Font Distribution: Know Your Rights

Nadine Chahine

Hello all!

This is my first post (took a while to get here!!) and I'm happy that it's on a topic that is very dear to my heart: the business of type and supporting indie foundries. There's been a seismic upheaval in royalty rates and licensing models in the past month and we (at ILT) have been asked to advise and support. We then reached out to Frank Martinez to invite him to give a seminar as part of our ILT Academy. All info is below and we highly recommend that you attend. Frank has graciously offered to make this free for all to attend given the seriousness of the topic and the necessity that such issues are discussed in our community.

cheers,

Nadine

Event sign up: 

https://www.eventbrite.co.uk/e/font-distribution-know-your-rights-tickets-488806442227

Event info:

Recent changes to royalty rates and pricing models by various font distributors have left foundries with many unanswered questions with regards to their legal rights and relationships with these font distributors. The ILT Academy is proud to invite renowned lawyer Frank Martinez who has 20+ years of experience representing foundries as well as a distinguished academic career teaching at the School of Visual Arts in New York City. Frank also has an MBA degree and studied art and design at Pratt Institute before law school.

Frank will present a 2-hour seminar focused on understanding contracts, presenting the dos and don’ts of font distribution agreements and will focus on these areas of particular interest:

- Understanding distribution contracts: what to look for, dos and don’ts 

- Cultural and country differences and how they affect contracts

- Unilateral changes to agreements, when is that a breach and when not

- Pricing and license models of font products, who decides?

The seminar will attempt to de-mystify the legal complexities of font distribution contracts. However, please note that Frank’s presentation and any questions will not represent legal advice, they are merely his informed opinion.

JoyceKetterer

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Mark Simonson

Why would someone disagree with a (free) seminar invitation? Kind of a rude way to welcome Nadine. If you have some issue with the topic, say so. Don't just anonymously click the "disagree" button, which gives no clear idea what the nature of the disagreement is in a case like this.

Nadine Chahine

Thank you Mark! If foundries are not sure what this is about, this has happened recently:

- One distributor has unilaterally decided to reduce royalties to foundries from 70% to 50%, in spite of signed contracts

- Another distributor has increased pricing of web fonts by up to 10 times and changed licensing models without consultation, and restricted web font licenses to 2 million, above which that distributor will handle requests directly (with a very likely change from 50% to 25% royalty change)

So it seems there is a large grey area for interpretation with regards to what rights a foundry gives to a distributor, and there are so few resources that explain what those rights are. Hence this seminar. We've been asked for advice and we are not in a position to provide that. But, we can try to organise educational talks that help share knowledge around this very important topic.

If anyone would like to submit questions for Frank to include in the talk please get in touch and I'll pass them on.

Dave Crossland

Yikes

I think this is a nice thing to offer, Nadine & ILT folks

Nadine Chahine

Thank you, Dave!

André G. Isaak

Mark Simonson said:

Why would someone disagree with a (free) seminar invitation? Kind of a rude way to welcome Nadine. If you have some issue with the topic, say so. Don't just anonymously click the "disagree" button, which gives no clear idea what the nature of the disagreement is in a case like this.

I definitely concur with Mark here.

To add to this, it's not clear to me what possible advantage there can be to having the 'disagree' flag remain anonymous. Is there some rationale for this that I am missing?

Mark Simonson

It's baked into the forum software and can't be easily changed, as I understand it.

JoyceKetterer

I disagreed.  I don't think that what amounts to a client pitch meeting for a lawyer is free. The framing of an event that is likely to generate income for the speaker as free makes me uncomfortable.  I also wish the disagree button wasn't anonymous.  Disagreement is an important component of discourse, making it anonymous makes it seem nefarious.  I didn't flag the post, it broke no rules. I just didn't agree. 

Dave Crossland

JoyceKetterer said:

I disagreed.  I don't think that what amounts to a client pitch meeting for a lawyer is free. The framing of an event that is likely to generate income for the speaker as free makes me uncomfortable.

But... aren't all "free" events like this..? ;p

Surely you can take it from me that anything "free" has a larger purpose and is a loss-leader for some other activity

I also wish the disagree button wasn't anonymous. Disagreement is an important component of discourse, making it anonymous makes it seem nefarious. I didn't flag the post, it broke no rules. I just didn't agree.

I agree XD

James Hultquist-Todd

I‘ll reach out to Vanilla and see what they can do about the disagreement anonymity.

Nadine Chahine

Question to all: did you guys know about these changes to rates and pricing/models? Many seem unaware because of the way it's been communicated.

Johannes Neumeier

The 70% to 50% hike certainly hasn't gone unnoticed. They made it coincide with the new design rollout, supporting the narrative of increased costs, but really the biggest problems with any retailer is lack of transparency.

It would be neat to have a retailer with a 5% base cut for a basic checkout. Any additional services increase their cut. Be listed in search results, 5%; have your new fonts featured, 10%; have them deal with customer support, 10%; use their license texts, 5%; provide an API to integrate their checkout on my site, 25%, ... at least you know (and could choose) what you pay them for, instead of being dictated to.

JoyceKetterer

I'm always really befuddled by these discussions.  As someone who runs an indie foundry I can tell you that the alternative (running the commerce side yourself) has overhead costs over 30% of gross income.  

Sure, the argument for doing that is control.  Certainly I believe in having control myself but I'd not say that it's a purely financial argument.  My point is that a good reseller is definitely worth a 50% cut because in addition to shouldering that overhead they should be widening your customer base.  From my research my understanding is that most foundries who were with more than one reseller got more net income from the ones that take the larger cut.  To me that sounds equitable, but since I don't deal with any of them directly I can't be certain. 

The most obvious conclusion from the fact that everyone is always outraged over a 50% cut is that the resellers aren't earning it. Certainly, I don't think they conduct business to my standards so I'm predisposed to think that.  However, people complain but they don't leave so maybe the resellers are earning it?  If they weren't earning their cut then it would be sensible to set up your own system, no?  Therefore, I always wonder if it's just a bunch of self described not business savvy people having a gut reaction to a top line number. 

Doing things quietly and unilaterally is an outrage but not at all surprising.  Monotype has engaged in pirate business practices for as long as I've been in this industry.   

JoyceKetterer

PS - I think this is all about Fontspring after being bought by Creative Market?  That sort of sale only happens because a creative market thinks that a fontspring has unrealized potential — that's the only way they can justify it to investors.  It was entirely obvious to me when that sale happened that they had looked at the font reseller market and said, "we can raise our cut to match that of the biggest player, increasing our margins considerably in one move." I think it remains to be seen if that was right because it depends on the idea that Fontspring had a niche beyond "better deal for font designers than monotype", which I'm not sure it ever did.  Or maybe that doesn't matter because a) creative market has a built in customer base from their other endeavors b) there's not many other places for font designers to go.  

Does it start to seem less than altruistic that I Love Typography, a new-ish reseller, is holding a workshop on your rights as a type designer with regards to unilateral royalty changes from other resellers?

John Hudson

 However, people complain but they don't leave so maybe the resellers are earning it?

Based on many conversations with designers over the years, I think it has more to do with dependency and lack of capital. Designers whose primary income from designing and releasing fonts is from retail licensing via distributors become dependent on those distributors, and even when they dislike how a distributor treats them they find it hard to break away because doing so will involve a sudden and dramatic loss of income. This is why ideas around collaborative distribution—much discussed at one stage—never went anywhere: because designers in existing distributor arrangements were unwilling to end those arrangements and switch to something new, because at least in the short term—and depending on the success of the new venture, possibly for years—that would mean a cut in income that most designers were unable to accept. Note that I say unable rather than unwilling: people who earn a living from their labour, which is the case for most type designers who never achieve a ‘bestseller’, do not have capital reserves on which to rely during transition between distributors, and do not have the capital to invest to ‘set up their own system’. The options available to people with capital and without capital are never the same.

Matthew Smith

To be clear, Nadine did not say that the conversation is to discuss whether or not a 50% royalty split is fair for foundries. In fact, from my understanding, I Love Typography (ILT) also does a 50/50 split with foundries. (Nadine, please correct me if I am wrong.)

To literally reiterate what Nadine said the talk is about:

- Understanding distribution contracts: what to look for, dos and don’ts 
- Cultural and country differences and how they affect contracts
- Unilateral changes to agreements, when is that a breach and when not
- Pricing and license models of font products, who decides?

But to answer your question, Joyce…

JoyceKetterer said:

Does it start to seem less than altruistic that I Love Typography, a new-ish reseller, is holding a workshop on your rights as a type designer with regards to unilateral royalty changes from other resellers?

Is this a potentially business motived discussion? Sure, but demonizing Nadine and the conversation seems silly. Providing resources which help others and promoting ones business are not mutually exclusive or at odds with each other. 

P.S. I have no affiliation with I Love Typography

Nick Shinn

It’s chokepoint capitalism, enabled by monopsony.

Not much the little people can do about it, except stay up to date.

Organization might be an option, but it’s not in the “indie”, entrepreneurial headspace that type designers occupy. 

Nadine Chahine

Matthew Smith said:
To be clear, Nadine did not say that the conversation is to discuss whether or not a 50% royalty split is fair for foundries. In fact, from my understanding, I Love Typography (ILT) also does a 50/50 split with foundries. (Nadine, please correct me if I am wrong.)

This is very true. I've had a video call with every foundry that distributes with us and I explained the logic why we need to ask for a 50-50 cut and the foundries agreed. So you are absolutely right that this is not a discussion of what is the right rate, but rather, how solid is the contract that foundries sign. Can a distributor change terms without any negotiation or written approval? Some people appear to think yes...

There seems to be cultural differences as to how "to the letter" a contract needs to be read, and this is something that would be good to expand on. My understanding is very much a German one as I have spent my formative career years there, and I was very surprised to hear that a US one is rather different. Frank will talk more about that in the seminar.

JoyceKetterer

I didn't know what ILT's royalty cut is.  I wanted to take a preliminary meeting with Nadine but she was unwilling to talk to me without an NDA.  I just don't have the brain space to keep track of what is and isn't confidential in an initial meeting so I didn't meet wit her.  I'm not demonising Nadine.  I want ILT to succeed, and would love for there to be 4-5 viable resellers on the market just for industry health.  

Nadine Chahine

This is partly off topic (apologies in advance) but the record needs to be set straight. 

Joyce, we reached out to you twice and it was only after I checked in with a common friend if we had the right email address that you responded. You had every right to refuse to sign an NDA, but not the pile of abuse you sent my way alongside. I would appreciate if we could stick to the topic of this post.

There is a woeful lack of information about the legal rights that foundries have, and this is directly resulting in significant loss of income. The seminar is a way to offer support, and we've kept it free due to the importance of the issues being discussed.

James Montalbano

John Hudson said:
which is the case for most type designers who never achieve a ‘bestseller’,

I've been fortunate to have had several "Bestsellers" and thus have been able to go it alone all these years. I've been approached by almost all of the "players" with offers to take over my library, but have been able to politely decline. Perhaps my heirs will be more inclined to sell off the library.

Nadine Chahine

Btw I forgot to add: We will invite those who register for the seminar to send in questions in advance so that Frank does his best to cover as much as possible. There will also be time for Q&A of course. As a reminder, these are the main themes:

- Understanding distribution contracts: what to look for, dos and don’ts

- Cultural and country differences and how they affect contracts

- Unilateral changes to agreements, when is that a breach and when not

- Pricing and license models of font products, who decides?

And this is where you can sign up:
https://www.eventbrite.co.uk/e/font-distribution-know-your-rights-tickets-488806442227

On the last point, the default pricing on Fontspring and the new pricing on Myfonts (which foundries can't change) have resulted in stunning differences in pricing as you can see in this example (part of pricing survey that we've done, pricing from a few weeks ago). This is why the question of who sets the price is so important:

Eris Alar

Hi @Nadine Chahine, welcome to TD. 

I concur with others here, while free events are absolutly a business decision, I don't feel that is bad. In fact, as a usually pretty 'underfunded' person I find free events (or even free videos of the talk on YouTube after the event) essepcially helpful. 

In my day job the compnay I work for does things to help their industry, sponsing events, doing a podcast, etc, and yes, these are partly marketing efforts, but they are also trying to find ways to boost the industrry at the same timeand help everyone, including our competitors. 

Eris Alar

@Nadine Chahine will the talk be available afterwards? I'm in Australia and may not be able to make the event live. 

JoyceKetterer

I never said it was bad, I just said it wasn't free.  The whole reason I made a point of saying this stuff is that there are a lot of young and naive people who read these boards.  

Eris Alar

@JoyceKetterer is this a perspective thing? As in, you see the costs and benefits for the host and speaker, but functionally, to an attendee, it does not cost them money to go, so is ‘free’.

If the objection is around the vested or possibly biased interest of the host, then I hear you, but it does not change my mind about wishing to attend. Maybe I am too jaded. But I assume all events or public talks are going to have a bias. This one seems pretty transparent in that ILT is hosting it, so people can make their own minds up about if that connection is too close for them. 

In terms of actionable steps, what could ILT do differently? 

JoyceKetterer

@Eris Alar i never objected to anything other than calling or free.  I was just trying to protect young people who might no realize who the presenters are or that they have a vested interest. 

k.l.

Related, a nice albeit utterly verbose interview with Doctorow & Giblin. (And if you liked this, you might also like the book Noise by Attali.)

Nadine Chahine

Hello all! In case there are questions that you would like to be answered in the talk, please let us know so we try to incorporate. We'll be taking questions during the seminar too of course! As a reminder, here are the main topics:

- Understanding distribution contracts: what to look for, dos and don’ts 

- Cultural and country differences and how they affect contracts

- Unilateral changes to agreements, when is that a breach and when not

- Pricing and license models of font products, who decides?

See you Wednesday!

Jens Kutilek

Will a recording be made available? I would like to join, but have scheduling conflicts