A co-operative is a kind of company that allows everyone involved to be a co-owner — everyone gets to share in decisions and profits.
The saying usually goes: "one member, one share, one vote." The model is all about bringing democracy to the workplace.
This forms one of the key ideas behind Resonate — that all musicians should have the opportunity to own their streaming service, and not just mega-rich stars.
We're building Resonate as a co-operative as it allows everyone involved (fans, musicians, independent labels and our workers) to have a say in how the company runs.
All members can vote on features and projects to develop, elect advisory board members and upper management, decide on key policies that affect how user data is used, and what kinds of partnerships to make. These are just a few examples of decisions that can be voted on, and that’s what having a democracy-based company is all about.
And then there are the profits
Being a worker/consumer co-op, Resonate will share any and all profits with consumers (listeners) and workers (musicians, labels and our staff).
Members will be able to trade their profits for more streams and downloads and/or withdraw as cash.
It's important to note that co-operatives are incentivized to declare profits because they validate the business model.
Contrast that with how corporations like Amazon and Spotify operate – they often run at a loss for decades, growing and devouring other companies while exclusively benefiting shareholders in the process.
Resonate is a multi-stakeholder co-operative comprised of three different roles: musicians, fans and the people who build it. Here's how profit distributions break down:
So if Resonate makes a million dollar profit in the first year those profits will be split 45/35/20*.
Within these groups, profits will be distributed according to involvement.
So this means that musicians receiving a higher number of streams will get a higher proportion of profit. (Musicians that share normal earnings with their labels will do the same with yearly profit distributions.)
Fans will get a proportion based on how they consume, meaning big spenders will receive more. For staff and volunteers (community managers, contributors to open source), those that put in more time will receive more dividends.
In all situations these percentages will be fairly split according to involvement, not on status, access or other forms of privilege. In the Resonate allotment, dividends are also paid to volunteers before paid staff.
Profit distributions are calculated after first removing 30% from the total.
20% is saved for the rainy day fund (a standard method for co-ops to maintain a cash reserve in case of emergencies). With technology startups, the emergency fund is critical because growth often outpaces profits. If the emergency funds are never used, they'll simply feed back into the next year's profit declarations.
The remaining 10% will pay interest for owners of Supporter Shares.
A number of details regarding co-operative procedure and governance will evolve as the community grows. To start the process off, we've nominated our board of directors, but that election process will become open after the first official election.
An organic form of community management will also likely rise up, driven by passionate volunteers from among our various stakeholders (musicians, fans and open source volunteers). For communication, we plan to use some combination of forums and Loomio's discussion system, so that we can have conversations responding to a range of issues. Many of those discussions should organically lead to member-wide votes on key decisions.