Why a co-op?
A cooperative is an enterprise owned and democratically governed by the people who use it. In a co-op, "members" refers to co-owners. Members elect the board and profits flow back to members. The Rochdale weavers worked this out in 1844, and for a hundred and eighty years co-ops have been quietly running everything from credit unions to grocery chains to the largest worker-owned federation in the world. Co-ops and worker-owned firms are the oldest and most practical alternatives to capitalism.
We chose this model because we want platforms that serve the communities they depend on, not the other way around. Co-ops are a proven path to economic democracy and a solidarity economy. They put workers (including culture workers) in charge of their own livelihoods. They are not new, not radical, and not experimental. They just are not the default in the music industry yet.
Why a dual structure?
Cooperatives have real limits when it comes to capital. Their structure restricts the sale of equity, which excludes them from traditional venture funding. Their for-profit status limits the grants and foundation support available to them. And their ability to raise debt is constrained by Subchapter T of the Internal Revenue Code, which caps returns to maintain a co-op's tax status.
Most startups have the opposite problem. They can raise capital but inevitably extract value from and betray the communities they serve, and eventually get sold to whoever pays the most.
Subvert uses a two-entity structure to harness the strengths of both models and mitigate the weaknesses of each. The co-op handles operations, governance, and ownership. The Corporation, owned by the co-op, holds the platform's intellectual property and can take on outside investment without giving investors any control over how the platform is run. It's experimental, but we are trying to create a real viable solution together.
Our dual entity approach is a small amount of legal complexity in service of simplicity, resiliency, and an intuitive ownership experience for members.