The target audience is casual user, who might prefer an online tool (even if it costs a bit) to downloading and using the tool on their computer. The pricing is quite high atm - I hope I'll be able to lower the costs (and thus the price) down soon (as there are rumors of Paypal coming to Croatia in 2011), but I decided to start higher and then lower when possible, instead of being cheap and then having to bump the prices up afterwards.
If it got stuck during the upload, yeah it was probably some problem with the upload (Have you used the flash uploader? I've got ordinary file input field for browsers with no flash (IOS/Android devices), but I haven't tested that as much as the Flash one).
That does bring an interesting question tho: would users want to upload hundreds of MB of video? I don't have a good answer to that. Google search trends suggest people do want "online video converter", so I guess there are some people who would prefer it.
So I'm going to try with lower prices (this time, based on "probably not everyone is going to use up every minute and every MB and every download available). I've slashed the prices in half ($1.5 for 5 min, $4 for an hour). On estimated average case, I should be doing okay, and in worst case I can adjust the prices again if I start going into red.
Thanks again to you, ScottWhigham and others for the feedback about this :)