Dear TypeDrawers friends and mates,
Since many years that I'm on this business, I never see this topic discussed in anywhere, considering that this times are each time more connected, sometimes I try to imagine how much the big companies cooking in earnings from type designers products reselling, and I have no clue to imagine how that huge monthly, weekly or daily balance could be, I just know about my personal part on this that it's look not much.
In a comparative* way (company vs designer earnings):
- Monotype 50% + 30% in taxes (since 2016) over "Designer earnings" / Designer 35%
- MyFonts 50% / Designer 50%
- FontShop 50% ? / Designer 50%? (I don't know, may be less to designer)
- Fontspring 30% / Designer 70% (not sure about taxes)
- CreativeMarket 30% + 30% in taxes (since 2016) over the "Retail Price" / Designer 40%
(*) Not official information
The main question here is how much is fair to pay to companies in a global connected world and how to do this kind of business better for every participant?
Comments
According to your data, there is no a standard as to how the taxes are computed. It seems to depend on the interpretation of the font vendor. Monotype's computation of taxes is based on designer share and it is fair to the designer. In the case of Creative Market, it is based on the retail price and it appears that the designer/foundry is subsidizing the withholding tax of the font vendor.
I really don't understand why (in the case of Monotype) I'm the only one (as designer) that I must to pay that taxes and not both of us (like Creative Market), I understad that rules has changed, because the previous stage (before 2016) on Font commerce has not related with any taxes matter.
Please, don't use the word "commission". Font distributors don't take commissions, they pay royalties on sales of licenses. Sales people working for font distributors might get a commission (meaning: a percent of the distributor's share of the sale price as an incentive to sell more licenses), but the distributor's net income after paying royalties is not a commission. It's just their net income. Calling it a commission is incorrect and confusing.
</rant>
Sorry for going off-topic. This just really bugs me.
I really feel that the amount that designers must to share to sell their fonts through that companies is too high, no matter what they know, no matter justifications, and no matter anything that I can reasonable understand, at the end, the example of each $1000 in sells and obtain only $350 from that starting $1000 is not look too fair to me.
I understand the way how percentages are calculated on each case, my question here is not the formula applied on every calculation, but how much percentage from earnings is fair to share with each part? in the hypothetical scenario if we could choice to deal that amounts, how much do you feel fair? and have a better parameter to choose which company is better to work with and which not.
My apologies for the wrong choice of words.
I run an independent foundry and I can tell you that driving font sales requires a great deal of costly effort. Saying "sales is sales" is like the web developer who says "fonts are fonts" and chooses to use a system font because it saves processor speed.
The infrastructure alone for font sales (shopping cart, database, website) is costly and complicated to build and maintain. These things have to be built custom because of the nature of how we sell fonts. That alone is probably worth a 20-25% cut. Then there's the fact that users want to look for fonts in large libraries. I speak from experience when I say that it is much harder to drive sales to a small library. So, just being a part of a large library might be worth 5-10%. Then there's customer service, which can be considerable even with online sales - another 5-10%. Then the cost of advertising... it's very easy to fairly justify a 50% cut.
If you're still doubting my logic then ask yourself this: Are you willing to try to start your own foundry to publish and sell your own fonts? Maybe you've looked into it and know what that would cost. Even if you think that would ultimately be cheaper than using a reseller the opportunity cost associated with not being able to sell your fonts RIGHT NOW is an issue. If the answer is no then the conclusion is that the "fair" reseller cut is the one which results in the most sales for you.
Yes, FontSpring is a respected seller who charges only 30%. They do that by keeping licensing simple (only perpetual, lots of one size fits all pricing) with the idea that the money will be made on volume. That's a valid business model but very different from the Monotype model that dominates the rest of the industry. I can't say if one actually brings in more money because we don't work with any of them but I wouldn't be surprised if the foundry net is very similar in both models. Therefore, I'd suggest that you think not in terms of percent paid to the reseller but in terms of which business model you prefer (both in sensibility and in net to you).
You might be asking yourself why the CEO of a independent foundry that works with no resellers other than Adobe is making this full throated defense of the value of resellers. Because there really is a logic behind their existence and the amount they charge for their services. There's another set of logic for why we don't work with them but that has nothing to do with whether or not their fees are "fair"
Joyce
Thank you for your answer, may be this was the best answer that I see at this topic.
Since about a year I tried to run sales on my own website, but even the cost is a little high is not too much expensive as I suppose it will be, regarding the programming part of the job is a very time demanding (at the starting point), then more time is needed everytime when a new font need to be launched, I know, plus the cost on webhosting plan, etc, for a medium-small web font library, may be my opinion is based on my own experience and I'm not taking on mind the rest of the facts, but in a quick view if somebody tell me that I will earn just $35 from a gross sale about $100 probably I will reject that kind of business, no matter which kind of business be, is about how we feel with the earning distribution. I'm trying to see that percentage with better eyes, but is hard.
I also know that resellers have more selling power than me, all this made me think precisely on volume sales and that is the exact point when I think about how hard is feel good with those respective percentages, and clearly I prefer those companies with better sales performance, maybe now I will rethink my maths.
Thank you for give to this another point of view.
Pedro
The type designer starts a font project and then completes it. One the font family is ready to be distributed, the designer hands the files off to the distributor and, unless bugs are found, can move on to the next project, or perhaps even take a prolonged vacation if the font families sell well. Fonts rarely need to be upgraded when new operating systems are released.
The font distributor needs to keep operations 24/7. Selling globally, the e-commerce site, sales and tech support etc. need to operate continuously, quasi forever. That usually requires a larger staff.
The font distributor needs to make sure that the site works with new browsers and operating systems, that the payment and customer information is secure, that the speed of the site is sufficient. So the distributor needs to constantly invest in and maintain infrastructure.
In short: a font distributor makes money for you while you work and while you sleep and while you're on vacation or out shopping or watching a movie. And this is why you share the revenue with the distributor.
I think everyone understands this. The question is what the share should be, and there are aspects of the economics of the reseller/distributor model that you've not discussed. Distribution is a service — actually a set of services, not all of which are offered by all distributors — but one that uses market heft to dictate terms to its client, i.e. the font makers. I am reminded of the real estate business in Canada, which a few years ago was forced by regulation to offer discrete services to home sellers and buyers on an à la carte basis, rather than presuming to dictate how property would be bought and sold. For decades, it was simply assumed that the business model used by the real estate industry was the only way things could be done. Until it wasn't.
Font distributors currently dictate terms to font makers, on a 'take it or leave it' model. There are a number of problems with this situation. One is that concentration of market share produces monopsonies that in effect avoid competition by unofficially standardising their models and percentage shares as 'market norms'. Another is that distributors build their business on scale, while font makers do not. This means that even fonts that do not sell are contributing to the value of the distributor by virtue of being part of the mass offering: the 'Buy from us, we have all the fonts' marketing of the distributor service to customers, as distinct from actually marketing the fonts. [A corollary of this is that distributors don't actually care which fonts sell, so long as a certain quantity of fonts are selling; whereas, to the font maker, which fonts sell is really important.]
Here's an idea:
Maybe the practical services that a distributor provides, which you have well-described, Adam, should be available as services. There should be monthly fees associated with specific aspects of the operation — the online store, digital delivery, tech support, etc. —, and foundries should pay the distributor company to perform these services. There should be reasonable profit margin in these service fees.
This is, in effect, the model that operates when independent foundries sell licenses through their own websites: they pay for hosting, they pay for e-commerce and delivery services. They tend to have to do their own tech support, and they do their own marketing (but often paying graphic designers, web developers, etc. as part of that), but I suspect many would be willing to pay for a tech support service, also QA, etc.. What's missing from this is the mass marketplace offered by distributors, to which customers go for 'one stop shopping'. Personally, I think such marketplaces are always going to be problematic, because they will always tend towards monopsony, in exactly the way that Amazon has for book publishers. At the end of the day, it is a market model that is severely stacked against independent producers.
The operations that Adam describes involves both ongoing operating costs and regular investment in keeping them up-to-date, as well as periodic investment in significant improvement, overhaul, refreshment. But these costs and investments are all itemisable budget items, and they don't increase significantly relative to either the number of fonts on offer or the quantity of a given font that is sold.
So why not link the percentage share of income from sales taken by the distributor to the quantity of those sales, on a sliding scale. So if a font doesn't sell very well, the percentage is higher, but if a font is a best seller, the percentage is considerably lower. This has the virtue of actually recognising the value that is generated by the individual products, rather than treating the whole distributor offering as a giant bag of undifferentiated commodities. The distributor would still be making more money from a bestseller than from less performing fonts, but would also be rewarding the font maker. This would also encourage font makers to do more to market their own fonts within the distribution market, without the sense that they're just doing the distributors' job for them, as often seems to be the case these days. As it is, distributors are encouraging font makers to compete against each other within the marketplace that the distributor controls, but for the same percentages.
Would the sales quantity be measured by number of sales or total sales revenue? E.g. the difference between a low-cost "best-seller" vs. high-cost luxury product.
With regard to avoiding the 'tiny royalties trap', the obvious solution would be a minimal payment to all font makers included in the collection, regardless of whether their fonts sell, in recognition of the fact that their fonts are contributing to the 'one stop shopping' value of the distributor. Call it a universal basic font income.
While the percentage for me has diminished the day-to-day costs incurred by rent, food, insurance, automotive repairs, etc. has only gone up over time.
It's a Catch-22 to say the least... but considering that Monotype/MyFonts controls about 95% of the global font market we still need them to get our goods out there. It's a reverse example of supply and demand. If a designer doesn't accept the contractual terms of any distributor, then the global showcase of his or her product(s) is greatly diminished.
A poor [but illustrative] example are the many items pitched on TV infomercials. Good or bad, useful or not it is this small network of telemarketing experts that put these products in the TV viewer's line of vision and "creates" a market.
Type design and sales, of course, is not telemarketing. Creative people search for the 'perfect' type design that 'feels" like the message they want to project in their project. There are thousands of choices. If we didn't have the distributors with such a global reach, our sales might just be 10-30% of what they currently are.
Sure, we feel the hours we slug away designing, assembling and kerning the fonts, writing the promotional text and creating the sales graphics are worth more than we receive on each sale... but it's a symbotic form of marriage.
We need them, but we're not happy with them at times.