Searching for the Moon

Shannon Clark's rambles and conversations on food, geeks, San Francisco and occasionally economics

BlogCoop continued

Posted by shannonclark on July 15, 2003

To continue and elaborate a bit from my previous post.

I have had a chance to exchange some emails with Mark Covey about BlogCoop and he has answered a few of my questions/concerns. First, his idea is to vary the compensation from the ownership stake – i.e. while all owners will be “equal”, compensation will not be (or at least need not be).

I think this is more workable, but raises a number of interesting questions and concerns, it is also not in some ways all that radical of a new thing. Further, it is different than current day Co-ops. In the Co-ops of which I am a member, all members are equal in some regards – i.e. getting the same benefits of ownership such as discounts, access to services etc. BUT each member is a shareholder, there is a minimum investment required to join, but then voting and some financial benefits (dividends) are paid out in proportion to the number of shares which you own – i.e. some owners have more votes and get bigger dividends.

The two co-ops which I am a member of are a grocery coop and a bookstore coop here in Chicago. I have not been an active member of either for the past few years as I no longer live really near either store, but I am still a member. In each case there is a financial benefit tied to one’s usage of the stores – i.e. a discount returned at the end of the year based on that year’s purchases. There is also a dividend paid to all shareholders when there is a profit (frequently paid in stock if you like).

A key difference between a share based co-op and a more typical corporation is that generally a co-op is not publically traded, and the shares are not easily trandferable, that said, the co-op itself is obligated to buy back your shares (generally after some initial limit, usually after holding them for at least one year).

The Blogcoop model suggests that all “owners” will be equal – i.e. will have the same vote (or votes depending on the system used) and will get the same benefits of membership/ownership except crucially for compensation.

In contrast, “compensation” for the two co-ops I am a member of is handled like any other business, the employees are paid a salary which comes out of the earnings of the business. The members share in the profits and recieve discounts or other benefits from membership (bulk purchasing, special orders, monthly sales etc.). Crucially you do not have to be a member of either business to do business with the business – i.e. the members get profits on the sales of goods (and sometimes services) to non-members, as well as the “profit” on sales to members. This is a crucial element in growing a long term successful business, having a source of outside of the group resources.

In any case an interesting idea which I have shared with a number of the groups I am actively involved in. I look forward to their reactions and to seeing how the idea grows.

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