Our server will be home to 50-100 separate clients. Each client will
have their own set of databases that will be accessed by 10-60 users at
each client's site. 

In terms of performance, is it better to have 1 instance of MySQL
servicing multiple databases, or multiple instances of MySQL each
serving 1 database?

Here's some more information to work with:

Each client has 3 databases.

Database: 500 tables. 13 tables sized 10-100MB. Remaining tables all
less that 10MB. (This is the only database that is updated. The others
are just for reference.) Main table grows at a rate of a few hundred
MB/year.

Database2: 50 tables. 3 tables sized 10-100MB. All other tables less
than 10MB. No data growth.

Database3: 179 tables. 10 tables sized 1-15MB. All other tables less
than 1MB. No data growth.

--Eric


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