50% drop in our Q1 2023 Adobe royalties

Miles Newlyn

For our latest quarter we've seen nearly a 50% drop in our Adobe royalties. This is close to the point of us deciding to pull out of Adobe, but we'll wait to see the results of the next quarter. I'm curious if anyone else has experienced a sudden drop in their royalties.

Igor Freiberger

At the same time, Adobe just announced financial records.

JoyceKetterer

@Miles Newlyn That really sucks. Thank you for sharing. This is super scary. I hope others will also share what they feel able, so we can know if this is a trend.

I can return the share by saying I saw a very small drop over last quarter, and have seen very small drops for the past three quarters consistently.  It hasn't been enough to really worry me.  We're still hovering around the same dollar amount I have regarded as our average since the new counting system came in.  

Have you analysed the reports? There is some chance there's an explanation for this that isn't Adobe's fault.  Had it been that you were getting a lot of overage from a single family (which might have been one or two large customers that just rebranded)?  Is it possible that your efforts with Font radar to teach graphic designers not to host client websites is having this side effect?  

Miles Newlyn

@JoyceKetterer I had not thought this could be Adobe's 'fault', rather that users were just not activating our fonts as much as previous quarters.

I find the reports completely incomprehensible, so I'm not able to do any analysis.

Regarding FontRadar, we've moved about 30 users over to Adobe hosted fonts. We haven't lost any AdobeCC users, rather the opposite; we've 'sold' AdobeCC subscriptions to some clients.

Adobe web royalties comprises about 6% of our Adobe royalties.

JoyceKetterer

@Miles Newlyn Well, sure, Typekit embedding has never been a lot. But it could still have the effect of them dropping use of your fonts on sync too, no?

Here's what I do every time I get a report from Adobe:

1.  import to a spreadsheet
2. move each font family to it's own tab
3.  create a summary tab for a the totals of each family.  this way I can see if any change is distributed or only from one family
4.  go back to the family tabs and sort for each family by the overage column.  this way I can see how many styles got overage and if my overage per family has gone up or down.  Overage doesn't equate directly to dollars but its a consistent number I can track.

Christopher Slye

Without getting too detailed about it, I can report that the simple payment-per-font (Adobe payment ÷ number of fonts) has been steadily ticking up over the last six quarters for Type Network fonts. I mean, it bounces around a little, but that’s the trend.

I have a fairly complex script that ingests the Adobe reports, and it’s on my list to examine a little deeper, e.g. how much of the payment is the guarantees, the difference between that and “earned” royalties (from actual use), and so on. I do know from experience that it’s common for a new font to take a while to build up a following, so to speak, but I’m not sure I’ve ever looked to see if a typeface has experienced a big drop over time. That would be interesting to look for.

Miles, if you have any specific questions about the data on the Adobe reports, I could try to answer them here, or DM me if you prefer.

James Hultquist-Todd

This happened to me a few years ago. I used to make most of my Adobe royalties through web use. Then it looked like a large company that was using my type rebranded and my royalties dropped quite a bit. Over time, the CC sync usage has grown pretty steadily and more than made up the difference but it surprising what one company rebranding can do.

Miles Newlyn

@JoyceKetterer We were expecting Adobe activations to remain the same or increase since we've not sold any licenses to Adobe users. Thank you for those very useful points on dealing with Adobe's csv files. I'm going to ask my accountant to have a go at this.

@Christopher Slye Good to know TN's Adobe royalties are healthy. I'll DM you for a little assistance.

TD rocks! Truly a supportive community 

JoyceKetterer

Agreed that TD rocks and I'm grateful for this community.  I want to repeat something someone suggested to me off line.  One possible reason for a dip this quarter could be the variable fonts came in.

There were a lot of them and they are new and exciting.

 It doesn't really explain a 50% drop (not sure over what time frame the drop happened, @Miles Newlyn) but it could explain some drop.  Maybe all the new exploration energy went to variable fonts, so that the numbers are more about the steady committed users of a given font.  

Miles Newlyn

@JoyceKetterer I concur, Adobe has been very busy with the launch of variable fonts, and that effort should be reflected to a degree among their subscribers.

Thomas Phinney

(Deleted because I did not read carefully enough.)

Miles Newlyn

@Thomas Phinney  Would not "simple payment-per-font" mean that adding foundries would have no effect on that?

Christopher Slye

One interesting idea that just occurred to me is that newly-added fonts obviously come in with very low usage counts, which in theory would drive the overall payment-per-font number down. So it’s good that TN’s number is generally going up a little, since we do regularly add fonts each quarter.

Since Adobe is now auto-deactivating unused desktop fonts, I wonder if there was a lag over the holidays where people just used fonts less, so fonts were deactivated more than average.

Miles Newlyn

I heard back from Adobe, Camille mentions two things that could have caused the royalty drop I've encountered:

1. A while back we corrected a mistake in the naming of our fonts. This will have caused all the old versions to be deactivated. Due to the timing of the "activation window" the drop in use was delayed until Q1 2023

2. Adobe had a system change in December to prevent users in mainland China from accessing their service which they cannot legally allow. This may have contributed a minor change to the overall payment.