Royalties

We have updated how we compensate foundries for their fonts in Monotype Fonts.

We have improved how royalties will be calculated, reported, and paid when fonts are not known at the time of original sale. This is often the case for the Monotype Fonts subscription plans. Monotype Fonts is designed to give the customer flexibility to pre-pay for licensing rights they need and then choose the fonts over time in collaborative ways.

The royalty model described in this article does not impact how you are paid for your individual fonts sold on MyFonts.com. These orders continue to be paid out using the standard model: a percent of what the customer pays.

Understanding Production Fonts

Before we dive into the Monotype Fonts royalty model, it is important to understand what a Production Font is.

Production Fonts are fonts that are “put into production” i.e., licensed for commercial use. Think of it as the font that the customer decided was the font they wanted to use in the project after testing out a bunch of other fonts.

Read more about production fonts and licensing in Monotype Fonts. 

So why did we change the royalty model?

We launched around 25 foundries' fonts in Monotype Fonts as a test group. Customers loved the additional fonts, and we learned a lot from this test phase about our partner's experience being in Monotype Fonts. One of the major takeaways was the lack of clarity and predictability around getting compensated for being in Monotype Fonts. So, we knew we needed to evolve the model before expanding Monotype Fonts with additional fonts and foundries.

In the past, royalties for Monotype Fonts were calculated using the same model as for e-commerce orders: a percent of what the customer paid. For Monotype Fonts, this meant when the customer named their production fonts or when the customer’s contract term ended.

The timing of paying foundries royalties was unpredictable because we did not know when the customer would name their fonts, so were waiting on them to pay our partners. Sometimes, this meant that we paid out most of the royalties soon after the contract was signed if the production fonts are named quickly (despite not having the money from the customer yet), or we would accrue cash for estimated royalties until the term of the agreement, then pay out at the end, which means foundries wouldn’t earn money for years, and were not seeing the value of being in Monotype Fonts.

These pain points arose because we were using the same model as how we pay on e-commerce sites, when we know what font is being licensed. However, Monotype Fonts is quite different compared to the old way of licensing on a per-font basis.

How it works.

Royalties are now calculated based on proxies that represent the value the foundry is bringing to the customer experience in Monotype Fonts.

We think foundries should be compensated for the fonts that are ultimately chosen by the customer AND for the fonts that the customer is using to prototype with to decide which font they want to choose. That selection is valuable to the customer, and we believe foundries should be compensated for providing fonts that customers are interested in prototyping with. 

In 2022, we surveyed our foundry partners and asked you all to share how you felt a customer’s payment should be allocated to various parts of an experience like Monotype Fonts. The results showed that you feel the same way. It really helped us shape our thinking around the royalty model.

QUESTION TO FOUNDRIES

“Let’s pretend a customer has paid up front to browse, evaluate, and license a font in the future, but they haven’t chosen the particular font yet. We want to understand what you think is valuable to the customer during this process. Please assign a percent of what the customer paid to the following items. Your responses must add up to 100%”

*The 2022 Foundry Priorities Survey included responses from 422 foundries that distribute fonts at Monotype.

Proxies.

We also wanted to remove the dependency on when customers name production fonts from the royalty payout, which means we can pay more to foundries sooner.

By implementing proxies, you can also expect to receive more frequent payments, and get a payment for being in Monotype Fonts even if your fonts were not named for production that quarter.

When did this royalty model begin? 

All customer contracts for Monotype Fonts that were signed on or after January 1, 2023 are paid out under this model.

The first payment to foundries calculated via the new model was 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:

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 250,000+ 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.

How do “swappable fonts” work with the royalty model?

The new royalty model was designed to be compatible with the idea of swappable fonts. Since royalties are paid once per quarter, we take a snapshot in time of the font use for that period to determine the payment. Customers can swap fonts at most quarterly, depending on their plan. If a font is swapped by the customer, then the new font is included in the proxy for the next quarter.

How do I grow my earnings once my fonts are in Monotype Fonts?

You will have a growing number of tools to merchandise and market your foundry and fonts via the new Foundry Program. Use the new tools to continue to grow your earnings on MyFonts, merchandise your fonts in Monotype Fonts so more users are syncing and naming your fonts, and continue to release amazing new fonts that resonate with customers.

As Monotype’s vast global sales teams continue to grow relationships with top clients and agencies, licensing revenue grows. When our revenue grows, your earnings grow naturally as a result.

How do I get my fonts in Monotype Fonts?

Join the Foundry Program by signing the latest agreement! Once you're part of the foundry program, your fonts will be released to Monotype Fonts.

As we are expanding inventory in Monotype Fonts, we will add new fonts in batches at a regular cadence, not releasing them all at once, so that foundries get a chance to shine. Each drop of additional fonts will be marketed to Monotype Fonts users. We’ll let you know in advance when you can expect your fonts to appear in Monotype Fonts.

Will there be any minimum requirements for fonts to be a part of the platform?

All fonts and foundries must pass our technical checks before being accepted at Monotype. We reject about 40% of all foundry applicants and 20% of all new font submissions. Once fonts and foundries are in the platform, factors like popularity and profile completeness will impact how often they are shown to customers and where. See more details in our answer to Art’s question below!

In Monotype Fonts, the order you will provide search results becomes extremely important. Could you please explain how you sort the results when looking for a font (what comes first, and why?)

Definitely agree – great question. Our search and discovery takes into account a variety of factors to display results to customers, and we’re constantly improving the technology.

Popularity is an important one; like most search results, we are showing more popular items higher in results. This popularity is determined by clicks.

Additionally, fonts are shown based on the accuracy of meeting a search criteria added by a user. This is something you can control by ensuring your family information is optimized; follow our SEO tips to ensure the text and tags you provide about each font is designed so that your fonts appear in relevant searches for your users.

We also have “Similar fonts” technology, where a user will click an icon next to a font to browse other similar fonts. Additionally, our search filters are designed to help the user narrow down the results to what they are looking for, so making sure your fonts are designed well, include broad language support, and have advanced typographic features will increase the likelihood of your fonts being included when those filters are selected.

A very important part of search and discovery in your control: profile completeness. Fonts and foundries that are missing imagery, logos, or other key merchandising data will be shown less frequently in less places on the site, so it’s important to make sure your foundry profile is complete, and that your fonts have images and excellent merchandising!

We are going to be rolling out new tools to add even more merchandising to your fonts (like font lists, fonts-in-use images, and related families) so staying up to date with our feature releases and adding new content soon after the tools are released will get your fonts front-and-center to users.

What is the actual weighting of participation/syncs/production percentages?

The three factors that determine the font’s contribution to the customer experience that royalties are paid based on (e-commerce earnings, syncs, and production fonts) are weighted equally.

If a font is synced in Q1 but remains synced for the remainder of a given year but never used as a production font, will that font sync continue to be paid on throughout the remaining quarters or will it only be eligible for one payment in Q1?

Once a font is synced, it will be included in your foundry’s percent of all syncs for a year. It doesn’t matter if it is ever named as a production font.

Will foundries still get metrics for individual fonts, even if the royalties are aggregated?

Definitely! It’s important for you to know which fonts are performing the best and which ones aren’t, so you can make smart decisions to grow your foundry with marketing and merchandising.

We’ll provide a dashboard in the foundry platform so you can see how each family and style is performing based on the factors of the royalty model.

Additionally, we designed this royalty model to work for foundries that need to pay royalties to other designers (which is a common thing to need to do). The payment is made each quarter for all the fonts in your foundry, but it comes with information that explains how the payment is allocated to each SKU so that foundries can pay any royalties on a per-SKU basis.