Transcript InterParty Business/Governance

The InterParty Project
Business models and governance issues
Norman Paskin
International DOI Foundation
doi>
Topics
• Scope and assumptions
• Business model
• Governance model
• Organisation
• Conclusions
Scope and assumptions
InterParty
Workpackage 4
Governance and business models
• “Draw up a specification which will integrate
data models, registration and access
procedures within the operating contexts of a
range of rights mediation agencies across a
number of sectors in the cultural heritage and
creative industries”
• Economic demand
• Scenarios for governance and business model
• Draft business/exploitation plan
• Define a governance structure
• Identify legal instruments
InterParty
Some fundamental assumptions
• InterParty will be a “closed” network
From
“business requirements”
section
– Open only to organisations with metadata to
share, and identification schemes to support
– Membership criteria will need to be defined as
part of the Governance model
• Members will join InterParty because
they perceive a common benefit from
interoperation
– At a minimum, access to “common metadata”
held by other members to improve the quality
of their own data
– Potentially, automated machine-to-machine
“transaction”
• Individuals and organisations will only
be identified within the InterParty
network if information about them
appears in one or more sets of data
created or held by an InterParty
member
InterParty
<indecs> Directory of Parties
Outline specification
from section 10
of DP spec.
• Process “distributed and delegated” which
increases the need for governance
• Who should be enabled to establish unique
identities? (authentication)
• Who can be allowed to declare metadata
[links, assertions] in a central Directory?
• “The opportunities for financial impropriety
in such a model could be considerable”
(fraudulent claims of rights etc)
• “Like any registry…will require mechanisms
for identification and resolution of
disputes…& security an issue”
• Operation will have costs …these should not
unreasonably exclude participants
Business model
InterParty
Business model
Viability is determined by :
• What will the business cost to run?
• What can the business charge?
“Annual income twenty pounds, annual expenditure nineteen six,
result happiness. Annual income twenty pounds, annual
expenditure twenty pound ought and six, result misery”.
Charles Dickens, David Copperfield, 1849
InterParty
Business model
But this is too simple…
Also:
• What will it cost to establish the business?
• The toll bridge analogy:
• €2 per car, 1400 cars/day = €1m/yr
• running costs €800K/yr. Net: €200K profit?
• but: €30million to build the bridge
The conundrum of building infrastructure
• “external” finance:
• (1) shareholders etc – a private good
• (2) grants - a common good
• “internal” finance:
• users via a self–financing system
• (but even then, cashflow issues)
• Implications for organisational structure and funding
InterParty
Business model: status
• Insufficient data to produce a definitive proposal for funding
• i.e. to go to a bank
• Indicative models can be produced
• i.e. to go to a next step of discussion with likely users/funders
• Based on estimates, similar or analogous activities
• Weakest areas:
Expected numbers of data and users
Pricing sensitivity estimates
Detailed technical architecture and hence costings
Investment requirements
InterParty
Costs: high level activities
Technical infrastructure
• Capacity, scalability, throughput, response times:
needs requirements (numbers and service levels)
insufficient information for detail costing at this stage
• Versions of infrastructure:
e.g. starting with distributed, but then central?
• Could be outsourced
Data management
• Critical
• Capacity, change requests, mutations, link dispute procedures:
needs requirements (numbers and service levels)
insufficient information for detail costing at this stage
• Could be outsourced
Policy
• Largely independent of technology and data
except that e.g. distributed data raises more issues
• Not easily outsourced
Technical costs
?
• Initially conceived as distributed
multiple data sets, with integrating
search process providing a single
integrated response
– Searching over the “common metadata” from
different datasets held in different locations
• Ultimately, InterParty is likely to require
some centralised indexing
“Resolution
Service”
– Current theory and practice suggests that
distributed network searching without any
centralised service becomes increasingly
inefficient as the number of data sources
grows beyond a fairly small number
Distributed v central reliability
Average reliability
of source access
Number of
sources
99% (fail 1/100)
99%
99%
99.9% (fail 1/1000)
99.9%
99.99% (fail 1/10,000)
1
10
50
5
50
50
Collective
reliability
99%
90% (1/10)
61% (1/3)
99.5% (1/200)
95% (1/20)
99.5% (1/200)
• Informal consensus is that there are 50+ likely IP sources
Conclusion:
• A central index/database will be needed
• Must be costed into build at some point: cost? One-off/ depreciated?
• CrossRef comparison:
200 data sources, search across 20 metadata elements: scalable: $1m
• Project deliverable D8 contains indicative models which assumes
€100K-250K pa for “central technical costs”
• Possible that “central technical” could be one IPM for annual fee
Non-technical: “policy” costs
Project deliverable cD8 contains some indicative business models
including these costs
Staff, office and non-technical support (figures based on IDF example)
Some key elements:
• Staffing:
Development and implementation of policy,
SLA management, etc
Technical development (or outsourcing of it)
Marketing, promotion, business development
Office costs
Depending on levels/numbers: €50K- €500K
• Legal counsel: IPM agreements, IP issues, patent claims etc : €100K
• Liability insurance: €10-30K minimum
[note consequences of incorrect identification]
What would users be willing to pay?
• Access to a shared metadata and
identification resource can substantially
reduce costs of data creation and
maintenance for all members of the
Valuing this depends
InterParty network…
on each organisations
• …while at the same time improving their
current costs
data quality and thus the services that
they offer
• There is an underlying assumption that
Cost justification
all Parties whose data appears in the
requires exemplary
database will have an active interest in
business cases
disambiguation
(cf IDF White paper)
– Greater certainty of identification in
circumstances where this is advantageous to
them
What would users be willing to pay?
•
•
Not enough data for a definitive question and analysis
A mix of fixed and variable fees:
Project deliverable D8 contains indicative business models including models of
• Low fixed/high variable: €0 per annum/ €1 per query
•
High fixed/low variable: €30K per annum / €0.03 per query
Two ends of the spectrum deliberately chosen.
(spreadsheet allows any variation)
(comment: “€5k should a fair membership fee”)
In each case, min. no queries guaranteed (to value €20K)
(comment: “users should commit to a minimum level of use to ensure real
testing”)
•
•
•
•
5 year model assumes gradual growth
input numbers are estimates/arbitrary to give a +ve result
price/demand elasticity (1.2m versus 3m) is a simple assumption, not based
on any economic model
At present, no differential for creating links (adds value) versus using links
– This was suggested as a possible incentive requirement
Low fixed, high variable fees
InterParty Organisation 5 Year Indicative Model - InterParty Members only with
no membership fee
All value data in Euro
Revenue
InterParty Members (IPM)
Number
of IPMs
2004
2005
2006
2007
2008
2
4
6
10
20
IPM Base
Fee
0
0
0
0
0
Min "Match" Match vol.
Fee per IPM
Per IPM
20,000
60,000
20,000
60,000
20,000
60,000
20,000
60,000
20,000
60,000
Euro per
Match
1.00
1.00
1.00
1.00
1.00
Revenue
per IPM
60,000
60,000
60,000
60,000
60,000
1.2 million
queries
Results
Revenue versus Costs
Costs
Revenue
IPM Total
Revenue
2004
2005
2006
2007
2008
120,000
240,000
360,000
600,000
1,200,000
C entral
Technical
C osts
100,000
150,000
200,000
220,000
240,000
Staff
217,000
230,000
245,000
258,000
271,000
Office
150,000
150,000
150,000
150,000
150,000
Non-tech
Support
250,000
150,000
150,000
150,000
150,000
Result Total C osts Revenue vs
C ost
717,000
-597,000
680,000
-440,000
745,000
-385,000
778,000
-178,000
811,000
389,000
High fixed, low variable fees
InterParty Organisation 5 Year Indicative Model - InterParty Members
only
All value data in Euro
Revenue
InterParty Members (IPM)
Number
of IPMs
2004
2005
2006
2007
2008
2
4
6
10
20
IPM Base Min "Match" Match vol.
Fee
Fee per IPM
Per IPM
30,000
20,000
150,000
30,000
20,000
150,000
35,000
20,000
150,000
35,000
20,000
150,000
35,000
20,000
150,000
Euro per
Match
0.03
0.03
0.03
0.03
0.03
Revenue
per IPM
50,000
50,000
55,000
55,000
55,000
Results
Revenue versus Costs
Costs
Revenue
IPM Total
Revenue
2004
2005
2006
2007
2008
100,000
200,000
330,000
550,000
1,100,000
C entral
Technical
C osts
100,000
150,000
200,000
220,000
240,000
Staff
217,000
230,000
245,000
258,000
271,000
Office
150,000
150,000
150,000
150,000
150,000
Non-tech
Support
250,000
150,000
150,000
150,000
150,000
Result Total C osts Revenue vs
C ost
717,000
-617,000
680,000
-480,000
745,000
-415,000
778,000
-228,000
811,000
289,000
3 million
queries
Sample analogous organisations (1)
• CrossRef (www.crossref.org )
Publishers International Linking Association (PILA)
DOI Registration Agency
In house technical services
5 staff
200 data sources (members)
Adding 3 million records per year
Centralised index/ database
Membership fee up to €2k per year
Input fee
Use fee
Non-member access fee (by license)
Membership fee
on sliding scale
Input fee
Output fee
Sample analogous organisations (2)
• CERL (www.cerl.org )
Consortium of European Research Libraries
Hand Press Book Database
34 members
Outsourced technical services
1 full time + 2 part time staff
Membership fee €8k per year
High fixed or high variable costs?
High fixed costs (IPM membership fee):
– More certainty of budgeting – under control of agency
– Raises barriers to entry: may be disincentive to join
– Few but large IPMs
– Scale is a critical factor in making IP a success.
Low fixed costs:
– Risks operational deficit (variable costs not under control of IP
Network agency)
– More likely requirement for some guarantee of funding?
Compromise?:
- Some minimum paid use as a condition of entry / membership
- Some incentive for link creation
- Reduce risk by guarantor loans?
Business models
Key questions are: how to finance:
1. Deficit incurred during operational start up (cashflow)
2. Creation costs of the infrastructure (see earlier)
One possible answer examined:
• based on early EAN/UCC physical bar code model and DOI model
• A creating, member-based, organisation
• Migration from this to an operational model as the infrastructure is
built/used
Project deliverable cD8 contains indicative business models including
one model of: High fixed/low variable/member support
• €30K per annum / €0.03 per query / €5K supporting membership
This has not been worked into a detailed scenario but compare IDF.
Limited experience: needs to be supplemented by loans etc.
No conclusions have been made as to viability in this case
Supporting Members and IPM mixed model
InterParty Organisation 5 Year Indicative Model - Supporting Members and InterParty Members
All value data in Euro
Revenue
2004
2005
2006
2007
2008
Supporting Members
Number
Fee
5
5,000
8
5,000
9
5,000
10
5,000
11
5,000
Only about 5% of total income in this example
cf IDF currently 55% (higher fees and numbers)
InterParty Members (IPM)
Number
of IPMs
2004
2005
2006
2007
2008
2
4
6
10
20
IPM Base Min "Match" Match vol.
Fee
Fee per IPM
Per IPM
30,000
20,000
150,000
30,000
20,000
150,000
35,000
20,000
150,000
35,000
20,000
150,000
35,000
20,000
150,000
c/Match
0.03
0.03
0.03
0.03
0.03
Revenue
per IPM
50,000
50,000
55,000
55,000
55,000
Results
Revenue versus Costs
InterParty Organisation Membership Fee Revenue
Members
2004
2005
2006
2007
2008
25,000
40,000
45,000
50,000
55,000
%
20%
17%
12%
8%
5%
IPMs
100,000
200,000
330,000
550,000
1,100,000
%
80%
83%
88%
92%
95%
C entral
Total Revenue Technical
C osts
125,000
100,000
240,000
150,000
375,000
200,000
600,000
220,000
1,155,000
240,000
Interparty Organisation Costs
Staff
217,000
230,000
245,000
258,000
271,000
Office
150,000
150,000
150,000
150,000
150,000
Non-tech
Support
250,000
150,000
150,000
150,000
150,000
Result Total C osts Revenue vs
C ost
717,000 -592,000
680,000 -440,000
745,000 -370,000
778,000 -178,000
811,000
344,000
Sample data
•
Bookdata publisher file
No. of Publishers 24,475
Annual deletions 1,650
Annual additions 3,304
Annual mutations: 2,124
(total annual changes: 7,078 (29%) )
• LOC Name Authority File
No. of parties: 5.5 million
Annual deletions 7,200
Annual additions 270,000
Annual mutations: 91,000
(total annual changes: 368,200 (6.7%) )
• Swedish National Library authority file
No of records: 80,000
Annual deletions 4,000
Annual additions 10,900
Annual mutations: 16,000
(total annual changes: 30,900 (39%) ) (but developing new system)
• Not a statistically valid sample. Total: 400K changes (cf 1.2m- 3m in model).
• “No figures exist for numbers of catalogues, authority files etc” (IFLA)
Organisation options
Likely model
InterParty
System
Site 1
Site 2
Org 1
C1
Site 3
Org 2
C2
C3
Site 4
Site 5
Org 3
C4
C4
Org 4
C5
C6
InterParty
Members
Clients
Operational roles
One possible model
Site 1
Site 2
Org 1
C1
InterParty
Site 3
Org 2
C2
C3
Site 4
Site 5
Org 3
C4
C4
Org 4
C5
C6
Operating
Entity
Participating
Members
Clients
3
Clients: register IDs with agency
(or registered by agency on behalf of client)
Operational roles
One possible model
Site 1
Site 2
Org 1
C1
Site 3
Org 2
C2
InterParty Member:
• agreements with clients*
• use of Interparty Network (terms?)
• metadata collection /added value*
• PIDI deposit, link creation, etc
• provision of, or to, Value Added Services
by agreement*, etc
* specific to each Participant
InterParty
C3
Site 4
Site 5
Org 3
C4
C4
Org 4
C5
C6
Operating
Entity
Participating
Members
Clients
3
Operational roles
One possible model
Site 1
Site 2
Org 1
C1
InterParty
Site 3
Org 2
C2
C3
Site 4
Site 5
Org 3
C4
C4
Org 4
C5
C6
Operating
Entity
Participating
Members
Clients
3
Interparty Network: operating entity
• minimal common agreements
• link (assertion) maintenance
• resolution of disputed links?
• service integrity:
• rules for relationships etc?
• policies e.g. archiving, testing, etc
Additional roles ?
One possible model
Site 1
?
Site 2
Org 1
C1
InterParty
Site 3
Org 2
C2
C3
Site 4
Site 5
Org 3
C4
C4
Org 4
C5
C6
Operating
Entity
Participating
Members
Clients
3
Interparty Network: operating entity
• development of the system to “make it better”
• exploit new technologies
• provide new opportunities to members (cost
effective?)
InterParty
Model for cost recovery
Operating costs
Operating
Entity
€
€
Costs/N
Org
€
Client
InterParty
Development/operation tension
development spend
cost management
Development
Entity
M
Operating
Entity
&
Org
Client
InterParty
Governance
Interparty
?
Org
Or just a federation of the participants?
c
InterParty
Instruments
Interparty Network (Agency)
• e.g. US not-for-profit Delaware corp; EU equivalents
• By laws – often template
• Examples exist e.g. IDF, IPA, CrossRef, etc and could be made available
• Membership criteria
• Board, elections, representation
Straightforward to create, requires leadership and funding
Agreement between Agency and IPM
• Standard agreement on equal terms for all
• IP issues – who owns what, who can access and copy what
• Financial obligations
• Technical obligations (how is data presented, when is data updated, etc)
Not straightforward; few precedents, many unique requirements, and often many
undecided issues, e.g.:
• What happens if an IPM withdraws?
• Legal obligations (“who says” and who relies on that?)
• “I’m a special case because…”
May necessitate a developmental activity (example: IDF)
Agreements between Agency and suppliers
• Standard commercial agreements including: Technical infrastructure (machines, SLA);
Data (escrow issues; roll back, audit trails); Specific tools, Licences, etc
Straightforward since they follow commercial models
InterParty
Conclusions (1)
• There is a need
Over 50 potential IPMs : sources of data/users
– Informal consensus estimates
– Implication: centralised indexing is a requirement (€)
•
Sufficient demand for a system with over 1 million uses per year
– 3 sampled sources total 400K party identification steps per year
•
No clear costed benefit to yet determine economic basis of participation
– Case study in a few potential IPMs?
– Need to have this as well as the intellectual argument: standards work
hard to finance
Hence business case is not yet made
•
•
But sample models indicate the numbers will work at reasonable(?) levels
with some mix of fixed/variable elements
Need better estimates of real numbers and willingness to commit
InterParty
Conclusions (2)
•
Investment is needed
- cashflow during start up
- up-front investment in creating technical infrastructure
– Attempting to create by bootstrapping without cash investment is
impossible or very difficult (DOI, Crossref)
– Identify four or five key sponsor organisations to spearhead
development (CrossRef model)
•
Analogous membership based organisations exist
– Governance and legal instruments can be modelled or based on these
– Caution re underestimating legal and developmental costs of creating
this entity
– Several sensitive commercial and political issues (security, privacy,
liability, misrepresentation…)
The InterParty Project
Business models and governance issues
InterParty
Interparty in 1943…
"So complex is reality, and so fragmentary and simplified is history,
that an omniscient observer could write an indefinite, almost
infinite, number of biographies of a man, each emphasizing
different facts; we would have to read many of them before we
realized that the protagonist was the same man. Let us greatly
simplify, and imagine that a life consists of 13,000 facts. One of
the hypothetical biographies would record the series 11,22,33...;
another, the series 9,13,17,21...; another, the series
3,12,21,30,39.... A history of a man's dreams is not inconceivable;
another, of the organs of his body; another, of the mistakes he
made; another, of all the moments when he thought about the
Pyramids; another, of his dealings with the night and with the
dawn. The above may seem merely fanciful, but unfortunately it is
not."
(Jorge Luis Borges “On William Beckford's Vathek”; 1943)