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 @ 1:34pm

    Letterhead fonts

    I was just rereading the article by chuck davis and came across this bit:
    "Ignoring piracy devalues our work and makes it that much harder for the next generation. Indeed, I can see a day when creativity has been stifled so severely that the only fonts being created are simply knock-offs of other fonts. After all, who wants to spend months creating an original typeface only to have it pirated the first week it's released?"

    And yet when you stop and look at almost every one of the font's at his site you'll notice they are almost entirely lifted from older works. Take a look at anything from the 1880's to the 1940's and you'll discover so many great letterhead font's and soon to be letterhead font's. I bought the book "the art of the market" and was amazed to see so may of the Fonts created by these designers used in old stock and bond certificates that it started me looking at some of the others, sure enough I found some from advertisements for Pharmacy labels, old cutouts from circulars, and quite a few from font foundries that were no longer in business. My point here is that one one hand ol' Chuck would like to use the argument that "I can see a day when creativity has been stifled so severely that the only fonts being created are simply knock-offs of other fonts" I find this funny since a lions share of his business is just that and he seems fine with it, worse his clients are fine with it, and he makes a profit with no problems. Then he says "After all, who wants to spend months creating an original typeface only to have it pirated the first week it's released?" But does it really take months on end to recreate a font? I've done my bit of design with font's and while I don't want to take the time on a lot of projects to design a font, when I have do so it has never taken months, and I am in no way as skilled as many of these artist when it comes to font design, and yet when you factor in the source material allowing the artist to lift a majority of the lettings then you really only have to scan, clean up the lines and recreate maybe a 1/3 or 26 letters and 10 numbers maybe 12 characters. If that takes months of work then these guys are not the pro's I thought them to be.

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