1. The Incentives to Preserve Digital Materials: Roles, Scenarios, and Economic Decision-making Brian Lavoie Research Scientist OCLC Research CNI Spring Task Force Meeting, April 29, 2003

2. Roadmap Background: Economics of Digital Preservation Incentives to Preserve Digital Materials Framework for Analyzing Incentives Implications Summary

3. Digital Preservation Research: Architectures Metadata Preservation strategies Economics Digital Preservation Research: Architectures Metadata Preservation strategies Economics 101101 101001 110011 101101 101001 110011 101101 101001 110011 101101 101001 110011 101101 101001 101101 101001 110011 101101 101001 110011 101101 101001 110011 101101 101001 110011 101101 101001 Economics of Digital Preservation Digital collections growing … … but long-term retention uncertain 101101 101001 110011 101101 101001 110011 101101 101001 110011 101101 101001 110011 101101 101001 101101 101001 110011 101101 101001 110011 101101 101001 110011 101101 101001 110011 101101 101001 101101 101001 110011 101101 101001 110011 101101 101001 110011 101101 101001 110011 101101 101001 101101 101001 110011 101101 101001 110011 101101 101001 110011 101101 101001 110011 101101 101001

4. Fundamental Economic Questions IF we preserve, how much will it cost? But: WILL we preserve? Or …What are the incentives to preserve? Important because digital preservation … … likely to be routine, ongoing component of digital asset lifecycle management … extends beyond collecting institutions to stakeholders not traditionally associated with preservation

5. Analysis of Incentives Incentives in practice: – Cost/benefit analysis for a proposed activity – Quantify incentives (costs and benefits) – But: quantifying digital preservation costs and benefits problematic Useful to have some form of predictive model to address question Will we preserve? Strategy: develop simple framework that … – Identifies key decision-making roles in digital preservation – Characterizes set of core scenarios representing possible ways decision-making roles can be organized in a digital preservation activity – Apply economic theory to core scenarios to yield qualitative descriptions of the incentives to preserve in each scenario

6. Incentives to Preserve (1) Recognition of a value or benefit in preserving a set of digital materials need to preserve = demand for digital preservation services (1) Recognition of a value or benefit in preserving a set of digital materials need to preserve = demand for digital preservation services (2) Willingness to implement and carry out processes necessary to preserve digital materials willingness to preserve = supply of digital preservation services (2) Willingness to implement and carry out processes necessary to preserve digital materials willingness to preserve = supply of digital preservation services

7. Digital Preservation: Decision-Making Roles Rights Holder Beneficiary Archive - Holds intellectual property rights - Right to initiate preservation - Can cede or grant right to another entity - Holds intellectual property rights - Right to initiate preservation - Can cede or grant right to another entity - Benefits from preservation - Directly: as end user - Indirectly: on behalf of end-users - Benefits from preservation - Directly: as end user - Indirectly: on behalf of end-users - Implements and manages preservation process - Implements and manages preservation process

8. Roles and Incentives Decision-makers are roles, not distinct entities (Entity: library, publisher, person, etc.) Multiple entities can share the same role Beneficiary: embodies need to preserve Archive: embodies willingness to preserve Rights Holder: empowers incentives

9. Core Scenarios of Digital Preservation Beneficiary Centripetal Model Centrifugal Model Consolidated Model Supply-Side Model Demand-Side Model Archive Rights Holder Rights Holder Rights Holder Rights Holder Rights Holder Archive Beneficiary

10. Economic Theory and Incentives Core scenarios highlight … – Relationships among key decision-making roles associated with digital preservation – Relationships between need to preserve, willingness to preserve, and right to preserve – How do these relationships impact incentives? Economics: rich literature dealing with incentives in settings similar to core scenarios – Prospects for sufficient incentives to emerge; factors that may diminish incentives – Policies to enhance incentives where needed

11. Example … Licensed/Subscribed digital content: – e-journals, e-books, online databases Common features: – Accessed over network (Rights Holders server) – Ownership/physical possession of bits resides with Rights Holder

12. Benefits from Preservation For some period of time, Rights Holder is also a Beneficiary from preservation: – Digital materials economic life But collecting institutions may perceive benefits from preservation beyond this period: – E.g., preserving scholarly or cultural record At some point, Rights Holder ceases to be Beneficiary, but other institutions continue in that role – I.e., Rights Holder becomes entity distinct from Beneficiary

13. Positive Externalities Economic Activity Economic Activity Cost Person A Person B Examples: Vaccination Digital Preservation Examples: Vaccination Digital Preservation Benefits

14. Back to Core Scenarios … Rights Holder is distinct from Beneficiary – Need to Preserve separate from Right to Preserve – Centrifugal Model: RH, B, and A all separate – Supply-Side Model: RH, A same; B separate – Consolidated Model: B, A same; RH separate In each of these models, economically sustainable digital preservation must overcome the incentive gap created by the positive externality

15. Textbook Solutions … Government Intervention: – Provide the activity – Fund the activity through subsidies Legal Environment: – Force Rights Holder to undertake activity (compensated through subsidy) – Force Rights Holder to grant right to preserve to another entity Negotiation: – Beneficiary persuades Rights Holder to undertake preservation (Beneficiary pays) – Beneficiary persuades Rights Holder to grant right to preserve (Beneficiary pays)

16. … And a Real-World Example Libraries (Beneficiaries) Publishers (Rights Holder) JSTOR (Archive) Free up space Eliminate redundancies Lower long-term storage costs Facilitate access Free up space Eliminate redundancies Lower long-term storage costs Facilitate access ? ? Archiving Journal Content in Digital Form Negotiates with Publishers Reformats content Manages storage + access Charges access + archiving fees to libraries Negotiates with Publishers Reformats content Manages storage + access Charges access + archiving fees to libraries Centrifugal Model Centrifugal Model

17. Summary Incentives to preserve fundamental to developing economically sustainable digital preservation activities – For any set of digital materials, need to examine underlying motivations to undertake digital preservation To analyze incentives, characterize organization of decision- making roles for a particular digital preservation activity: – Identify relationships between incentives to preserve (need to preserve, willingness to preserve) and right to preserve Use these relationships to identify potential misalignment of preservation incentives and objectives. This will inform: – Organization of digital preservation activities a priori – Design of policies to enhance incentives ex post

18. For More Information … Paper: http://www.oclc.org/research/projects/digipres/incentives- dp.pdf Contact: lavoie@oclc.org