Moodle = open-source
Moodle = free to use and change
Moodle ≠free to host
If you aren’t Apple and have a billion dollars lying around to build a new server farm or have a spare river or ocean to cool your servers like Google then one of your worries may be server storage limits on your Moodle site. Whether you host with a Moodle Partner or self-host, administrators always have to worry about server storage limits; especially if you run a site with tens of thousands of users. Each new image, video or file uploaded to your Moodle site slowly moves you closer to your storage limit. If you do reach your storage limit and are hosted by a Moodle Partner, it could mean you are charged extra. If you self-host, it could mean adding another server to your data center. In either case, it requires more time and money on your part.
Solution: Have your users host their files elsewhere and then link to/embed them in Moodle.
Example: Ever notice on Moodle.org help forums that you can only attach files of 100 kb or less to a post? This is probably done by Moodle HQ for a couple of reasons. First, it cuts down on the time needed to moderate posts. Second, it limits the load Moodle HQ’s servers have to handle. They don’t have to worry about users uploading large (and potentially malicious) files. So why not follow their path?
Sites like Google Drive (renamed from Google Docs) or Scribd (example at bottom) excel at hosting files such as Word, PowerPoint or PDF files. They offer many other benefits as well; such as embed codes for the files so that you don’t always have to link to the file but instead can embed it into your course. If you have bigger files such as video, you can host them on YouTube or Vimeo and then embed them in your course. By embedding or linking to these files, the load will be on the hosting companies servers, not your Moodle servers. So if you are a Moodle administrator you may want to look into what you currently have the file limits set at and potentially looking into lowering them to make users host files on other sites.
WARNING: Most tech companies out there aren’t out there to steal your content. They are acting in good faith but do have to protect themselves legally. So I would read any hosting company’s terms of service to see how each functions.
To put this post bluntly, don’t think of your Moodle site as a hosting site. You are not there to host every file your users own. There are plenty of hosting sites out there that do it better because their goal is to host files. So use them to your advantage and let Moodle do what Martin Dougiamas designed it for; be a “web application that educators can use to create effective online learning sites.”