Monotype foundry webinar on royalties

Nadine Chahine

Hello all,
We've been receiving a lot of questions about how Monotype will pay royalties on its new subscription service. We've also heard that they plan to give a webinar on the top on Wednesday so, in order to be helpful, we've publicly shared the questions that would help give transparency to the topic. I've posted them here:

https://twitter.com/arabictype/status/1663239667808862214?s=20

and I'm posting them here as well:

Qs to MT:

1- Can you please confirm that the foundries will actually receive 25% royalties on income from Monotype Fonts rather than 50%? Most subscriptions are simply bought online. Why is this not treated as Digital Commerce with 50% royalty rate as is standard?

2- Of the $199 for Individual Pro subscription, how do you split the income across the 40,000 fonts, the fonts that get synced, the 3 commercial fonts & all the webfonts used?

3- The commercial fonts can be swapped. How many times & how do you divide income across all the ones used?

4- If for example, fonts can be swapped 4 times a year. Will a font that was named for the whole year get the same income as one that was named for just one quarter?

5- How do you define fonts in the count of 3 commercial fonts allowed? Is it 3 font weight/styles or 3 families?

6- How are you able to guarantee to foundries that fonts that are synced are not being used “commercially”?

7- How do you define “commercially”? Why is desktop limited to prototyping but web font usage is exempt from that restriction?

8- On how many websites can the fonts be used? How many web fonts can be used in the Individual Pro plan? The info on the website is vague...

And finally, based on what has been shared online, your most recent MyFonts contract pushes foundries onto Monotype Fonts as well, where they will get less favourable conditions: 25% instead of 50%, of a likely reduced total income. 

Do they not have the right to choose?

Fontfruits

@Nadine Chahine Thank you for standing up and making all aware of these questions that SHOULD be asked and adressed clearly. I do worry though, that even if transparency is given as to royalty structures, that it would be very easy ( much easier than standard desktop license records for instance) to not pay some/any royalties where they are due in this scenario due to lack of transparency in how we SEE RECORDS of these transactions , and foundries would be none the wiser. So…

THIS is the MOST important question everyone SHOULD be asking : 

Will they have a system/ dashboard/ reports where you can track your fonts use in said subscriptions , live. With tallies of royalties as they accumulate.  

I imagine the answer would be no. 

And in there lies the rub. 

With me anyway. 

Nadine Chahine

Oooohhh that's a totally different angle to take... My questions are focused on royalty calculations rather than royalty tracking and reporting. You would hope, really, that they are able to:
1- track usage accurately
2- report it correctly
and
3- assign the right royalty calculations to it

Nadine Chahine

Took a while but I would like to summarise how Monotype seems to be calculating royalties and the problems with the approach.


The calculation model:
Foundries will receive royalties based on 25% of revenue that they contribute to. This is calculated via 3 factors:
- % of how many fonts they contribute to total synced fonts (for prototyping) in each quarter
- % how many fonts they contribute to total production fonts (for commercial use) I each quarter
- their % of total sales on Monotype e-commerce sites in each quarter

The average of these factors is then multiplied by total revenue generated by Monotype Fonts subscription. Then the foundry gets 25% of that.

Problems with the approach:
The model does not take into account the number of page views and app downloads that customers are buying even though they charge wildly different rates based off of those (screenshots at end of post).

Instead, the models splits the revenue across all synced and named fonts (am really hoping downloaded web fonts count towards those, otherwise this is even worse) and therefore awards the lion's share of the revenue to the foundry that has the most fonts and therefore likely most synced and named fonts on the platform. In other words, Monotype.

Example: Foundry X has a modest library of maybe 15 families with ok revenue. They get lucky and a big customer decides to get a license for 20 million page views for one of their families. They reach out to Monotype which puts them on a Monotype fonts subscription (I've heard about this happening so is not speculation but hearsay). The client does not need any other fonts but the ones they chose. The $20,500 fee is then split across all foundries with synced and named fonts. Foundry X barely gets a few cents, because its contribution in number of fonts is too small in relation to total.

If this were on any other distribution platform, Foundry X would get a minimum of 50% of whatever that fee would have been.

Summery: 
The royalty splits are not representative of the fees that Monotype is charging its clients.




In the current model, all of the 20k fee is split across all fonts named or synced without recognition of which fonts actually contributed towards those page views for which Monotype is charging so much extra for. Same for digital ads and apps.

Enrico Sogari

Thank you @Nadine Chahine

Basically makes no sense for any small foundry to invest time/energy/hope in Monotype. Not a news but a solid confirmation.

Nadine Chahine

You're welcome! For any foundry on Monotype, and is now on the subscription service, it's important to analyze the trends in royalties per quarter, how much of that comes from subscription, and the number of large deals. The problem is, any large deal coming through subscription will not be visible, because of the issues of how royalties are calculated as I mentioned earlier.

Dusan Jelesijevic

Here's one exclusivity from my Earning report.



I have a couple of these (to mention that those families are not for free nor they contain any free weights).

Happy new era to all of us.

Moritz Kleinsorge

It's a bug. That's what they wrote me:

I hope this message finds you well. We want to address an ongoing issue that has come to our attention regarding the "My Earnings" section in the sales reports. We understand that many of our valued foundry partners are currently experiencing a problem where this section displays a total earnings amount of $0.
Please rest assured that we are fully aware of this issue and are treating it with the utmost priority. Our dedicated technical team is actively working on resolving this matter as quickly as possible to ensure that you receive accurate and up-to-date earnings information.

Grzegorz Luk (gluk)

I have personally experienced that some bugs on MT platform can be "very creative" and working on resolving by technical team may take years.

Diego Aravena

Nadine Chahine said:

Oooohhh that's a totally different angle to take... My questions are focused on royalty calculations rather than royalty tracking and reporting. You would hope, really, that they are able to:
1- track usage accurately
2- report it correctly
and
3- assign the right royalty calculations to it

They do, but they do not report it unless it's necessary. I had an online meeting with one of the Monotype guys asking for my consent to let them to close a deal with a big company instead of doing personally. They are very good at it, since they can ask for more. That was months ago but apparently there was no deal. However, they track the correct usage of your font if the company that is using it is big.

Nadine Chahine

From what I've heard, this is a tactic often used to get foundries to sign the new contract. They do and then somehow there is no deal. Have heard it from quite a few sources that I trust, so it sounds like it's not a one-off thing. Still, it's good to hear that they are at least tracking usage properly!

James Puckett

They tried this with me (I was always on the old Bitstream contract). I refused and they did the deal as a one time thing. I laughed when I saw how little money it was—they tried to get me to sign the Monotype contract for $500!