Community Buyout Q&A
Do you have a road map for the changes?
We are following a process from Co-operatives UK which outlines how to migrate from a traditional business model to a community lead model. This means we are busy putting together the required documents which is quite an extensive process.
The first is a business plan: how we make money, what the business is etc. As a community structure each person would buy a share, irrelevant of how much they invest the shares would be per person. There will be another round of shares in the future so we need to form a strategy for how to take on additional members in the future.
The next step is democratic process: i.e developing a board. We are currently a very small team so we will need to develop a board and a democratic process in future and the processes of how to do this, such as who is on board and the structure of what it will look like.
There are then the accounts for Echoes to show the financial processes and a Financial strategy to show what the state of business is. There was a $5k donation 10 years ago but other than that there isn’t any capital in the business.
We also need to develop a HR strategy. This is most likely to be sourced from the community. Community buy-outs are usually community business like pubs and shops. This digital model is fairly new but gaining popularity. We need to see how it works with this organisational structure and establish how we will make decisions on things such as how we make profit. So far our model has been that the profits from the Echoes Lab side of the business (the white labels etc.) have fed back into the platform to enable us to develop it. The memberships have also fed in, over the years the balance has changed on the level of this so we need to do some analysis of the platform and the development and how shareholders would feed into the platform.
Finally there is Succession Planning. Josh built most of the Echoes platform and Creator: and most of the information for this is still in his head! This information needs to be shared, so far this has been difficult to find the time to do whilst he is running the business. We feel the move to a community owned model will be a good way to distribute the information to the community and therefore allow people to pick up the threads and develop the business such as AR, spatial audio, gamification etc and push the platform in different directions. In order to have the time to disseminate his knowledge Josh needs to take a backseat in the business and transition into a role such as an artistic director and allow the community to move into a more active role in the platform.
In order to get to the stage of selling shares we need to complete these documents to allow transparency for the potential shareholders.
Part of the process will be looking at the business structure, currently a Limited Company, which is a capitalist model to make money. We are looking into the CIC structure; which limits shareholder dividends and allows profits but needs to work for the community it serves. We are very much open to other ideas but so far the CIC model fits as it has a limit on selling shares which can stop people selling them on or passing them on. We need to limit who has shares so we can track them and limit who has investment in Echoes to preserve our community.
We plan to have an initial selling period, then a cooling off period to limit who can buy them, then in the future have another round of sales.
(Maybe there needs to be another Q and A on how to develop the platform in future?).
What is a CIC?
A CIC is a Community Interest Company. It is designed for social enterprises or not-for-profits but is structured like a regular company limited by guarantee or shares. CICs are shaped and driven by community purpose, which is written into their constitution, so this structure would be perfect for what we are looking to do.
How many people use Echoes and how many have expressed interest?
We have around 12000 signed up to Echoes. Of those, about 2000 to 3000 are active users on a yearly basis.
Around 150 people a day listen to soundwalks, if there is an event happening this can rise to 9000 weekly users.
So far 95 people have expressed an interest in the share offer. A handful are interested in finding out more but are not interested in investing.
So this leaves about 80-85 people interested in being part of the community buy out which is enough to raise a reasonable amount of capital depending on how much people are willing to invest.
What is the timeline from here?
At present we have no fixed timeline. Working on the business plan and all the other associated documentation takes time so we are being led by this at present.
We’re finalising the best way to share the information once completed, but it will probably be on an unlisted section of the website which can be accessed by interested parties.
What is the distinction between members and shareholders? Would members elect the board for example?
We have been using the terms member and shareholder interchangeably, essentially we see members of the community and shareholders as the same thing. We have a vision of it being a society.
Everyone would get a single share regardless of how much they invest, it would be inequitable otherwise. A CIC is the least profitable way for people to invest; investment in a CIC is not a profit making exercise, you invest to become part of the society.
The shareholders will vote to elect the board.
How are you going to guard against being bought out and shelved to avoid competition?
The CIC structure should prevent this as there are strict rules governing the constitutions of CICs and ownership will be irrelevant of how much has been invested because everyone will only get one share. We will, of course, look into this in more detail to ensure there is a clause written into the constitution at the formation of the CIC.
Having had conversations in the past with corporations such as Spotify and BMW about locative technologies, we are of the opinion that the larger companies feel it is essentially too arty. There are other companies out there that are similar but we do not feel they are a threat. We are looking at this as more of an arts collective, so hopefully no one will want to sell out to apple!
Will you be writing into a mission statement that certain types of content cannot be sold?
Echoes is a content agnostic platform, meaning there is currently no restriction on content; by working this way we get a wide range of audio experiences such as experimental art, theatre, narrative experiences, soundwalk experiences and audio guides. Recently, for example, we completed a project creating an audio guide for the Colosseum in Rome based on Echoes technology.
The majority of content spans genres and the platform itself is not designed for step by step audio guides, the power is ultimately in the flexibility of the platform. We don’t currently have any plans to restrict content on the platform, but if there is suddenly an influx of audio guides or similar then it might be something we will have to consider.
There is no money to be made in audio guides: Apple and Google restrict money being made through the platform and this is something we can look at in the future, but there are a large number of artists who adamantly do not want to make money. The overheads involved in taking payment is insurmountable at the moment. Previously walks have sold for £5.99 but after Google has taken a cut and then the tax; we get 60% of the original payment then passed on a similar percentage. Google also puts a large threshold on paying out, somewhere in the region of £150, so it takes a long time to accumulate enough earnings to get the funds released. There are so many blocks.
The listener subscriptions could get to a point where we can pass on a percentage to the creator, but we still have a long way to go. Another option could be to launch a podcast type model; there is a lot to think about and we are very open to additional suggestions as to how to develop those aspects of the platform.
I am interested to know what kind of sum would make a big difference to you and what would you do with it?
There are various things to consider when thinking about the amount required to make a difference, such as where does the money go, how much we raise and how much we put back into the platform?
Currently Josh owns 95% of the company. The money raised would need to go into buying those shares, so really it all comes down to how much we raise.
I am interested in seeing how it develops and being able to explore some of the other options in a research way, such as Beacons. I do not have funds to look into beacons, so I would be interested in learning about those. I couldn’t find any “how to” videos on them, so I feel that “how to” videos would be useful and would open Echoes up to more people.
We have a few videos, but how to and walk through videos would be great. Josh is not a video person (hence all audio) so maybe some podcasts could be a great medium.
Education and schooling on the platform are not a strong area. Maybe Josh transferring his knowledge could be via podcasts. The FAQ is the only source of information at the moment so there are a lot of queries that we end up answering in emails that really should be in the FAQ. The education side is something that we can build on.
What are beacons and how do I use them?
Beacons are a core part of the ECHOES app, and are the only way of really using it reliably indoors. We’ve been waiting for Apple and Google to do indoor positioning with wifi that’s stable enough, but as yet it hasn’t materialised so we’ve continued to concentrate on GPS-triggering. We’ve stuck with beacons only in the top tier memberships to cater mainly for venues or bricks and mortar institutions, however we’ve encountered artists who want to use them so we’ve granted access or offered a big discount to those creators.
We’re now looking at either introducing lower tier memberships that offer more features, or reducing the price of the top tier memberships. We’ve also looked at an income assessed or ‘pay what you like’ model for memberships, but haven’t settled on a good system yet.
What does a buy-in for a prospective member look like?
In terms of buy-in, we will try to reach a consensus about a fixed buy-in. We would like as much capital to go into the company as possible so there is capital for development and projects.
There are overheads to run the business, and currently there are only a few of us: Josh, Ganga, Sarah, a designer and a few software developers (iOS and Android), everyone currently works as freelance. As part of this we would need to look at structure, does anyone become permanent? Would we have marketing? Ganga’s currently been writing the newsletters and doing social media, would we need a more permanent dedicated role there for example?
We are open to discussion on whether people can bring skills to Echoes and how those would fit within the community. The good thing about being owned by the community would be that everyone could bring different skills to the table.
Is the company in trouble or is the reason to do a buyout to try and take it to the next level? I’ve just never heard of a company doing this unless it has to…
This has been in the pipeline for many years as a potential, it’s only now turning into a reality.
The turnover has stayed the same for years, we’re not in favour of growth for growth's sake. We feel it can be better served by the community developing it: people can empower it. By going down this route the community it serves can have a say in its structure and how it is run. This could be with different functionality, maybe a change to memberships?
We are proposing this so that the community have their say, definitely not because we are in trouble.
You’ve talked about skills and that people could buy in with a small amount of money but can bring skills. I’d be interested in a noticeboard or something as it would be good to link up with people who have knowledge.
Yes, connecting with other people is a good thing.
There would be a lot of mileage in creating a bulletin board for meeting fellow soundwalk artists. This kind of thing could be written into the documentation when the framework is written. It could even be the first step for linking people up then we can work it into the strategy.
You mentioned that you’re answering questions all the time; people love sharing knowledge so could the community start answering those questions for you? Maybe you could create a noticeboard so your community answers the questions for you?
This is something that we have considered in the past, but from an audio route, maybe something like discord? There are lots of things to consider about the way it works, should it be linked to Echoes accounts for example? This is definitely worth investigating and potentially doing first.
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