Saturday, November 1, 2014

Governance and legal structure for commons-based peer production

Governance and legal structures for commons-based peer production (CBPP) are evolving very rapidly, but we are still far from having something that is fully compatible with CBPP practices, to make a coherent CBPP system.

CBPP communities that create exchange value (products and services to be distributed/exchanged on the market) are usually hybrid or mixed structures. The most obvious examples are ecosystems like Arduino, which are comprised of a classical structure (the Arduino company) in the middle of an open source hardware (OSHW) community. The Arduino company incorporates functions for production and distribution, but it also plays an important role of facilitation and coordination of the open OSWH network around it. The 3D robotics (the company) and DIY Drones (the community) form a similar ecosystem. See Open source hardware meets the p2p economy blog post.

Other CBPP communities are organized as cooperatives. This choice is justified by the more democratic nature of these types of organizations. I expressed my opinions on this structure in the Are Coops Outdated in a Network Age article.

My observation of this relatively new field is that in order to insure stable production and distribution, and to offer good services for the products distributed, CBPP initiatives have resorted to tested and proven classical methods and processes, embodied by classical types of organizations (the corporation and the co op being the most popular ones). Thus, most CBPP systems are divided into two major components: one that takes care of innovation on one side, which takes the form of an open community (decentralized, fluid, dynamic) and one that takes care of production, distribution and servicing on the other, which takes the form of a classical organization. The problem is that classical organizations are not fully compatible with CBPP. For example, their accounting and redistribution/reward systems cannot include everyone who participates in value creation. This has led to what I call the candy economy, as I explain in this post. If we want to push the CBPP logic we need be more inclusive (allow access not only to innovation processes, but also to production, distribution and servicing), and to extend redistribution to everyone involved in value creation. All the functions incorporated in corporations need to become distributed, to go long tail.

Formulating a solution starts with a new notion of property - nondominium. See original document and see the concept on p2p foundation. Access to resources becomes more important than ownership.

The custodian
Within the current legal system resources used by a CBPP community affiliates can be passed to a custodian. The custodian signs a nondominium agreement, which essentially guarantees the allocation of these resources according to a charter given by the community. In this arrangement, community affiliates are alleviated from the responsibility that comes with the management of physical spaces, equipment and tools. More concretely, the custodian covers the risk associated with the use of material assets; it pays insurance for example. Moreover, the custodian can offer other types of services that reduce the organizational or bureaucratic overhead of ventures (projects). For example, the custodian offers a bank account to project members, where they can deposit their crowdfunding rewards and from which they can pay for resources.

The open community
The community can take the form of a non-registered association (there is legal code for it in Canada and other commonwealth countries), which remains fluid and dynamic and can operate in the long tail mode.

The exchange firm
In order to interface with the market the community creates Exchange firms, which are limited liability moral entities (corporations). Their main role is to take on the legal liability for the product. The Exchange firm is only a legal interface with the market and it signs an agreement to distribute the revenue to all participants in a venture (project) according to the value equation. The Exchange firm charges a fee to cover its costs and the risk associated with the liability it carries.

Product development, market development, distribution and servicing are all functions and processes within the the open community.

Levels of governance

Governance at the project level: Within the non-registered association, projects are governed individually. Affiliates sign a Governance agreement and a Value Equation agreement. The Value Equation agreement describes how contributions are evaluated relatively to each other and how they are turned into equity.

Governance at the network level: Some decisions are taken at the network level and they concern general issues, like a % from revenue for infrastructure maintenance and development, the branding of the network, its general mission, etc.

Governance at the network of networks level: At this level we deal with interfaces between affiliated networks (communities), interoperability (protocols and standards), etc.

See more about governance on the OVN wiki
See more on SENSORICA’s Agreements and governance page.

Normative systems

In April 2014 I proposed a p2p governance and normative system, which I believe is more coherent with CBPP. 

By Tibi

By AllOfUs


  1. I think this is the future of a world economy which can be created independent of the current bureaucratic process, which is detached from the actual people involved. It's a bit like a "Real Democracy" in which, through participation, each person gets to influence the policy of the body as a whole.

    I recently wrote an opinion article on this, then through my research for it, came upon your project and the Sensorica project. I'm almost in disbelief that so much effort has already been put into creating this kind of far reaching "Open Source Governing", which if you ask me, is not the only way, but it is the best way to deal with the exponential increase of information, resources and the more immediate impact of global events to your average person.

    My opinion article is here:

  2. Maybe this is helpful in this context:
    Going Beyond Employment. Liberating Purposeful Work. has developed scalable systems to fully distribute authority and equity, all in service of the organizational purpose. The world is moving towards a purpose based economy. The For-Purpose Enterprise requires new Legal, Financial, and Social structures.

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  4. Pretty nice post. I just stumbled upon your weblog and wanted to say that I have really enjoyed browsing your blog posts. After all I’ll be subscribing to your feed and I hope you write again soon! Elia & Ponto

    1. Thanks Zack. Perhaps you can suggest a subject to write about :)