Server-based Licensing

TheOtherNick's picture

I have been out of the loop for awhile, due to some time-consuming family business, so I don't know if this topic has been discussed yet. Anyhow...

I have had several inquiries concerning licensing fees for web-based applications and have yet to come up with an acceptable solution. Licensing fees are normally based on the number of users, but the number is usual fairly consistent over time and each user is assumed to have unlimited access to a licensed font. With these apps, the number of users varies—ideally, if the developer has a killer app, users could number in the thousands—but the actual usage time is rather limited.

As far as I can see, the most sensible way to assess fees would be to have a meter-based system that would charge the developer a nominal fee—say, 5¢ or so—each time a font was used. Unfortunately, none of the developers who have contacted me knows of any available software that would accomplish this task. Bottom line, until some enterprising programmer sees some profit in developing a meter-used licensing system, I am stuck with coming up with a set fee that is fair to all parties involved.

Anyone got any ideas, experiences, guidelines, or such to share?

blank's picture

I thought about this before releasing Downturn for web embedding and the following items came to mind:

• Nobody wants to deal with per-use royalty rates. Unlike print campaigns, it’s not something that most projects can budget for. Sure a designer might only expect ten-thousand individual users a month, but if Digg, Slashdot, or BoingBoing link to a site that number can exceed a few hundred thousand in just hours, possibly resulting in royalties that exceed a small project’s yearly profits. And unless you want to set up and manage the tracking server yourself, you’ll probably get ripped off by under-reporting (just ask musicians how they feel about album sales reporting).

• From a designer’s perspective, licensing type for a web project is very limiting. They don’t care how many users are getting it, they just care that they’re probably only going to be able to use each license on one web site and one server and probably only for a few years or months, depending on the project. Contrast that to buying a solid workhorse face for print use, where it’s generally usable over and over until software no longer supports the font format, without ever paying again.

Based on these observations, I decided that the best way to go is with per-server, per-site licenses at the same price or less (I chose the same because I only sell the fonts through MyFonts, which has limitations with pricing). It could really work in your favor to sell cheap server licenses and make money in volume when designers use the font on multiple projects, or if you’re lucky, on web-sites with redundant load-balanced server pools.

aluminum's picture

Are we talking @font-face and the like where people are asking to use a font to render text for the end-user to read? If so, then I'd think it'd be like print.

If we're talking about a font used to render end-user created work, such as an online business card printer or gift card creator, then I'd think that deserves a much higher license as now we're talking product.

TheOtherNick's picture

The latter instance: a website offers to print labels or business cards or whatever, and wants to offer its customers a wide choice of typefaces. The end user doesn't end up with a copy of the font, only a printed piece which used the font in the production process. So, in essence, the end user is not purchasing a license: he or she is merely "renting" the outlines on a temporary basis.

aluminum's picture

In that case, in my opinion, I'd negotiate a 'use for product creation' license of some sort. It'd probably be difficult and prohibitive to track a per instance use of it so you'd be better off with a bigger up front license cost.

.00's picture

That license fee is going to be somewhere between a multi-user license and a full-blown enterprise license. I think I remember a major player selling server licenses for its fonts at 10x the single user price, with discounts for multiple fonts licensed.

maxgraphic's picture

Pricing for this kind of use is all over the place. I run an online printer and have contacted probably a dozen type foundries about using fonts on my site. They range from being fine with it on a regular license (on the logic that it's a single installation) to being breathtakingly restrictive and expensive ($1500/weight with a 100 character limit), to simply being impossible at any price. Adobe, for example, has told me that they don't allow this kind of use under any license, which makes me wonder how some of my competitors are using their fonts.

It's difficult to put a price on this kind of use. Maybe some kind of volume-based percentage makes the most sense, but as James mentioned the unpredictability of that makes it a tough sell. But this isn't that different than the off-line world: as a designer, I can buy a $100 font and use it in a $500 logo or as the centerpiece of a $50k advertising campaign. In the same way, an online design site might sell a $6 rubber stamp a week or be doing Vistaprint-level sales. I think there are far more of the former than the latter, so I'd suggest gearing your pricing toward them.

TheOtherNick's picture

Max, I suspect that anyone using Adobe fonts as you describe is using them illegally, which is to say under conditions not covered by the licensing agreement. If you want to knock off some of your competitors, you could probably point out this little detail to Adobe's legal department, if you had a mind to...but that would be wrong.

Nonetheless, since you are a potential customer who has seen a WIDE variety of possible pricing options, what is a "middle ground" you could live with? Everyone's gotta eat, but no one needs to be greedy. Is a ten-user license, from your point of view, an acceptable compromise? I just need some feedback: so far, I've had to pass on three offers because I am currently clueless about what would be fair to ALL parties concerned...

blank's picture

Something else to consider is the benefit of sales that might be gained from having these sites promote your type. Most of your catalog is priced well within the budget of amateur users, students, scrapbookers, etc. Getting the site to credit the typeface, or even link to it, might be worth discounting the license cost as it might bring in customers who might not be exposed to your designs otherwise.

maxgraphic's picture

I guess it depends on how that affects the price and what the base price is, but doubling or tripling the base price seems reasonable to me. I probably don't have, at peak times, more than three or four people using my editor at once, so a 10-seat license seems more than adequate if you're looking at it from that angle.

maxgraphic's picture

That's a good point too, James. I link to foundries on my fonts page, and did recently get an email from a customer who liked the font she used so much that she licensed it. It's hard to say how many sales something like that really generates, but it can't hurt.

.00's picture

Nevermind, I have to stop wasting my time.

maxgraphic's picture

I'm not sure I understand your math. If 500 people a month use a font and each use were "a few cents," that's $15 a month or $180 a year. Where do you get $3000?

You're, of course, welcome to charge whatever you want for your work. There is a huge range of pricing and quality in the world of fonts, and maybe your work is worth $3000/weight. But I don't think the market is there. Would you rather sell a hundred licenses at $100 each or zero licenses at $3000 each?

TheOtherNick's picture

Thanks, all: I think I am in a better position to offer some intelligent pricing options the next time—hopefully—I am presented with this "problem."

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