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If it costs them money to run it, it makes sense?
Why are they proxying the stream through their server though
Not necessarily. Tailscale uses their own servers in order to do the negotiation, but once the connections are opened on both ends you should be directly connected to each other. All without port forwarding or any config on your end.
https://tailscale.com/blog/how-tailscale-works
Right, but IIRC anyone can go on the plex.tv website and use shared servers due to the "proxy"
The self-hosted servers use UPnP and NAT-PMP to automatically forward the port used for media streaming.
They typically don't. They do proxy it if there is something preventing a direct connection, but the proxy bandwidth is super limited and results in pretty terrible playback quality.
They aren't, all their server does is handle the login authentication afaik, and then streaming happens directly from the server to the user.
They do actually provide a relay server if your personal server isn't entirely accessible for whatever reason (for example I recently added a new NIC on my server which changed the IP and broke my port forwarding and my users were still able to watch my media via the relay). It is limited to low res quality but it is something they're offering.
How else would it work?
Directly to the clients from the already self-hosted server, exactly like all the other media hosting software does. Lmao.
Port forwarding, tailscale...
... Nebula...
When I stream from my plex server it's a direct connection between my device and the server. The only time it proxies through plex is if your server isn't directly accessible, like ports are blocked or not forwarded properly.