Benefits and drawbacks of self-hosting photos vs remote hosting

I'm considering disabling the code allowing users to display remote images, forcing them to upload images to our server, and I'd like to discuss the benefits and the drawbacks. We currently have around 35k members on a dedicated server, with plenty of space to spare. If it provides the end user a better experience, I'll gladly pay more for the increased storage space (though at this time we have plenty).

Anyone care to contribute their ideas, comments, suggestions, etc?

Benefits

• Ease Of Use - One option means it'd be easier train everyone to use our upload feature.
• No Broken Links - When someone closes an image hosting account or loses hosting, our links remain intact.

Drawbacks

• Increased Expense - Hard drive space costs money.
• Potential For Malware - I'm not sure this is even an issue, considering we're not choosing between the two options. Member uploads would remain enabled regardless.

 

More Benefits

• Better SEO & Site Authority - Good for Google Images Search & Your site authority to Google (your images are on other sites)
• Faster loading for local users
• Possible to group into Album/Gallery

More Drawbacks

• Users have to save files to computer to upload (if they are on other sites)
• More RAM, Server resource (only Bandwidth)

 

Another thing to consider is if you host the images yourself, you open yourself up to liability if a copyrighted image is stored on your hard drive.