company handle updates? If yes, you'll want details about format and the scope of their obligations. If you'll be doing the updates yourself, you'll need provisions about the tools you'll need and how you'll get past the security, which is designed to keep people from doing what you want to do--modify your site.

The obvious answer to getting in to modify your site is that you'll have password-protected access. The less obvious issues include things like how many passwords can you have, do they log access and do they have audit trails to determine who did what to the site and when. These can be important if you ever need to track a vandalism or hacking problem.

A key area of your agreement is performance standards. You want provisions that take the promises that you've relied upon to choose this hosting business and turn them into contractual obligations. Brochures and verbal promises may not cut it if they screw up your website and you lose money because of that.

You need provisions on when your site will be available to Net surfers (usually 24 by 7 by 365), objective criteria against which to measure the performance of their server hardware and software, and detailed information about their telecommunications capabilities to connect your site to the Net.

You'll want to negotiate remedies in case the system fails. Your position should be that you should get more than "I'm sorry" if your B2C (business to consumer) website goes down the weekend before Christmas. Often, you can negotiate for credits toward future hosting fees and other remedies.

Experience tells me that the remedies you can realistically hope to negotiate rarely make you whole. Therefore, your best remedy may be a provision letting you out of the contract early if they don't perform as promised.

These seemingly "routine" agreements are complex and highly specialized. If you don't involve your tech lawyer, you'll have nobody to blame but yourself if things go badly.

Web Hosting Agreements is republished from
Mark Grossman
Mark Grossman