Why we’re a cooperative

In case you've never heard of this type of business, a cooperative is a kind of company that allows everyone involved to be a co-owner. Sharing in decisions and sharing in the profits.

The saying usually goes "one member, one share, one vote" and it's all about bringing democracy to the workplace.

That's a very brief description of what cooperatives are about, so check out Wikipedia for more details.

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We're building Resonate as a cooperative as it allows everyone involved (fans, musicians, independent labels and our workers) to have a say in how the company runs.

Voting on features and projects to develop, electing who serves on the advisory board and upper management, deciding on key policies that affect how your data is used, what kinds of partnerships to make, and more... these are all examples of what having a democracy-based company is all about.

And then there are the profits

Being a worker/consumer co-op, this means that every year we'll share any and all profits with consumers (listeners) and workers (musicians, labels and our staff).

Listeners will be able to trade their profits for more streams and downloads and/or withdraw as cash. Same for everyone else.

It should be noted that cooperatives are incentivized to declare profits because they validate the business model.

Contrast that against corporations like Amazon and Spotify which often run at a loss for decades, growing and devouring other companies while exlusively benefiting shareholders in the process.


A look at the numbers

Resonate is a multi-stakeholder cooperative, comprised of three different roles... musicians, fans and the people who build it. A typical worker/consumer co-op has two roles and in our situation, in effect, musicians are part of the worker group. Here's how profit distributions break down:

  • 45% musicians
  • 35% fans
  • 20% Resonate

So if Resonate makes a million dollar profit in the first year those profits will be split 45/35/20*.

For musicians, fans and staff, profits will be distributed according to involvement.

For musicians, those that receive a larger number of streams will get a higher proportion. (Musicians that share normal earnings with their labels will do the same with yearly profit distributions.)

Fans will get a profits proportion based on how they consume, meaning big spenders will receive a higher proportion. 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.

Rainy day fund and investor dividends

*The profit distributions are calculated after first removing 30% from the total.

  • 20% for the rainy day fund (a standard method for co-ops to maintain a cash reserve in case of emergencies)
  • 10% to pay interest for owners of Supporter Shares.

With technology startups the emergency fund is critical because growth often outpaces profits.

However, if the emergency funds are never used, they'll simply feed back into the next year's profit declarations.

Advisory board and community management

A number of details regarding cooperative 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 an open process after the first year.

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. Some combination of forums and Loomio's discussion system will drive conversations dealing with a variety of issues. Many of those discussions will organically lead to member-wide votes about key issues.

Further reading

Explore how governance in Resonate can be managed in the blockchain, providing a secure, irrevocable record of transactions.

To read more about the personal story about how Resonate came to exist as a co-op, check out this post on Medium.

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