Dividend-Earning Profiles

Dividend-earning profiles are the nominal owners of Consensus. This is more of a legal and accounting technicality than actual ownership, for all members of Consensus will be the decision makers.

I, the project manager, and a few other future members of Consensus will put some money down as “legal capital” in CC. In exchange for this money, our profiles will be immediately upgraded to dividend-earning profiles when Consensus becomes operational.

When Consensus becomes operational, the PM should start shifting the revenue source from selling preferred shares towards encouraging new members to upgrade their profile to a dividend earning profile.

Consensus should always be free to join and use. So a member does not have to upgrade her profile—ever—to fully participate in Consensus. The basic profile will have voting rights and can be elected to the low or high rings. In this regard, regular profile and dividend-earning profiles have the same rights.

The primary objective of the dividend-earning profile is to attract some working capital after launch. In exchange for this capital, dividend-earning profiles can share later in Consensus' profits. Regular members do not share in these profits.

Funds from upgraded profiles will be recorded as “profile equity” on the CC accounting statements. From this perspective, profile equity is similar to common stock equity for corporations, giving the appearance of ownership.

CC could be quite profitable—the CC articles will have conditions on how to direct dividends towards dividend-earning profiles. Because these dividends could indeed be quite substantial, it is possible that a few wealthy people could provide most of the working capital after launch. Not only would they dominate the dividend earnings allocated to dividend earning profiles, they might also gain a sense of entitlement that they are the true owners of CC&dmash;and create all sorts of legal challenges to wrest control of this new form of co-operative governance. To prevent this possibility, there should be some limits paid for the upgrade. I suggest an upper limit of $5,000 to prevent a dominating attitude from happening. With this upper limit, it would be difficult for a few wealthy people to unite and try to take over. There should also be a lower limit to make the transaction worthwhile from an administrative perspective (about $200).

So who would upgrade the profile?

Let's anticipate that most Consensus members will not upgrade. For many people in the world, $200 is a lot of money, and many people may not have the banking mechanism to effect such a payment to CC—or get a dividend back.

However, there will be a few early Consensus members who have some disposable income and a working banking mechanism. They would look at their upgrading investment in Consensus as a reasonable fee to have a very useful communication and entertainment tool. I think the investment opportunity would be a secondary reason to upgrade.

I have designed CC such that if it becomes very profitable, the dividend-earning profiles should get a 50% dividend on their collective original investment. This may seem quite high, but it should be noted that it might take five or more years for CC to make this kind of dividend. And there is no guarantee this kind of investment will be paid out every year (the high ring makes this dividend decision). There is still a lot of financial risk with upgrading the profile, however I think the risk and reward are fairly balanced out with this 50% dividend for the “original investors.”

And, most importantly, this dividend will be capped at 50%. Any profits above this will go to a better place: the Consensus Foundation (which I will discuss later).

The Free Rider

When revenue from advertising is enough to pay the bills for Consensus, converting profiles to dividend-earning profiles should be given less emphasis. However, the option to upgrade should still be available to all members.

If CC does become profitable, this will create an incentive for other profiles to upgrade to a dividend-earning profile. It would seem that they are getting a free ride, waiting for profits to appear before upgrading. However, the dividends paid to dividend-earning profiles are based on their Influence from the time they upgrade. Potential free-loaders will not get a big dividend for several years after their upgrade.

When a profile upgrades to a dividend-earning profile, it will generate a second Influence calculation for the profile. The first calculation for voting is still retained and is based on when the profile first joins Consensus. The second is for earning dividends and is based on the time the profile converts to a dividend-earning profile.

As an example, let's assume two members, Fred and Veronica, both joined Consensus at its launch. After five years, both have 200 supporters. Both of them have 179 Influence points to use in voting. But at launch, Veronica decided to upgrade, using both altruistic and materialistic reasoning. Veronica's voting Influence will be the same as her dividend Influence because she joined Consensus and upgraded at the same time. On the other hand, Fred chose not to upgrade. But four years after launch, Fred can see some dividends coming to dividend-earning profiles, so he makes the upgrade, mostly based on materialistic reasoning.

In the fifth year, the high ring declares some dividends. If all dividend-earning profiles were to share equally, Fred would earn the same dividends as Veronica. But with the Influence calculation being applied to the time of the upgrade, Fred's Influence (as a dividend-earning profile) is 69. Dividends to Veronica and Fred would be split in a 179:69 ratio. In other words, if $100 were to go to Veronica and Fred, Veronica would get $72 and Fred would get $28. This is more fair to Veronica who put up her money when Consensus really needed it and an investment in Consensus was more risky. And Veronica had to wait five years to get a return on her investment.

I need to emphasize the two Influence values after making an upgrade. Because Veronica upgraded when she joined, she has 179 Influence for both voting and earning dividends. Fred has 179 for voting and 69 for dividends. The many members who will not upgrade have no Influence for dividends, but they still have their Influence for voting in Consensus.

And I should point out again that the second Influence calculation is also partially based on the number of supporters. A dividend- earning profile with more supporters will have a higher dividend than a similar profile with few supporters. That higher dividend is a reward for making Consensus a great place for other members.