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I'm not entirely sure about them, but I use S3 and EC2 with SQS so that the user can upload the file, it will be encoded while waiting in a queue, then place itself back into storage. That way nothing ever touches my production server.

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Yep, I use this model, too. Using this model is great, too, because multiple disparate servers can be dealing with the media coming from/heading to S3. You don't get stuck with media files on one box.

It's like a giant disconnected filesystem.

Oh, and use whatever language you are most comfortable using.

I use merb on ec2 with a redirect back to the app server to write the db reference. We are using a regular html based file uploader and also have a flash uploader - which sometimes gives us fits.

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