When did this new royalty model begin?
All customer contracts for Monotype Fonts that were signed on or after January 1, 2023 are paid out under this new model.
The first payment to foundries calculated via the new model will be sent in May 2023.
How does this compare to the previous royalty model?
The old royalty model used for Monotype Fonts was very similar to the way fonts were compensated on a site like MyFonts. We paid foundries per order for the production fonts named by the customer during the quarter.
Previous Royalty Model Calculation:
|Take royalty-bearing revenue from an individual customer order.||$70k revenue attributed to font licensing from a customer order|
Royalty team emails the customer every quarter to request them to name production fonts.
If the customer names production fonts, the foundry is paid based on this.
Customer has 10 production fonts in their plan, and they name 5 of them. All 5 happen to be from the same foundry.
$70k / 10 = $7k revenue per production font
$7k * 5 = $35k revenue
|Revenue from named production fonts during that period times foundry’s royalty rate.||$35k * 0.25 = $8,750|
What kinds of tests did you run to determine if this royalty model was viable before launching it?
We spent a significant amount of time and resources modeling, testing, and validating the new royalty model. Our testing demonstrated the proxies used in the new model are reliable, consistent, and the results representative of the value the foundry brings to the customer experience of Monotype Fonts.
Like all significant changes to royalty accounting practices at Monotype, the new royalty model was validated by external experts, determined to be inline with industry best practices, and compliant with generally accepted accounting principles.
Why would fonts be unknown at the time of the sale?
A customer may purchase a Monotype Fonts subscription with a certain number of production fonts that they plan to use over a period of time. They may not know which fonts they are going to need in the future, or may want to change their fonts over time, but they can be rest assured that their use is covered for any font that is in Monotype Fonts.
Additionally, some Monotype Fonts plans include swappable fonts, which means the customer can change (hence, “swap”) their commercial production fonts once per quarter (every three months) without having to file extra paperwork.
What is Monotype Fonts?
Monotype Fonts is a cloud-based subscription service designed to streamline font discovery, usage, licensing, and deployment. Subscribers get access to 30,000+ fonts from a multitude of foundries.
These fonts may be used for prototyping and mockups, and commercial distribution. Every subscription plan features universal licensing agreements that reduce the need to review individual licenses.
What is a sync in Monotype Fonts?
Syncing enables users to start working with their favorite fonts with a single click.
With the Monotype App installed on their system, users can seamlessly sync fonts whilst browsing the Monotype Fonts inventory. Fonts are synced in the background, require no manual installation and are available in a matter of seconds.
Customers can view, search, and unsync any of the installed fonts directly through the Monotype App. As the Monotype App is linked to users’ accounts it provides admins with additional security and compliance control over font-installations throughout their organization.
How do customers track their production fonts, syncs, and font use in Monotype Fonts?
Monotype Fonts customers can track their production fonts in two ways. The primary approach is for customers to create a comprehensive list of their organization's fonts in production. Another approach is to create a private tag for production fonts and assign them to the appropriate font styles and families. Users can search for this tag whenever they need a quick view of all production fonts. Customers can combine these approaches to create a customized method that suits their team’s workflow.
Every quarter, Monotype Fonts customers receive a quarterly utilization report which contains all their users’ sync and download activity. Customers should mark which ones are currently being used in production and send the document back to Monotype.
The full explanation and details regarding tracking production fonts in Monotype Fonts can be viewed here.
How do I know which of my fonts are being synced or named as production fonts?
If your fonts are being synced or named as production fonts, you will immediately begin participating in the new royalty model and see royalty payouts on your quarterly royalty report.
Royalties associated with fonts being synced or named as production fonts will have a Sales Order Number value like “MTFonts_202303”. MTFonts indicates the sale is associated with Monotype Fonts, and 202303 indicates the earnings were for the quarter ended March 2023.
What Monotype E-commerce sites are included in the new royalty model?
None – only fonts included in deals where the fonts are not known at the time of purchase, for example in Monotype Fonts plans.
When will I get paid?
Foundries get a payment every quarter with data to understand what made up that payment. Foundries are still paid even if none of their fonts were ‘named for production’ during that time because the proxies are weighted and better represent the value the foundries are bringing to the platform.
Are calculations based on Monotype’s annual or quarterly revenue billings?
Quarterly. We pay foundries quarterly based on what we bill customers quarterly based on what customers are syncing, naming, and purchasing quarterly. It all lines up!
I am one of the foundries that had fonts in Monotype Fonts before the new royalty model. What about my royalties under old customer contracts?
For customers that signed agreements prior to January 1, 2023, the existing royalty accrual will be paid out as production fonts are named until customer contract ends or renews. Foundries will continue to be paid out based on production fonts reported by the customer until the end of term.
When customers renew, the new model will be used going forward.
If the new royalty model only covers fonts that are not known, how is royalty paid out for fonts that known at the time of purchase?
There is no change. Royalties are paid just like they used to be, where you get a percentage of what that customer paid.
Can you share the names of the customers that are syncing or naming production fonts with me?
We currently do not share the names of customers syncing or naming production fonts.