Loomio
April 16th, 2018 17:58

Looking at the long term financial vitality of Social.Coop...

RB
Robert Benjamin Public Seen by 332

Although there is some overlap to what other groups may be covering and some other discussions already in progress I wanted to present a few semi-connected ideas around budgeting, membership fees, allocations, and admin remuneration along with some potential policy tweaks for feedback.

1: Member-Owner Capital Contribution – Right now there doesn’t seem to be a clear point to where someone becomes an official Member (owner) beyond signing up, getting a handle, and hopefully starting (and continuing) to pay a subscription fee. Does that mean we consider people that signed up but never paid a subscription to be member owners or are they users? Are people that paid a subscription fee at one time but stopped paying no longer considered member owners? Are non paying users allowed to use the platform if so is there an optimal percentage of “users” to paying members that the platform seeks to maintain?

One way to address some of the gray area around membership status could be to designate a certain amount of fees paid (say $4) as the initial Capital Contribution needed to bestow Membership (ownership) and once that is done the continued payment of the standard subscription would determine “Active” or “In-active” membership status with either governance and/or platform privileges a part of active status.

This way everyone attains member-owner status equally and if they were to choose to put their subscription on hold at some point they would not lose ownership status only access the whatever the cooperative deems a privilege of subscription.

This would also allow the capital contribution to be tracked and allocated separately in the event that a system of patronage was established at a later time.

2: Operation Critical Admin Remuneration/Budget Allocation – In order to provide seamless coverage (especially as SC scales) while still maintaining the fluidity of member volunteer engagement it could be beneficial to provide incentives for Operation Critical admin duties. There may be a point where it is necessary to create revolving/contractor status roles but in the meantime a somewhat simple way to accomplish coverage goals could be to create allocation accounts for each area of critical admin management. Each "Operations Team" would provide diversified coverage by members with needed skill sets or desire to learn. The groups would self manage to ensure adequate coverage with hours tracked and the monthly pool split pro rata between the volunteers.

Note this kind of remuneration would be for OPERATION CRITICAL duties (however that is defined) and not for general governance duties for which there is an expectation that all members participate in some way at their own chosen level.

Three initial allocations pools might be for Tech Admin, Community Admin, and Finance Admin. Admin Ops Team Proposal In Progress

3: Base Subscription Price/Voluntary Initiative Funding – The sliding scale subscription price of $1-$10 doesn’t seem to have a clear connection to what the base cost per user is to sustain and grow the platform. Though this will change as greater efficiency of scale is achieved we could start with simple pro-forma budget based on a certain user counts and operations allocations.

For example using a target of $2/month per user and a minimum rolling paying member count of 150 a monthly operating budget of $300 and $3600 yearly (minus transaction fees) could be created. With this budget cooperative could address base costs of keeping the platform physically up and running, create sufficient reserves, and add (incentivized) volunteer admin roles as the community scales.

Having one affordable set base subscription price would bring all member owners to same level in regards to supporting the platform. Additional advantages of setting say a $2 base over say $1 is that the transaction cost of revenue is less % wise.

Later if the user numbers were to grow by a large amount, and the operations cost level out, a simple system of patronage could be created to offer rebate credits that would effectively bring down the subscription price.

Of note a low base subscription price would likely only cover base operations costs and provide a reserve buffer. Any other activities or expenditures could be funded through additional revenue sources, specifically by offering additional monthly initiative donation options.

What if someone wants to be member but their current circumstances don’t accommodate a $2 subscription?

Currently Open Collective shows 90 total paying members with a breakdown of (25/27%) $1, (16/18%) $3, (21/23%) $7, (6/7%) $10, (8/9%) $1x12, (7/7%) $3x12, (2/2%) $7x12, (5/5%) $10x12. On paper this demonstrates a strong demand for the $1 (as well as the $3 and $7) but it is likely with greater transparency on subscription price use and operational need a $2 subscription would prove desirable and attainable to the majority of members. A solution to accommodate members that are temporary unable to contribute all or part of the $2 subscription price is to create an Assistance fund allocation in the base operations budget or through a voluntary $1/month contribution. This way the base cost per user is still captured and tracked in conjunction with the overall assistance demand and ability to accommodate.

_What if people want to contribute more so the coop can achieve more? _

By creating additional donation tiers it would be possible to fund specific initiatives that have strong interest and have been approved by the members. These initiatives could be managed through volunteer working groups with expenses funded through their corresponding allocation account.

Some potential initiatives might be;

Mastodon Development – Dedicated to supporting the software that the entire Mastodon fediverse relies on. This could take the form of providing a monthly contribution to Mastodon developers while advocating for community requested fixes as well as pushing for an organized federation representation structure.

Mastodon Platform Cooperative Solid Fund – Dedicated to helping other instances inside of the Mastodon fediverse to start or transition to a cooperative ownership structure. Support could come in the way of small development grants as well as best practices documentation.
Discussion in progress

Blog.social.coop – Dedicated to supporting a blog to spread the word about not only what Social Coop is doing but happenings around online privacy, the shift away from surveillance tech, and platform coops in general.

Discussion in progress

Thoughts?

Michele Kipiel

Michele Kipiel April 17th, 2018 09:45

I suggest, if possible, we break this down into "blocks" so we can address them one at a time, like in:

Block 1: what does "membership" mean and how we define ownership? (We discussed this topic at the very beginning of social.coop, but it would be good to revise our decisions since the coop grew very fast)
Block 2: contributions vs. maintenance costs vs. tiers (and how those who already contributed the yearly sum in one donation are to be considered)
Block 3: what to do with the surplus in a "predictable cash-flow" scenario

What do you think?

RB

Robert Benjamin April 17th, 2018 16:51

Sounds good. How do suggest we break down the blocks? As separate threads or could I separate them as sub-replies?

Michele Kipiel

Michele Kipiel April 19th, 2018 12:20

Sorry I missed your comment somehow... I'd suggest three different threads, it will help keep things easy and tidy.

Matt Noyes

Matt Noyes April 19th, 2018 21:44

For reference: in our little Social Justice Learning Collective in Tokyo, we set the initial capital contribution at 10,000 yen (about $100) -- we are a mix of part-timers, retirees, factory workers, and professors, so most of us lower income.

RB

Robert Benjamin April 20th, 2018 05:04

One way we might look at the capital contribution for a platform coop, at least one that is not a market place at least, is that it is more of a formality gate to gaining full ownership rights and doesn't bestow any economic advantages (unlike say a worker or producer coop) so the amount required to become an owner would need to be nominal.

RB

Robert Benjamin April 20th, 2018 05:31

Block 1 "what does "membership" mean and how we define ownership?" definitely seems worthy of a dedicated thread. Possibly in the governance working group? There seems to have been a few past and present discussions that touch on it in some way including the Org membership conversation.

Block 2 "Capital contributions and maintenance costs." and Block 3 "What to do with the surplus in a "predictable cash-flow" scenario" are primarily financial and I think connected to what this or maybe a separate thread could be devoted to which is; "Establishing a allocations based budget and reevaluating the member fee structure."

DU

[deactivated account] May 6th, 2018 17:48

I'm not sure if these are going to be broken up into separate threads? Has that happened elsewhere? Assuming not, I'll reply to all of them below.

DU

[deactivated account] May 6th, 2018 17:59

Block 1: what does membership mean?
I am initially attracted by the idea of a small contribution to become a member-owner; it fits with my experience of other coops. When one wants to stop being a member, one can get that contribution refunded, in my experience (though that's usually when the capital contribution is significantly larger than, say, $4). My only concern is in leaving out people who are interested in a cooperative platform and want to help build it but don't have much in the way of financial flexibility to contribute. I am very interested in seeing platform cooperativism grow, and I don't want it to grow only within those who have money to spare. I value the contributions some may be able to give with time rather than money.

I realize my thoughts here pull in two different directions! Perhaps a compromise is a very low threshold for member-owner costs (very low dollar amount). Also, I would like to see those who paid the capital contribution continue to be able to post on social.coop even if they don't contribute with a monthly subscription. Maybe they just wouldn't be able to be active on Loomio or governance activities? But then again, perhaps people could substitute time for money if they want, so if someone has tech skills they could contribute those instead of a monthly subscription fee?

But now that I say all this, which is what really resonates with my values, the fact of practicality comes up--how to keep track of those who are contributing with money vs those who are contributing with time?

I guess suffice it to say that at this point I'm still a little conflicted and would love to hear what others think.

DU

[deactivated account] May 6th, 2018 18:09

Blocks 2 and 3:
I think the suggestion in (2) is entirely reasonable. I don't have anything else to add.
For (3), I am in favour, generally, of the $2 base subscription price (I actually wished I could choose $2 when I first signed up--$1 seemed too little, and I wasn't yet sure I was ready for $3 yet). As with the above comment I made about people unable to pay, my only concern is making the platform unaffordable for some people. It is very important to equity, inclusion and diversity to ensure that a wide variety of people can join in. An assistance fund is an interesting idea, though that can also be a bit of a bar for some people: some may not want to "use up" that fund and leave it for others whom they perceive to be more in need, and may just decide to go elsewhere rather than join us to build a platform coop.

Maybe one way to meet this halfway: people could choose a $1 contribution and ask for $1/month assistance rather than asking for the full $2 per month assistance? And maybe every few months they get an automated email asking them if they still need the assistance?

Perhaps my thoughts above and here can be combined: a small capital contribution allows people to continue to use and post at social.coop, and then the subscription is for active participation in governance? So if people don't want to do that they don't have to subscribe?

Still, this may not get us the revenue we need to make this thing work, and if that's the case, then that makes a big difference to my view!

RB

Robert Benjamin May 6th, 2018 22:08

Great feedback.

Offering a standardized low subscription generally tied to cost per active user (CPAU) would provide greater transparency to what the charge covers. A link the budget would be included. This would invites more people who can afford it to sign up and become members.

The Access Fund (better name than Assistance fund?) would be there to partially or fully subsidize memberships as needed and available.

To address the bounce off of users who may want to try the platform out but either don't want to use up Access funds or "commit" to subscription we should look at the idea of allowing a % of non paying Users to Paying Members. The paying members of course would be subsidizing the non-paying uses but should be fairly easy to balance by adjusting the % and moving Users to Members as they are ready.

Either way the main goal is would be account (budget) for revenue and base costs on a per Active User basis. Which would provide better overall planning ability as well as platform stability.

RB

Robert Benjamin May 6th, 2018 22:14

On the Capital Contribution to become a member owner it could be looked at as simply a gate to full ownership rights though it is actually paid as a subscription. Once ownership rights are gained they are not taken away (unless for cause) and subscription just denotes active membership which might include both Platform access and Governance rights. Or Governance could be an evergreen right attained by gaining Member Owner status.

Right now the bylaws don't directly address this along with a few other Membership questions (Organization memberships, etc) so it would be good to do so as part of a general "What it means to be a Social.Coop member." conversation that will probably happen soon under the Community Working group when that gets going.

RB

Robert Benjamin May 6th, 2018 22:19

Ultimately making the threshold reasonably small should address access to becoming a member owner for the majority of people. Another way to address this is not to charge and additional Capital Contribution fee but rather make it just a threshold attained through paying a subscription.

Matthew Cropp

Matthew Cropp May 14th, 2018 03:10

On Block 3, I think the Access Fund makes sense as an add-on, so long as a % of the operating budget is dedicated to that purpose as well. The Platform Co-op Solid Fund feels stand-alone enough to makes sense as well. The blog (services) and sponsorship of open-source infrastructure for the project would make sense to me to be placed in the base operations budget.

Pulling percentages kinda out of the air, I could imagine a monthly breakdown like, with number adjusted (Quarterly? Monthly? In Real Time?) based on rising or falling revenue (with the accumulated reserve acting as a buffer for smoothly increasing or decreasing capacity without the organization experiencing an immediate fiscal crisis):

  • 5% OpenCollective Fee
  • 5% Open Collective Fiscal Sponsor Fee (Sarapis Foundation)
  • 5% Platform Co-op Solid Fund
  • 5% Open Source Infrastructure Development Contribution Fund
  • 5% Legal & Organizational Expenses
  • 25% Hosting, Subscriptions & Infrastructure
  • 30% Member Operational Labor Remuneration
  • 20% Contingency Reserves

This would give us an Ops Team starting budget of ~$120/month.

Matthew Cropp

Matthew Cropp May 14th, 2018 03:15

I like the idea of the first $x of your subscription is paying toward your member share, and as long as you are paying $2/month, you are an active member while your share is partially paid.

This complicates the role of the Access fund; are folks who receive the service via access fund $$ building equity via the access fund sponsorship? Or are they receiving the service but the have no credit toward a share built up? Do they have full governance rights?

An additional question worth discussing is whether the subscription business model is what we are aiming for in the long-term exclusively? Or are there other revenue sources we'd like to explore? Like if a co-op federation offered to pay to put an ad/notice of an upcoming webinar, would we accept such an offer, or would we tell them to create an account and toot about it? There's an interesting philosophical and strategic question in those environs...

Matthew Cropp

Matthew Cropp May 14th, 2018 03:41

Also noticed that it looks like a $2/mo transaction incurs a $0.358 transaction fee, which is not insignificant, in addition to the OpenCollective/fiscal sponsor fees.

So it would be worthwhile to think about what more efficient vectors our micro-payments might take...

RB

Robert Benjamin May 14th, 2018 03:56

Subscription is a good starting point as it provides the most consistent source of revenue to budget against but yeah as soon as there is a large enough engaged audience the coop could parlay to bring in additional value to the community. Pending the community wanting to allow ads in some form. Which there may be some push back.

A more low hanging revenue source would be to offer an organizational broadcaster membership at a higher rate (like $20/month). It could be looked at as sort of sponsorship.

On the Access fund I would think while someone is receiving a subsidized subscription that it would not accrue towards their Capital Contribution but they would be able to participate in most governance.

Leo Sammallahti

Leo Sammallahti May 14th, 2018 04:05

organizational broadcaster membership

Would this mean that such user accounts would be for organizations like a media site, allowing it to toot its articles?

I scrolled down the feed, and had to go down about 50 toots to find one from an organizational account (Coop News). As long as the feed doesn't get filled with such toots (more than 5%-10%), I think it would be a good idea.

Let me know if I understood the idea wrong, or if there's other uses you had in mind for broadcaster members?

Like the sound of it!

RB

Robert Benjamin May 14th, 2018 04:07

Yeah I was hoping you had those transaction fees. They are very significant when looking at as a percentage of lost revenue. One of the reasons a $1/month subscription shouldn't be offered. One way to lower the costs right away is to batch the monthly subscriptions as Bi-monthly. Also yearly or 6 month subscriptions should be a little more forward.

RB

Robert Benjamin May 14th, 2018 04:19

One reason to not have the Solid fund and the Open Source Fund as part of the general budget is to keep the Base monthly subscription as low as possible and tied to absolutely necessary spends around keeping the platform up and running. Probably more important when looking at larger scale as 10% of not much is not much but as Admin Remuneration is going to start underfunded every penny added to that will make a difference.

Another reason to split these more aspirational activities out is by making them voluntary funded gives more latitude with how the funds are spent and the ability to take more risks without members feeling like that could have been spent in other ways. It's also a nice way to see how many members really support these initiatives.

Matthew Cropp

Matthew Cropp May 14th, 2018 04:26

I feel that about solid fund, but do feel like giving some percentage of operations (even a token amount) to open source infrastructure we use (particularly Mastodon devs) is operationally important, as it impacts the quality of our tools/platform.

RB

Robert Benjamin May 14th, 2018 05:02

Yep that is it. Right now there are only 2 - Coop New and Geo Collective. They mostly post in batches during the week.

There was a proposal about establishing a process for allowing organizations onto the platform that is different than individuals though there was question what is currently allowed via the bylaws.

One of the reasons for that is to maintain a balance of org broadcasters to individuals but I think it could also be looked at as an opportunity to go out and solicit support from cooperative/social impact enterprise leaning organizations for what Social.coop is doing. Right now it is the only democratically run (cooperatively owned*) social media platform and that is a big deal.

RB

Robert Benjamin May 14th, 2018 05:14

Sounds fair. The budget should be re-evaluated every 6 month to start in any case and could be adjusted as needed. Getting any allocation based budget on the books will be a big step to anticipating and planning for expenses.

You should take a look at how the FOSS white paper discussion is unfolding as well. Following some lively developer centric discussion I just floated something about a way for Social.coop to both indirectly and directly take a larger role in supporting Mastodon dev while pushing things overall towards a more cooperatively run eco-system.

https://www.loomio.org/d/r1KuYn6q/foss-cooperatives-a-white-paper-/47

Matt Noyes

Matt Noyes May 14th, 2018 21:05

For coops, inter-cooperation is not aspirational, so I think both funds should be considered basic operations.

RB

Robert Benjamin May 15th, 2018 17:53

Sure as a principal but I was referring to whether setting up and managing a fund to help develop additional cooperative instances (which there is a lot of support for) is actually part of Social.coop's core business of running and maintaining a social media platform. At this stage it doesn't seem like it is, especially as there is still a lot of work to be done to make just that activity sustainable. Which doesn't mean it can be done just that it should be funded separately from the core business.

Matt Noyes

Matt Noyes May 16th, 2018 03:52

Got it, but probably don't agree -- core and periphery is not a helpful framework for us, I think. Nor is principals vs. business. Your point -- that we really need to get on a stable basis -- is key. No need to introduce these distinctions, right?

Michele Kipiel

Michele Kipiel May 19th, 2018 13:35

Hey, sorry to break into this convo like that, but could you please sum things up in a few points for us non-finance people? :) Thanks!