Thoughts on Monotype and its subsidiaries?

John Hudson

Any such organisation in the EU would need to avoid contravening Article 101 of the EU functional treaty, which prohibits agreements between independent competitors that restrict competition. So if a group of designers and foundries decide to organise around collective contract bargaining with a distributor, the distributor could make a case that this is restricting competition and that the act of collective organisation constitutes a cartel. And when I say 'make a case', I mean sue the participants. So this is something on which appropriately experienced lawyers in the EU should advise.

Unfortunately, antitrust laws almost everywhere are set up to protect consumers against monopolies, not to protect producers against monopsonies.

What Europe does have, more so than the US, is prominent examples of producers cooperatives like Mandragon, but these are formal, legal corporation structures with shared ownership, not associations or organisations of independent producers.

John Hudson

On the subject of antitrust laws, how much of the type industry does Monotype need to buy before we can argue that they're too big and should be broken up? 

Nick Shinn

A rhetorical question. Donald Trump is no Teddy Roosevelt, and trust-busting wasn’t on Obama’s radar either.

George Thomas

On the subject of antitrust laws, how much of the type industry does Monotype need to buy before we can argue that they're too big and should be broken up?

They are already there in my opinion.

Matthijs Herzberg

With a better commission split, it is likely many designers/foundries would lower their prices. They would also have extra incentive to produce more (and better) work.

As such, the antitrust laws preventing type designers from standing up to monotype are hurting the consumers that they are meant to protect! But tell that to the judge...

JoyceKetterer

I don't think it's about commission split.  I am actually very suspicious of too good a commission split because it means they are likely cutting costs elsewhere.  

The real problem with monopoly in the information era is that they can use the data from the sales on their platform of others' products to drive their own development of competitive products.  There's lots of circumstantial evidence that Monotype does this, and pushes it's own fonts over other fonts they supposedly represent.  I don't know if anyone has proven it.

And let us not forget myfonts, under their "stewardship", encourages a race to the bottom mentality.  Things like regular poor quality expansion releases to keep good sellers in the top of results and unreasonable sales.  

Dave Crossland

Amazon Basics, anyone?

James Puckett

I don’t think changing the MyFonts commission would affect prices much. MyFonts already encourages deep discounts and flash sales that have crashed font prices so much that designers are able to stock up on trendy type families for paltry sums and not even need to bill their clients for type.

Ray Larabie

 I don't understand why distributors can't offer sellers two options:

A: high commission + low visibility
B: low commission + high visibility

By visibility I mean reasonable marketing effort. Fontspring is type A. That's fine for some of my typefaces. I prefer my well known typefaces to be A and my lesser known typefaces to be B.

I guess most distributors are type C: low commission + low visibility.

JoyceKetterer

@Ray Larabie when I talk about cutting corners i'm not talking about marketing. 

I'm the first to admit that Darden Studio isn't very good at marketing.  We still have a lot of overhead. 

I'm mostly talking about maintaining a good site UI, but also a lot of energy goes into customer support. 

Do you think any of the resellers do regular vetting of their on site EULA agreement to make sure it comports with current case law?  To me that's just a basic thing I do regularly and have done for years among other things I think they don't do.

Since you bring up Fontspring, the biggest problem with them is their fixation om perpetual licenses.  Their price for perpetual web licenses are in many cases the same or lower than what a company like Font Bureau charges for one year.  Make no mistake, that's a customer support decision that would require them to have more staff if they went the other way.

I think the thing that would persuade me to go with a reseller is if they didn't pay their sales people on commission.  Sales people who are paid well regardless of their specific sales are less likely to be sloppy and unethical.

Rob Barba

Matthijs Herzberg said:
Is it time for a type union?

Not for a union.  As has been pointed out before, those are for employees.  Basically, what you're discussing, is a guild, or its modern equivalent, a trade association.  And while there are such (AIGA, GAA, etc.), I don't think there's one specifically for fontmakers.

Albert_Jan_Pool

Think Rob Barba is pointing in the right direction. Most foundries would be better off when they would share their legal expertise before signing or updating any contract with companies such as Monotype/MyFonts, Adobe or Google. The same goes for designers. The level of organisation needed for such an exchange and for joining forces is not that high, especially when one focuses on a single issue. A few yours ago, FontFont Designers were quite successful in getting better license agreements with Monotype. One does not necessary run into anti-trust laws by doing so. In the course of doing this, I also read some Monotype and MyFonts Distribution Agreements and Monotype Consulting Agreements. My impression, and also of the lawyers we consulted, is that these could be much more in favour of the designers or foundries. To what I got from this is that wether you bump into anti-trust laws is not determined by what you do or want, it is a matter of how you do it. If you want to move this forward, please do so, get proper advise, and in the sense of Moltke: march separately, strike together. 

Albert_Jan_Pool

Rob Barba said:

 And while there are such (AIGA, GAA, etc.), I don't think there's one specifically for fontmakers.

We used to have ATypI until the organization was moved to the US and had its remaining teeth pulled. From a legal point of view, we have thus become makers of products rather than people who design works.

Chris Lozos

Albert_Jan_Pool said:

We used to have ATypI until the organization was moved to the US and had its remaining teeth pulled.

<i><b>Albert, how did this happen? Can we move it back to Europe to have the teeth returned?</b></i>

<i>We Americans have been screwing up too many things in the past 3 1/2 years.</i>

 

John Hudson

Did ATypI ever have teeth? Did it ever succeed in enforcing its code morale on anyone (leaving aside that the code morale was a cartel agreement to permit manufacturers to pirate each others products after 15 years, and was never in the interest of type designers)?

Thomas Phinney

Albert_Jan_Pool said:

Rob Barba said:

 And while there are such (AIGA, GAA, etc.), I don't think there's one specifically for fontmakers.

We used to have ATypI until the organization was moved to the US and had its remaining teeth pulled. From a legal point of view, we have thus become makers of products rather than people who design works.

ATypI has few significant functional limitations due to being based in the USA. The problem is first and foremost about having key members based in the USA.

I don’t immediately recall, in my past 16 years on the ATypI board (most of them on the executive—treasurer, secretary, VP) that ATypI has often encountered major limitations due to ATypI itself being based in the US.

But I have been in discussions where employees of large US companies (including me, IIRC) have had to say “our lawyer says we can’t enter into this discussion because of US anti-trust laws. So if you want to talk about it, we will have to go.”

Moving ATypI’s incorporation back to Europe would not solve that problem, unless ATypI was willing to lose both all its US members, and US corporate sponsorship. ATypI could move back to Europe at some point; there are other advantages (and disadvantages), but not likely for this reason.

John Hudson

But I have been in discussions where employees of large US companies (including me, IIRC) have had to say “our lawyer says we can’t enter into this discussion because of US anti-trust laws. So if you want to talk about it, we will have to go.”

It was specifically to address one aspect of such situations that ATypI voted to remove the old Code Morale from the statutes at the 2004 AGM in Prague. At the time, there was interest among some individuals and companies in using ATypI as a organisational framework for font technology collaboration. I'd even been approached by someone from one of the major US companies in the field enquiring if ATypI might take ownership of the OpenType format specification. As we began to look into these initiatives, so did Adobe's lawyers, who actually read the ATypI statutes, and exclaimed ‘But this is a cartel!’ — and as I recall, Adobe folk who were active in ATypI explained to the lawyers that the statutes were an historical artefact and that most current members of ATypI hadn’t read them and they weren't really relevant to the modern association. To which the lawyers responded ‘But it’s a cartel!’, pointing out, reasonably enough, that this was there in black and white in the Code Morale: an agreement between competitors to manage and limit their competition.

So the 2004 revisions to the statutes were specifically targeting those aspects that constituted a cartel under antitrust laws. And I don't think they only constituted a cartel under US law, but also under EU treaties. The fact they had not been previously challenged was that they had simply been ignored for so long that few people in the association thought the statutes were remotely relevant to the modern membership and activities of an association no longer dominated by machine manufacturers.

JoyceKetterer

The thing that's most relevant to this conversation is what's going on with uber and lift drivers in the past couple years.  If the journalists' summaries of things is accurate, it seems like courts are moving in the direction of considering it ok for independent contractors to organize in situations where they are all "selling" to the same large buyer who is presenting them all with the same contract.  

JoyceKetterer

As a side issue I'd love to see a guild enforce nomenclature standards. 

We can't have an industry standard license because that would be anti competitive.  That is, even if we don't all charge the same price for the same thing having same product list is still considered a kind of price fixing.  However, I doubt agreeing on the definitions of key terms would be anti competitive.  This could address confusion over licensing terms like "enterprise" and "server licensing" but also other things as well per an old lecture by @Bruno Maag  (I forget the details).

Thomas Phinney

Surely having a looser or tighter dividing line between server and desktop, or enterprise and “regular,” could themselves be competitive points in licensing, no?

JoyceKetterer

@Thomas Phinney  Totally.  But I don't think that's prohibited by just agreeing about what the words mean.  At the moment I avoid using the word enterprise because no two people mean the same by it.

peggo (Pedro González)

I just want to say that since 2016 earnings for some of us from Distributors like Monotype and others are not 50% but 35%, that's because 30% of our earnings are taken for USA taxes.

Mark Simonson

U.S. citizens pay taxes on the earnings, too. They just aren't taken out before we get paid by the distributors. 

peggo (Pedro González)

Mark Simonson said:

U.S. citizens pay taxes on the earnings, too. They just aren't taken out before we get paid by the distributors. 

I guess is not 30% like us, otherwise I think is too excesive

Mark Simonson

Probably true for most people, but it can be as high as 37% if you're doing really well in the font business. In any case, I agree that 30% is excessive if it's regardless of income.

peggo (Pedro González)

Sometimes when we Co-work with colaborators this situation is even more dramatic reaching just 17,5% each party. 

JoyceKetterer

@peggo (Pedro González) There's a very simple tax form (by tax form standards) called W8BEN that you should be able to fill out and then not have the 30% deducted. I'm not an accountant or tax attorney but I do pay non-americans and from what I've been told this form eliminates the need for burdensome withholding. If you have no US presence (office, bank account, hours working inside this country) and you fill this form out correctly I think you'll probably be fine.  If you've filled it out and they are still withholding money it's probably work talking to a US accountant because you may be doing the form wrong.

JoeManbeck

@JoyceKetterer Unfortunately (to the best of my knowledge), this is only the case if the US has a tax treaty with the country the foundry is registered in. For many foundries (including @peggo (Pedro González) and many in South American countries), we need to withhold 30% of the royalties, even with a W8BEN on file because there's not tax treaty between the two countries. We'd be extremely happy to be proven wrong, but we've talked with many a tax lawyer.
https://www.irs.gov/businesses/international-businesses/united-states-income-tax-treaties-a-to-z

JoyceKetterer

@joe Manbeck I admit that I've never paid anyone who wasn't in a treaty country (mostly Europeans) so your information is more complete than mine.  That said, the people in the non-treaty countries can still get the money back by filing taxes here, right?  I know it creates a 12 month delay, which I don't want to minimize, but I don't think that the money is fully lost, right?

JoeManbeck

@JoyceKetterer Admittedly, I don't know the answer to that question, although I suspect the answer is no. I'm under the impression that most of these foreign foundries are not filing US taxes.