The Cooperative Production Company: Part 1

Introduction

I would like to share a revelation I’ve had which has thrown me into a frenzy of research and sleepless nights lately. And although I call it a revelation, its an idea thats been tearing at my mind for some time. It wasn't until I started my own business about a year ago, that I’ve actually had time to reflect about this industry that I’m in and how much I love and hate it at the same time. I’m sure many of you in VFX can relate to that sentiment.

Being my own boss has afforded me luxuries that I rarely experienced as a freelance/“permalance” compositor; NOT working on the weekend if I don't want to, throttling my workload to fit within my 40-hour work week, going after and choosing the projects that I want to work on, the ability to set aside time for myself and my family. But most of all, I get to decide whats important for my business. I’m not at the behest of the Producers, the CEO, or the Stockholders. As my own boss, my primary objective is to earn myself a living, and a big part of that is having a life.

However, being a loner does have its drawbacks. Especially in an industry and with an art-form that thrives in collaboration, being a one-man show doesn't facilitate that need for synergy — creating something together that is greater than the simple sum of its parts.

So how can I have the collaboration I desire while maintaining the ideals that I want and that I’ve set forth in my business? Become someone else’s boss, right? Grow my business, take on employees, become the boss. But… I don’t want to spend my time being the boss. I want to spend my time making movies. I want to spend my time collaborating. I wouldn't mind sharing the responsibility of the business, in fact, I would rather people working with me have an equal say in what we do as a group. We live in a democracy after all, why can’t we work in one too?

But how would that work? Is that even possible?

As it turns out there is a very real and proven business model that fits these needs — The Worker Cooperative.

This post will be the first in a series of posts about my dream that is The Cooperative Production Company. I don’t know how long this series will be or if there will ever really be a conclusion. Currently, I don’t have a plan. But by writing this and, hopefully, through discussion with the readers, I want to not only convince you that this can be the model of a viable and successful business but also solidify my resolve and collaborate on a business plan.

What is a Cooperative?

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So lets start with the basics. Simply put, a cooperative (or co-op) is a business that is owed and controlled by the people that use its services. Unlike a typical business where profits are returned to owners based on their monetary investment, a cooperative rewards its owners based on how much they use the cooperative. Also unlike a typical business where the owner’s control of the business is proportional to their investment, a cooperative is governed with democratic principles, specifically “one member, one vote”.

So this is a very high-level definition, but its meant to cover a wide range of cooperatives. There are a few different types of cooperatives, and I’ll talk about how the Worker Cooperative interprets this definition.

For a more detailed definition of a co-op's identity, values & principles, visit the International Co-operative Alliance

Types of Cooperatives

So if the definition of a cooperative is “a business that is owned and controlled by the people that use its services”. The “people” are called the members. A member of a cooperative is an owner of that co-op. Generally, they become a member when they economically contribute capital through the purchase of a share of the co-op. By becoming a member, an individual receives decision making rights in the co-op.  The “services” the co-op provides is how these types of co-ops differ.

Producer Co-op, Farmer's Co-op, or Marketing Co-op—these are often used to describe the same type of co-op where the members are independent producers, like diary or produce farmers, and they join together to process or market or distribute their products collectively. Any profit the co-op makes is returned (as patronage refunds) to the producer members, in proportion to how much they used the co-op. Ocean Spray, Land O'Lakes, and Sun-Maid are just a few examples from this group.

The second type of co-op, which you're most likely familiar with, is called a Consumer Co-op. This group includes retailers like REI or your local food co-op, credit unions, and housing co-ops. In these co-ops the members are the consumers of the goods and services provided by the co-op. The co-op's job is to get high-quality goods and services, which can be bought in greater quantities than by an individual, and sell them to the consumers at a low price. Profits are returned to the members of the co-op as patronage refunds. 

You remain skeptical. You've heard of this co-op thing, you might even enjoy a yearly dividend from your membership at REI, but whats that got to do with a production company? Here's the thing, co-ops are not just about farmers and natural grocery stores that sell wheatgrass and goji berries. The third type of co-op is the one that I'm really interested in: The Worker Cooperative.

The Worker Cooperative

A Worker Cooperative is a business entity that is owned by it’s workers, governed by it’s workers, and operates for the benefit of it’s workers. So the worker co-op is a bit different in how it interprets the definition of a co-op — “a business that is owned and controlled by the people that use its services”. The worker co-op’s “service” is the employment it provides it’s members and the members (or worker-owners) return it’s profits to themselves based on the amount and value of their labor.

Because worker cooperatives are owned and controlled by and for the people who work there, they operate differently from traditional businesses in some key ways. 

Joint Ownership

In traditional for-profit businesses, the owners are sole proprietors or shareholders whose main interest is in generating a profit. Worker cooperatives are interested in making money too, but they are also invested in making sure that the business meets the needs of its members, such as paying fair wages and providing a sustainable livelihood. 

Democratic Control 

In typical business enterprises, major decisions are made by investors who cast votes based on the number of shares they own. In worker cooperatives, directors are elected and major decisions are made by the workers, on a one-member, one-vote basis. Therefore, control is vested with each member, not each share of stock. No member has a larger or more influential vote than any other member in the business. 

Cooperative Distribution of Earnings

In investor-owned businesses profits are distributed based on how many shares each person owns. Worker cooperatives instead distribute surplus earnings based on a patronage system. This means profit is distributed equitably based on factors such as hours worked or value of work provided. Profit distribution is thus based on labor input, not on capital contribution. Workers do not receive a greater profit share by contributing more money directly to the business or by purchasing shares. 

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It may sound like a bunch of hippie-dippy baloney but this is a very real and proven business model. Worker Cooperatives have been around for a long time and although they aren't as widely known in the US (they are a lot more common in Europe) there has been some substantial success by worker co-ops here in the states. And the movement is gaining traction. New York City recently approved a $1.2 million initiative to help fund worker cooperatives. Madison, Wisconsin, not to be out-done by NYC, is investing $1 million per year for the next 5 years in the same type of initiative. 

So what are these businesses? How do they operate? How are they organized? I'll answer these questions and more in the weeks to come. In the meantime, I'd like to share this informative video that I found that should give you a taste of how a few worker cooperatives operate.