1. Total Cost of Preservation Cost Modeling for Sustainable Services Stephen Abrams Patricia Cruse John Kunze University of California Curation Center California Digital Library Screening the Future 2012: Pause, Play, and Press Forward Los Angeles, May 21-23, 2012

2. Goals Understand costs in order to plan for and implement sustainable preservation services Investigate the possibility of paid-up pricing in order to address ► Boom-or-bust budget cycles ► Fixed-term, grant funded projects Source: www.sharedidiz.com/ Final report

3. Meeting the expectation Corner store ► Fry’s≤$ 100/TB Commercial cloud ► Amazon$1,000/TB/year ► Apple$2,000/TB/year ► Dropbox$1,980/TB/year ► Google$1,200/TB/year ► Microsoft$ 500/TB/year Preservation repository ► Princeton DataSpace$6,000/TB for “forever” ► USC Digital Repository$1,000/TB for 20 years

4. Prior work Nationaal Archief (2005) http://www.nationaalarchief.nl/sites/default/files/docs/kennisbank/codpv1.pdf LIFE (2008) http://www.life.ac.uk/ KRDS (2010) http://www.beagrie.com/krds.php DataSpace (2010) http://arks.princeton.edu/ark:/88435/dsp01w6634361k Jean-Daniel Zeller (2010) “Cost of digital archiving: Is there a universal model?” 8th European Conference on Digital Archiving, Geneva, April 28-30, 2010 http://regarddejanus.files.wordpress.com/2010/05/costsdigitalarchiving-_jdz_eca2010.pdf http://regarddejanus.files.wordpress.com/2010/05/costsdigitalarchiving-_jdz_eca2010.pdf Rosenthal (2011) http://blog.dshr.org/2011/09/modeling-economics-of-long-term-storage.html } Identification of granular cost components } Assumption of annual decrease in aggregate cost, i.e., discounted cash flow (DCF) Critique of DCF approach

5. Cost model components  System, composed of various  Services providing curation function, running on  Servers, deployed by  Staff, in support of content  Producers, who use  Workflows to submit instances of  Content Types, which occupy  Storage, and are subject to ongoing  Monitoring and periodic  Interventions ; all subject to managerial  Oversight

6. Number and unit cost of Producers Total cost of preservation Fixed cost of System Number and unit cost of Workflows Unit cost and number of Content Types Number and unit cost of Storage Number and unit cost of Monitoring Number and unit cost of Interventions System component subsumes Services and Servers Staff costs are subsumed by other components Total cost to service provider Fixed cost of oversight

7. Cost to a single producer Cost of the Archive, Workflows, Content Types, Monitoring, and Interventions are “common goods” ► Equally beneficial to all Providers ► Properly apportioned across all Providers Number of Storage units attributable to Producer Number of Producers Unit cost of a Producer Total cost attributable to a given Producer

8. Price models Pay-as-you go pricing ► Annual billing cycle ► Price = cost of providing curation service to a given Producer ► Only viable if Producers have predictable and reliable sources of funding ● Any interruption in funding, and therefore service, may result in irretrievable data loss Paid-up pricing ► Assumption of an annual decrease, d, in aggregate service cost, and investment return, r ● In economic terms, this is a Discounted Cash Flow (DCF) or Net Present Value (NPV) model

9. Pricing over time 0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 $16,000 $14,000 $12,000 $10,000 $ 8,000 $ 6,000 $ 4,000 $ 2,000 $ 0 Year (T) Cost ($) (1–d) t discount factor Discounted pay-as-you-go G (T,d ) Discounted pay-as-you-go G ( ,d ) Cumulative pay-as-you-go G (T )

10. Pricing over time 0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 $16,000 $14,000 $12,000 $10,000 $ 8,000 $ 6,000 $ 4,000 $ 2,000 $ 0 Year (T) Cost ($) (1–d) t discount factor (1+r) t investment return Paid-up price, for T F (T,d,r) Paid-up price, for  F ( ,d,r) Discounted pay-as-you-go G (T,d ) Discounted pay-as-you-go G ( ,d ) Cumulative pay-as-you-go G (T )

11. Predicting the future is hard TCP modeling is dependent on the predictive reliability of d and r www.flickr.com/photos/mcgraths/3248483447

12. Predicting the future is hard Model the risk ► Add a risk premium to the modeling equations Recalibrate the model ► Periodically reset the values of d and r (and G and F ), based on contemporary conditions, to be applied prospectively Bound the uncertainty ► Stochastic modeling to determine the probability distribution of possible outcomes

13. Hybrid price model Distinguish between costs that are (relatively) easy to quantify and forecast, and those that aren’t ► Use the paid-up model for the former and pay-as-you-go for the latter EasyDifficult ArchiveIntervention Producer Workflow Content Type Monitoring Storage

14. Hybrid price model Distinguish between costs that are (relatively) easy to quantify and forecast, and those that aren’t ► Use the paid-up model for the former and pay-as-you-go for the latter EasyDifficult ArchiveContent Type ProducerWorkflow StorageMonitoring Intervention

15. Preservation forever Some things are intended to last forever… Source: John Church CompanySource: United Artists

16. Preservation forever ? Some things are intended to last forever…

17. Preservation for … A fixed term – 10 years? 20 years? – may be appropriate for much content ► Give content an opportunity to prove its worth, as evidenced by someone’s commitment to pay for its subsequent preservation

18. Transparency and opportunity Possible outcomes… ► We overestimate our costs and collect too much ● Fund a higher level of service ● Refund some portion ► We underestimate ● Ask for additional funds ● Lower service levels ● De-accession content – but at least it was preserved up to that point and had a chance to prove its value, and gain an advocate

19. Conclusions Different customers have different funding capabilities ► Flexibility in price models is important Any price model is based on an idealization of the real world ► Assumptions matter Understanding all of your costs is a precondition to a policy decision to recover all or part of those costs ► Cost accounting is difficult If investment return and discount factor can be reliably projected, DCF can be used to model of long-term costs ► What if not?

20. Conclusions Even if we don’t have a perfect model, we need to move forward now with a “good enough” model Source: Getty Images

21. For more information Total Cost of Preservation: Cost Modeling for Sustainable Services http://wiki.ucop.edu/display/Curation/Cost+Modeling UC Curation Center http://www.cdlib.org/uc3 uc3@ucop.edu Stephen AbramsMark Reyes Patricia CruseAbhishek Salve Scott FisherJoan Starr Erik HetznerTracy Seneca Greg JanéeCarly Strasser John KunzeMarisa Strong Margaret LowAdrian Turner David LoyPerry Willett Source: Getty Images