The License

How we get paid

Every cooperative running an instance of the Agora pays a licensing fee to Mana Dork Labs. The following explains why we chose this configuration, and how this setup ensures that MDL won’t become your next marketplace landlord.

The License Arrangement

Mana Dork Labs builds and maintains the Agora, which is then licensed to marketplace cooperatives. In exchange for a finite-horizon license fee, the cooperative receives perpetual access to the latest version of the Agora at the time of license expiry. This license arrangement enables Mana Dork Labs to have stable recurring revenue over an extended period, while simultaneously giving the cooperative a real ability to walk away at the end of each licensing period. Importantly though, despite having perpetual access to their current marketplace version at license expiry, the cooperative will need to renew their license if they wish to continue being able to receive updates, place requests for new features, or receive customer service. This setup directly aligns the long-term incentives between Mana Dork Labs and its customers.

Critically, despite the license fee, MDL never touches a marketplace transaction directly. Mana Dork Labs is not the merchant of record, holds no buyer or seller funds, and takes no commission on any individual sale. Money in a marketplace transaction moves only between the buyer, the seller, and the cooperative’s treasury. The license fee is paid separately out of that treasury, and it is the whole of MDL’s revenue from any single cooperative. There are no hidden fees, and no gotchas.

This arrangement produces a key distinction:

• The member fee: this is what a seller pays their cooperative, typically as a percentage of a sale. The cooperative sets it, collects it, and often returns any surplus to its members. This is a governable parameter on the Agora.
• The license fee: this is what the cooperative pays Mana Dork Labs for the software. It is one of the cooperative’s operating costs, sitting alongside things like insurance, trademark costs, and legal fees. This is set by the license agreement between Mana Dork Labs and the cooperative.

To use a video game metaphor, licensing here works the way old-school game expansions did. A cooperative that licenses the Agora holds the version it licensed and keeps it whether or not the agreement continues; renewing buys the next iteration, with its upgrades, new features, and maintenance. Declining an expansion pack never took away the game you already owned, and this license arrangement works the same way.

Why Can’t the Cooperative Build Its Own Platform?

It’s an excellent question, and the answer is a combination of financing and expertise.

Cooperatives have notoriously terrible access to capital markets. While a marketplace cooperative can usually raise money from a member buy-in, it is very difficult for them to raise enough money to design, build, and maintain a marketplace platform. Even if the cooperative could access enough capital, it is arguably an even bigger hurdle to then find a member within the coop that has the proper engineering background to perform this work. As a result of this high barrier to entry, cooperatives tend to rent instead of own. Unfortunately, renting incurs a dependency on apathetic external actors for the cooperative’s online marketplace infrastructure. This results in low effort bug-fixes, anemic (if any) development of cooperative-specific features, and sometimes even financial documentation boondoggles; all of which could otherwise have been avoided with sufficient capital and expertise.

Mana Dork Labs exists to fill this gap by providing a vehicle that today’s capital markets can actually tolerate. Recurring license revenue across multiple cooperatives is a financeable business model for investors in a way that a cooperative platform budget can never be. Even though MDL’s formational charter prohibits the issuing of stock with unbounded investor returns, Mana Dork Labs can issue bonds (paying finite and/or horizon-limited returns) to finance its growth. Using this strategy, Mana Dork Labs maintains the ability to raise limited investor capital prior to becoming self-sustaining. It’s a win-win: MDL gets access to capital, cooperatives get the Agora, and no 3rd party shareholder gets deep enough into the mix to establish perpetual extractive rents.

A Coordination Cost, Not an Extraction Cost

The Why argues that shareholder profit is dead weight loss on transactions between producers and consumers. That said, a license fee could become an avenue of extraction too, so it is fair to ask how MDL can avoid becoming what it abhors.

The key is time horizon. A shareholder dividend is a claim on surplus that persists as long as the shares do. By comparison, MDL’s license fee is (a) capped, (b) finite in duration, and (c) granting of ownership via perpetual irrevocable access. This changes the cost to the cooperative from a perpetual involuntary economic rent into a simple, on-going series of voluntary business transactions.

Rather than paying extractive rents, the cooperative gets permanent access to a platform built for both transactions AND governance from the ground up, as well as contractual control over that platform which no standard privately-owned company would ever allow.

Protections For The Cooperative

The following protections for the cooperative are built into the license agreement.

• Perpetual and irrevocable access. The license grants the cooperative ownership of the running instance, the API, and the escrowed source, in their versioned states at the end of the license period. MDL cannot switch access off after the license expires (literally: the blockchain makes it impossible).
• Immutable cap. The license fee is capped at a fixed percent of the cooperative’s gross fee revenue in the marketplace’s immutable code.
• Flexibility. Part of the fee is contingent on the cooperative’s actual surplus. A small floor covers our marginal cost, while a variable portion expands when the cooperative does well, or compresses (potentially to zero) when the cooperative struggles. MDL only succeeds when the cooperative succeeds.
• Change of control veto. Each cooperative holding a license agreement with Mana Dork Labs is given a unilateral veto over any change of control, so the cooperative cannot wake up one day licensing from a buyer it never chose.

Mana Dork Labs’ Limitations

The following rules exist in our corporate charter.

• Mana Dork Labs hold nothing inside any cooperative. No equity, no membership, no patronage account, no board seat, no officer role, and no vote. We are a licensor, and while we are philosophically aligned with the cooperative, the relationship cannot and should not go any further than that.
• Mana Dork Labs does not operate any marketplace. Not as merchant of record, not as a holder of anyone’s funds, not for a cut of any individual sale, and not on a temporary basis while a cooperative is still forming. Running the live market is the cooperative’s job.
• Mana Dork Labs issues no entitlements to indefinite return. The charter bars the issuance of shares entitling investors to unbounded or indefinite returns, and further bars investor board control or investor consent rights over the license agreement.