Amazon’s rolling out an extension to its S3 storage offering that will help move content closer to users, reducing WAN latency. “Using a global network of edge locations this new service can deliver popular data stored in Amazon S3 to customers around the globe through local access,” announced Amazon CTO Werner Vogels on his blog. Om beat me to the punch on this one and has a great writeup, too.

The service gives Amazon a much-needed footprint in Asia, but also serves notice to CDN companies that the days of long-term, minimum-rate, negotiated contracts and favored pricing are nearing their end.

Network services are a logical complement to on-demand computing platforms. While the economics of computing suggest that it makes sense to perform processing as close to data as possible, centralized computing doesn’t deliver the low latency required for many of today’s interactive applications.

“S3 is only available in the US and Europe, not worldwide,” said Jinesh Varia, Web Services evangelist for Amazon. The new service extends that reach, helping to address Internet delays to other parts of the world. Jeff Barr, another Amazon evangelist, says the service has “edge locations on three continents.” Hopefully this will address latency in cloud-enamored Asia.

It’s unlikely that Amazon rolled this service out on its own—the capital cost and operating overhead of running regional data caches is better left to CDN firms like Akamai and Limelight. But Varia declined to comment on whether the service involved a partner.

By applying cloud pricing models to the offering—operators pay for what they use, without contracts, and publish to the service with a single call—the new offering may affect the economics of traditional content delivery networks, who take over a site’s DNS and often require buyers to sign long-term contracts. CDNs with enhanced services like WAN optimization, content transcoding, DRM, and so on will still be able to differentiate their offerings as premium, but this is a big threat to plain-vanilla CDN firms.

The service is in private beta, and expected to be launched by the end of 2008.