Font Company Can't Come Up With Good Business Model; Punishes Customers

from the yeah,-that'll-work dept

Tyler Hellard writes in to alert us to the bizarre and self-destructive plan of a company called Letterhead that sells different fonts. The super paranoid company apparently includes the name, email and account ID of each purchaser with the font itself. One font buyer shared the font with a company making a sign for him (which seems reasonable enough) and that company ended up sharing the font on a file sharing network. That's the point at which Letterhead went ballistic. It claimed that every single download was "stolen" (which, of course, it was not) and then sent the original purchaser a bill for $944 for all of those downloads (Update: Apparently the folks at Letterhead aren't happy about this post -- they've blocked anyone coming from this site, so if you want to see the article, you need to copy and paste the URL, rather than just clicking the link. Apparently, they don't deal with criticism well.). How many downloads were there? A whopping 32 copies. But Letterhead falsely assumes that all 32 would have purchased the font (no, they would not have) and then thinks it can change its original deal with the guy so that they can charge him for those downloads. The company also published his name and his contact info (which would appear to be a violation of a customer's privacy).

Then, to make things even more ridiculous, Letterhead decided to punish all its own customers for its own inability to put in place a business model that recognizes basic supply and demand. So, along with publishing the story and this guy's name, it's significantly raised the price of the font from $30 to $40 -- saying that it will keep the price up until the full $944 is paid off. This is doubly stupid. Not only are they making it even less likely that anyone will buy the font, they're now competing with the fact that this font is already out there available for free. That's not the time at which you raise prices. Obviously, they're trying to shame the guy into paying $944 -- but the real problem is the company doesn't understand its own market or the products its selling.

In fact, it goes out of its way to admit that it doesn't understand digital goods by claiming:
"Fonts are tangible goods around here and will forever be treated as such. Theft always affects the price of fonts and there are some costs that must be recouped. (1) The time that Duncan Wilkie spent in creating the fonts (2) The time Letterhead Fonts spent in helping Duncan to refine his fonts (3) The time and advertising dollars Letterhead Fonts spent to promote LHF Garner (4) The time Letterhead Fonts spends removing LHF Garner from the file-sharing websites."
This shows a fatal lack of understanding of basic economics. First, fonts are not tangible goods. They never have been, and to say that the company will always consider them to be suggests that it will probably go out of business well before businesses that understand what they're actually selling. Then, claiming that there are specific costs that need to be recouped, again is a misunderstanding of economics. Yes, costs need to be recouped, but that's the responsibility of those setting up the business model -- not the customers. Furthermore, the company falsely includes fixed costs with the marginal costs in figuring out how to "price" the fonts, again insuring that other companies will be able to create much more reasonable business models.

Basically, the company is advertising its ignorance of basic economics and its own products and market, while punishing customers for its own incompetence. It may think it's going to shame one of its customers into paying, but all it's really doing is convincing a lot of folks never to buy anything from Letterhead fonts in the future.

Filed Under: downloads, economics, fonts, punishing customers, tangible goods

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  1. identicon
    James, 11 May 2008 @ 10:43am

    letterhead fonts

    I can understand Letterheads position and I love both their site and their fonts. That being said I understand the peoples argument here. Fist off here's my problem's with the current arrangement.

    1. As a loyal customer I am now being punished for others misdeeds. If I choose to buy it then I'm being a loyal customer, not forgoing the process of paying the original artist and representation rather than just go get the product for free (you know stealing) yet somehow I now am being penalized for making the right decision.

    2. I find it troubling that my personal information is being tagged and distributed to who knows by Letterhead font, without my permission. I would argue that now that they've put how they embed my info onto their fonts it could put my personal info at jeopardy. I'm not sure why I haven't noticed this before in the terms of use license nor if it's there but computers and hackers in particular today are very creative if there's a exploit to use this information out there they can find a way to retrieve it. I see that they value their artwork in the form of fonts but they don't respect the value of my personal information.

    3. While I agree that Letterhead has the best font's around and a amazing site, I don't buy the advertising angle they represent. Their advertising is the site itself and it's a sales tool. I see no advertising anywhere else nor do I see them in any publications that refer to font's. In fact unless your a type / font fan you might be hard pressed to even know it exists. Hardly the advertising I could justify the 30% take from. In fact if anything I would expect the owner of Letterhead to make a reward system for his products, find a file sharing site with our product report it to us and we'll knock $5 - $10 off the price of a font. In this way he would be actively pursuing the problem, engaging the customers to be familiar with the artist plight and rewarding people for actually buying the product rather than doing the exact opposite. Since he doesn't do this and has instead charged more for the product he should be paying the artist more than 70% as he failed to distribute the product to the masses as he was commissioned to do. Charging would be customers would make sense if the company was at a loss for the theft, but they are not. People often forget that they can and will mark this off as a loss on their taxes. As such they will be making more than a little profit off this fiasco. Namely they will be getting the Letterhead name out, they've now had a reason to mark up the product, and they have hit the original purchaser of the font for the damages. Even if he doesn't pay up it will go to the losses posted in taxes as mentioned. I don't see the downside to their position other than the fact that at least 32 people have the product now, than did before and have not paid for it.
    4. I love these font's and I respect the many artist that have spent time and effort to put these together but let's call a spade a spade. Many of these font's are copies of type from Billheads, Signs from advertising in the late 1800's and other places. Now that may not be the case with all of the fonts but a far share are. So what we are seeing is someone ranting about others taking work without paying and yet the work in question is a recreation and fixing of another's work in the first place. Now I don't mind paying for this as I don't have the time and energy to put into taking these lettering samples, scanning them into Fontographer, cleaning them up and submitting them to Letterhead font to be further cleaned up and distributed, but when I see someone get huffy about what is essentially a service that recreates digitally the works of master artist from long ago, I have to wonder why they don't kick some of that money down to the original artist's families, (oh wait they don't have to because that persons more than likely dead or unknown) to me this would be the equivalent to someone wanting to get paid for someone sharing a digital clip art of the mona lisa that they charge for then upping the price of the clip art to compensate for the price. Should they charge for it in the first place? Well, they did make the effort to digitize it sure and they distributed it as well so yes. Now should they get uppity if someone else takes the artwork? No because that is what they essentially did as well.

    As I said before I am a fan of letterhead font. I know it doesn't sound like it but I am. They provide a service and represent artist in a way that no-one does, but they also show they're artist naivete by their business practices. Their customers are diehard font fans and as such will forgive them their transgressions, so I don't see their actions changing their profit much at all. But it does remind me of the old joke about the 2 bulls one young, one old. The young one says to the old timer hey let's run down and screw us a few cows, the old Bull replies nah, let's walk down and screw em all. The point being that by alienating the consumer and charging more they won't hurt their business too much as the customers they offer a specialty product for a niche consumer. But had they taken the time to embrace the power of these consumers and enlist their help they would find themselves in a better market position. They could have put a good spin on the angle, maybe someone would have put the story on digg and it could have generated some of the publicity that the owner of Letterhead font charges 30% for. Products would be more secure since customers (loyal as ever) would have spent a little time to hunt down the beloved fonts on file sharing sites and report them and thus making pirated fonts that much harder to find. This would make me as a font artist more agreeable to using Letterhead font as my distributor as they would show their prowess at keeping this my "creations" off the file sharing sites and profits in my pocket.

    As it stands now I have no reason to spend any of my time doing letterhead font any favors, I mean why should I? If I do find a file being shared and I report it it will only make that and other font's go up in price and after a while that add's up, and what would I do then? Of course I do own fontographer and have a extensive library of old types, I guess I could always just get off my soap box and recreate some of those old fonts that everyone is clamoring for. Now if I recreate Billhead from the original Source am I imposing on Letterheads trademark / copyright?


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