For comparison, Backblaze deployed petabytes of storage at 1/5th the cost at $55/TB (including server costs): http://blog.backblaze.com/2011/07/20/petabytes-on-a-budget-v...
(In all fairness, Backblaze costs assume 3TB drives costing $120. Due to last year's Thailand floods, a 3TB drive costs $150 today. But this only puts Backblaze at $65/TB at today's prices, still a lot cheaper than $250/TB.)
It seems to me that archive.org could try harder to reduce their costs. I can't imagine their workloads being much different than Backblaze (in both cases, most of their data is being accessed/read rarely, with mostly slow continuous writing/archiving.)
This also does not count that archive.org likely needs more infrastructure than BB does for serving files, caching, etc.. They are one of the most visited (top 250) websites after all.
> $1,000,000! [...] enough to purchase 4 petabytes of storage. Beyond that, this will help us archive books, music, video and web sites.
I think this means that $1MM is an amount of capital that allows them to buy 4PB of storage, while also spending on their other needs. Not that they will simply turn $1MM into 4PB of spinning rust.