TheCapitalClinic

On Empowering Cottage Industries. TCC would like to re-examine the proposition that "cottage industries" can be a powerful business model that minimizes hierarchies. In light of enabling technologies and costs of communications approaching nil, ubiquitous cottage industries, still the dominant economic unit throughout the world but representing an underclass in capital allocations, will challenge if not supplant current corporate [i.e., hierarchical] forms of capital formation that are becoming increasingly inefficient.

Value allocations in the corporate form of doing business have now created in many industrial ecosystems inverted pyramids with excessive returns at the top of a teetering structure. Every other article in the business press seems to relate to the dislocation of values and a coming correction [excessive executive compensation, back-dating of options, Sarbanes-Oxley over-reactions, hedge fund volatility, dramatic growth of private equity funds, disfunctional CYA fiduciaries, class-action abuses, SEC enforcement action that punishes the very parties to be protected - the list goes on.]

The dialectic progression from ossified privilege to "creative destruction" is predictable. Business models destroy capital values when past successes become generalized as infallible processes in concentrated hands trying in vain to perpetuate perceived economic laws of increasing returns that are inevitably transitory.

The process of "disaggregating the corporation," though inexorable, will be uneven. The music domain is particularly sensitive to the dialectic forces at work in changing "the micro-economics of the dispossessed." The shift in the power discourse to "Cottage Industries Revisited" and realigning allocation to the proper base of the value pyramid, i.e. to the Artists rather than ossified gatekeepers and compromised intermediaries, is happening. Watch this space.