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Total Cost of Preservation Cost Modeling for Sustainable Services

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

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Total Cost of Preservation Cost Modeling for Sustainable Services

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

  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 Final report Source: www.sharedidiz.com/

  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 • PrincetonDataSpace$6,000/TB for “forever” • USCDigitalRepository$1,000/TB for 20 years

  4. Prior work } • NationaalArchief (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 • 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 Servicesproviding curation function, running on Servers, deployed by Staff, in support of content Producers, who use Workflowsto submit instances of ContentTypes, which occupy Storage, and are subject to ongoing Monitoring and periodic Interventions; all subject to managerial Oversight

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

  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 Total cost attributable to a given Producer Number of Producers Unit cost of a 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 (1–d)tdiscount factor Cumulative pay-as-you-go G (T ) $16,000 $14,000 $12,000 $10,000 $8,000 $6,000 $4,000 $2,000 $0 Discounted pay-as-you-go G (T,d) Discounted pay-as-you-go G (,d ) Cost ($) 0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 Year (T)

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

  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

  15. Preservation forever • Some things are intended to last forever… Source: John Church Company Source: 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 Abrams Mark Reyes Patricia Cruse Abhishek Salve Scott Fisher Joan Starr Erik Hetzner Tracy Seneca Greg Janée Carly Strasser John Kunze Marisa Strong Margaret Low Adrian Turner David Loy Perry Willett Source: Getty Images

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