Royalties

Jeff Peters

Without mentioning any particular distributors/resellers, what would you consider a minimal acceptable royalty for normal reselling, for syncing and for pageviews per month?

JoeManbeck

70%, but I might be biased.

Ray Larabie

I'm willing to lower my expectations for royalties if they're accompanied by appropriate effort/money towards promotion. But 50% for placing a font on a site where I'm required to deep discount in exchange for a slight chance at visibility isn't satisfactory. There should be some ad copy, some social media promotion...some effort directed to promotion of each new font release. If the distributor is keeping half the money, hosting the site, processing the credit card and dealing with customers isn't a fair 50/50 trade for making the fonts. And if I'm putting money and time into promotion to replace the promotion that they're not doing, I'm really getting less than half. I guess. I mean, that's one way to look at it that may not be correct but that's how it feels to me. I feel ripped off at 50%. But with decent promotional effort, I might feel that it's fair. 

If it's a new distributor: I agree with @Joe Manbeck. That's a fair percentage for distribution with minimal promotion and visibility. If a new distributor comes at me with less than that, they'd better be offering something special. And I've been promised that sort of thing and let down. We'll take half and promote you but nope. As for old ones, distributors I've already signed up with—I'm not likely to pull my fonts off them but I'm less likely to premiere them there. For cloud sync/pageviews, it's complicated. I have to consider flat payments plus overages and customer volume...there are no apples and oranges comparisons that can be made in that field so far.

notdef

I made a rough estimate of 2–4% of the gross monthly income from Creative Cloud distributed back to type designers in royalty fees as a fair reflection of the value added and hours invested. I have no idea what that figure actually is. Since type designers need the tools to produce the fonts, the least they can do is offer a free CC plan.

notdef

Sorry, plain English: I pay ~ €60 per month for my Adobe CC plan. I think 2–4% of that should go to type designer royalties.

Henrique Beier

This reminds me of the time Epic Games decided the 70/30 split from Steam was unfair to developers and created its own store with a 88/12 revenue split: https://www.polygon.com/2018/12/4/18125498/epic-games-store-details-revenue-split-launch-date

Having said that, I believe 70% is acceptable for what you call normal reselling. No idea about syncing and pageviews, though.

JoyceKetterer

@Frode   I think that something like Creative Cloud is just completely different from conventional reselling.  Ok, yeah, at the end of the day it's a royalty check...  But the customer is choosing the Creative Cloud service first and the fonts are a value add to it rather than the primary product. 

I do think that fonts (and the other licensed IP that Creative Cloud provides access to) are very influential in customer retention for that sort of service. If you drop the service you're in a pickle with regard to preexisting work - but it's sneaky.  

As someone who runs a font foundry I can tell you that a lot of expense goes to maintaining the infrastructure and providing customer service - which have nothing to do with promotion.  I can't imagine publishing other people's work for only a 30% cut - it just wouldn't work at all. 

By way of reference, 30% is what I charge when I'm called in to resolve a pre-existing license enforcement matter for someone.  In that scenario I'm called in to essentially dive bomb one specific problem.  I'm being paid for my expertise more for my expertise than for the amount of time I will spend (because the assumption is that they are reverse correlated).  It's just the completely opposite situation from the day to day work of selling licenses.  So I have no idea how the resellers who are taking that small a cut make it work.  Perhaps imagical things happen at scale that I don't have experience with.  Or perhaps they are making a lot of concessions I'd not be willing to make.  

I don't think this question about minimum acceptable royalty is a useful framing because it functions in a vacuum. 

For Darden Studio, I think first about whether the reseller is providing us with access to a market we'd not see otherwise.  Then I decide if their proposed cut seems fair based on how much I value that access.  For example, back when webfonts where new, we signed with third party hosters knowing we'd get very little money from them simply because we wanted to have a toe in what we knew was the emerging future of the industry.  We weren't about to make our own web fonts service so the deal was a fair exchange of money for access.  

Conversely, we aren't currently with any traditional resellers because none of them handle licensing to our satisfaction.  The cost benefit analysis lands on the negative side.  But I can imagine a scenario  where the industry contracts to the point that the cost of maintaining a our own boutique is unwise and the calculus would flip.  At no point am I just asking myself "what cut is reasonable for them to take?"  I'll always be asking myself "do the benefits outweigh the costs?" where both those words are meant in their broadest possible sense.

notdef

> the fonts are a value add to it 

Of course, and I think that value added is 2–4%. If I were to consider only my side of the equation, that number would be much higher. I’m guessing Adobe’s number is much lower.

Andriy Dykun

Guys, I'm still new to the font business, but it seems to me that low deductions are acceptable when they are offset by the number of sales. It is better to get 100 sales and get 40-50%, than one sale and 70% of deductions. I am guided by the logic of microstock. What do you think about it?

Thomas Phinney

To me, the question is whether any given channel provides enough added value to justify using them, compared to the alternative(s).

I see this much like @JoyceKetterer.

I do not choose to primarily analyze it by whether some channel is “doing enough to justify their cut.” I think that is treating it as a moral choice, in which you want to punish those who are in essence undeserving in terms of them not doing enough. Although I don’t have a problem with taking ethical positions in business, but I don’t weight that particular question very much at all, compared to whether it makes business sense for me or my company.

Jeff Peters

Thanks for your insight, all.

Michael Rafailyk

Ray Larabie said:

I'm willing to lower my expectations for royalties if they're accompanied by appropriate effort/money towards promotion.

Indeed. I collected some analytics and was surprised how selectively Monotype is promoting our fonts. Now I am confused and don't quite understand such a high commission, because selling fonts without promotion is doomed to invisibility. I see much more sense in building my own promotion channels for the future.

Nick Curtis

Since I officially retired in 2015 and began collecting my Social Security pension, I haven't done a lick of work to promote my line of 664 families of fonts; nevertheless, I have consistently been netting between $1,750 - $2,500 per month in 50/50 royalties.

Lately, I've grown a bit less indolent and have been exploring ways to add value to my current stock and monetize said value. I expect that the fewer dollars per unit I will receive will be offset by the volume of deeply discounted sales prices.

I may be wrong, however. It wouldn't be the first time, nor is it likely to be the last.

Miles Newlyn

As someone who runs a font foundry I can tell you that a lot of expense goes to maintaining the infrastructure and providing customer service - which have nothing to do with promotion.  I can't imagine publishing other people's work for only a 30% cut - it just wouldn't work at all. 

I guess this is dependent upon how your website is set up. 
I could add a family to my site in five minutes, it would take my developer an afternoon to write the royalty reporting code, and beyond that there's only my hosting, Stripe, and MailChimp subscriptions, which are cheap. In over a decade of maintaining a foundry I've had less than twenty customer service calls, fonts are maintenance free. 

Developing a good e-commerce website in the first place, then time and money spent on promotion are the only expenses in my retail business model.

Without spending on promotion, a 30% cut would be simply money in the bank.

Nick Curtis

Miles Newlyn

Developing a good e-commerce website in the first place, then time and money spent on promotion are the only expenses in my retail business model.

Well, I'm 73 and, despite all my protestations at age 21 that I would never become un-hip, I have managed to do so. Consequently, it make sense for me to hire a twenty-something brand manager to flog my wares in "all the right places."