The Economics of Everyday Things - 74. Fonts

0:03Think for a moment about how many times you come across digital or printed words on any given morning. You check the messages on your phone, read the New York Times with your coffee, and pass by billboards on the freeway. You're probably paying more attention to what these words say than what they look like. But if you zero in, you'll notice that the things around you in daily life are written in a vast array of fonts. Those messages on your iPhone?

0:33are coded in a modern sans-serif typeface called San Francisco. That copy of the New York Times is set in the old school charm of Cheltenham and Georgia. And the billboards on your way to work might feature Futura or Aerial Black. Behind each and every one of these fonts, there are hundreds of little design choices made by someone like Lucas Sharp. You look at some typefaces and it's like, dang, she's a brickhouse. It's like...

1:02Bam, you know, it's really in your face and very apparent. It's got attitude and flair and it's beautiful. Sharp is a professional font designer. He's worked on more than 50 typefaces and he's done work for brands like Condé Nast, Samsung and Amazon. It's mostly rhythm section. You know, most of those letters are playing the tambourine, but you can use those moments where things are a little more funky and curvy, like a double story, lowercase g.

1:32Sometimes every single letter is like a crazy guitar solo. Fonts aren't just a form of artistic expression. They're a big business. There are more than a million fonts available on the internet. And every year, designers license more than a billion dollars worth of them to marketing firms and publishers. But it's not an easy industry to make money in. A successful font has to be unique enough to stand out and familiar enough to be legible.

2:04It's an art form, but on the other hand, we're also kind of selling drills here We're selling a tool and it's got to be useful for people For the Freakonomics radio network. This is the economics of everyday things. I'm Zachary Kraken today fonts To understand fonts you have to go back to the origins of written language and That story begins in Mesopotamia back in 3100 BCE People would make marks on clay tablets, but also parchment, papyrus, reeds, palm leaves, anything that is amenable to some sort of scratching or mark making and will be reasonably permanent. Jerry Leonidis is a professor of typography at the University of Reading in the UK. As the letter forms become larger, they become more deliberate in their making and they begin to separate from the

3:04forms that the tools themselves determine. In the centuries that followed, writing with ink on paper became more common, and certain styles of handwriting emerged. By the Middle Ages, many scribes were writing in a form called black letter, which featured angular lines and thick strokes. It's what you'd imagine seeing on a medieval scroll. And when Johannes Gutenberg invented his version of the printing press in the mid-1400s, which made it possible to reproduce text at scale, the first official font was born. It was called Donatus Calendar, and it mimicked the handwriting of the time. As the printing industry grew, so did different styles of text. What we see is the rise of a class of professionals who make typefaces. They're selling always to printing presses. The French King might order a typeface for his printing house.

4:05to reflect the glories of the empire, or they might be doing typefaces for smaller editions for the gradually growing literate community. Up to this point, letters would be cast on small metal blocks called sorts. Employees at the printing press would manually assemble them into words, sentences, and entire pages of text. These would be dipped in ink and stamped onto paper. If you wanted to change a font or its size, you'd have to swap it out by hand. In the 19th and early 20th centuries, new technologies came along that mechanized this process, making it easier to experiment with different fonts. One favorite that emerged from this era was Times New Roman. It was commissioned by the British newspaper The Times in the early 1930s. And not too long after that, it was made available for other uses, and it became a mainstay in publications around the world.

5:06But the real revolution in the font industry came with the rise of personal computers. A series of technological advancements starting in the 1960s culminated in software programs that allowed people to design fonts using pixels. Older typeface libraries from the printing press days were digitized. This is the key innovation that completely transforms the type world. The risk for entry into the market completely collapses. And whereas before you'd needed an entire industrial environment around you, so that you would get the investment to make all the proprietary equipment to produce the letterforms you design, now you just buy a Macintosh computer and license a copy of Photographer, and you can make typefaces. Now, we should say here, a typeface is the name for a collection of fonts, like Aerial. And a font

6:04is one specific variation within the collection, say aerial light or aerial bold. Today, there's a robust demand for different typefaces and fonts. Businesses use them in logos. The publishing industry uses them for websites and books. And graphic designers use them on everything from packaging to annual reports. There are plenty of familiar widely used fonts available for purchase. But when professionals need a custom font for a project, they often turn to a company like Sharp Type. It's one of thousands of boutique foundries, firms that specialize in designing and licensing typefaces. It was co-founded in 2015 by type director Lucas Sharp and his wife, John Traumalee, who serves as CEO. Since we started, the strategy was we would have our workhorses in our library, and then we would have our window pieces, we would call them. You want to get people in the door with these

7:03really display-oriented typefaces that might not be so practical to use on an everyday basis. Workhorse fonts are clean, easy to read, and can be used for many different purposes. The window pieces are a little more conceptual, good for showing off a foundry's artistic flair and design capabilities. In total, SharpType has around 50 typefaces, with names like Ghost, Cartoon Nueva, Octave, and Respira.

7:34Each of these sets contains multiple weights and styles for different uses. When you get to a certain size and are kind of established like us, you end up with maybe three, four, five typefaces that are making, you know, like 80% of your income. Sharp's most widely used typeface is Sharp Grotesque. It's like a perfect, subtle, you know, geometric typeface that Works for everything so beautifully those kind of typefaces you have to really spend time with it before you can Appreciate it. It's not something that's gonna get like a thousand likes on Instagram right away Sharp gets paid when people license these typefaces So fonts are really interesting because it falls into the category of software But it's not like a computer game or it being on my computer is kind of the sum total of the value that I need to compensate

8:33down or four. Most foundries offer a few different tiers for their licenses, and it works on a sliding scale based on what the intended uses are. Take, for instance, Sharptypes ghost typeface. If you're just using a single font on your desktop, you can pay a one time $60 fee. But if you're a small business, buying it to install on 200 computers, that goes up to around $2,000. If you'd like to use it on the web, you'll have to pay anywhere from $60 to $900 a year depending on how many page views you have. And if you want to use it in an app, it's another $60 to $360 per year based on registered downloads. The way you make money in this game is basically you have a license that kind of gets people's foot in the door. You don't want to be too restrictive for the average Joe graphic designer.

9:26who wants to use it to do something basic like a poster for an event or a wedding invitation. We also want to make sure that the license is restrictive enough to where they can't just use it in some crazy capacity in some huge campaign. Sharp type learned this the hard way. We had a big restaurant chain. They bought a $50 license on our website and it ended up in a Super Bowl commercial. And we were like, oh, I guess we need to do some more restrictions on our license.

9:58These licenses bring in nice recurring income for font designers. But there's another side to the business that can be more lucrative, designing and selling custom fonts. If you're a big company that needs to disseminate a font to thousands of employees or a TV network that has to broadcast text graphics to millions of viewers each night, you don't want to pay for expensive ongoing licenses. You want your own unique font, either one that's designed from scratch, or a specially made variation of one that already exists. There's a lot of companies that have come to us who want to use an existing typeface, but they want to customize it so that there's some visual ownership for their brand. Those are negotiated directly with the client versus just, you know, ad hoc, adding to cart on our website. A few years ago, the cloud storage company Dropbox.

10:54hired Sharp type to make a custom version of their font, Sharp Grotesque. So they actually used it in all of their ads, television, print on their website. When you log in, they're using it. It's on their app. It's fully ingrained in the entire business. For custom jobs, Sharp usually offers a mutual ownership model. The foundry retains the copyrights on the font, but the client gets exclusive rights to use it for a set period.

11:24And they cost substantially more than your basic desktop license. A typeface family containing four font styles might run from $100,000 to $250,000 or more. A more robust product that's custom built from scratch can be in the millions. That kind of deal is a big part of the business model for boutique foundries like Sharp Type. And that's largely because the more commonplace licensing deals are dominated by one giant company. Monotype. They are like gatekeepers that have the keys to all the big platforms. They're the private equity behemoth that's been gobbling everything up. That's coming up. If you spend time searching for fonts on the internet, it won't be long before you come across a company called Monotype. It was founded in 1887 during the rise of mechanical type setting.

12:24and became a leading provider of machinery for printing presses. In the following decades, it developed a number of popular fonts, including Times New Roman, and when computers revolutionized the industry, it reinvented itself as a digital typeface titan. Monotype aggressively bought out a number of large competing foundries, and in 2019 was acquired by a private equity firm for $825 million.

12:53Today, Monotype owns thousands of fonts. Not just Times New Roman, but other classics like Helvetica, Avenir, and Aerial. And perhaps even more importantly, it owns a website called MyFonts.com. It is really like a supermarket. There's everything in there. Again, that's typeface historian Jerry Leonidis. He compares the website to a supermarket because it's sort of a one-stop shop for fonts.

13:22On MyFonts, prospective clients can browse through more than 300,000 fonts from 4,500 different foundries all over the world. What they're selling is large choice and a very well established distribution network. If you're a foundry that sells through MyFonts, you set your price and monotype will handle all of the sales and licensing. In return, they take a 50% cut of your revenue. Licensing is sort of the black sheep in the typo.

13:53because there isn't enough consistency in the licensing model. So if I'm a publisher and I do a deal with my fonts, then I might have a smoother licensing experience. The underlying intellectual property of a font is actually the software used to code it, not the design itself. And companies that use fonts without proper licensing often get embroiled in legal issues. In 2017, the candy company, Haribo, was sued for $150,000 after using an unlicensed font on one of its rappers. It joined a long list of other accused font infringers, including Nike, Volvo, and the musician Cher. She allegedly knocked off a famous designer's font on the cover of her 2013 album, Closer to Truth. Cher's case was dismissed, but several of the other accused parties had to settle out of court.

14:50Sometimes even companies that secure licenses get in trouble. NBC Universal has been sued at least three times for using fonts in ways not covered by the license. Most notably for allegedly printing a font on Harry Potter merchandise like pillows and hats when they only have the digital rights. Navigating the legal landscape of fonts is tough for foundries and customers alike. And my fonts isn't the only company in the business of streamlining licensing deals.

15:20My name is Lucas Zarnakey and my title it is creative director Zarnakey works for a company called type network It helps more than a hundred foundries sell more than 18,000 different fonts Let's say you have your Freakonomics font We'll put on the website put in social media email newsletter that kind of thing fast forward a few months We get a phone call or an email from IBM or some other company that's interested in using it then My colleagues and I will speak with them, find out what they're planning to use it for. We'll negotiate on your behalf to make sure that you get the best price possible. We'll do the deal, sign any agreements, and then every quarter send you your big royalty check. One of the holy grails in the font world is getting a deal to include a font in a widely available word processor. Take Microsoft Word.

16:19Some of the fonts that come preloaded in the program are owned by Microsoft itself. Their popular font, Calibri, for instance, was purchased from a Dutch typeface designer named Lucas de Groot. He was reportedly paid just enough to cover a few office renovations in his home. But others are owned by Monotype. And a long time ago, Microsoft likely paid large one-time fees for non-exclusive perpetual rights to use them.

16:48companies where their users can access and use the fonts. They're not interested in term licenses that could end after one, three, five or 10 years because they need complete and total backwards compatibility for their users work. So you can't open a Word document in 10 years that you made today and have it break. The fonts have to work. How much do you think Microsoft paid for Times New Roman?

17:15So if they were to do that afresh today, it would be no doubt millions of dollars. And in fact, I would nearly guarantee that neither monotype nor most distributors would be interested in a permanent license of that kind. In fact, they would almost certainly say, you know, we want X number of millions per year. The foundries that managed to get into a popular program like Microsoft Word often see benefits that extend well beyond the licensing deal. Let's say, for example, Agency FB, which is a old font. So that was added to Office a long time ago, but you could still go and license it as an individual or as a company. And existing in Office was the best advertisement that that typeface could ever get, because people used it in their documents and then said, we want to license this font for other usage. Microsoft's fonts are proprietary.

18:12You can use them with a Microsoft Office license or license them separately. Google has also designed and commissioned a large catalog of typefaces, but it offers them for free through its web apps. One Google font, Roboto, is among the most widely used fonts in America. It's been used as the default font on the Android operating system and on the website for the United Nations. The company makes it available to anyone without a license.

18:40Google has done a great thing by doing that. A number of people in the type industry are supported by the open approach that Google takes. Free fonts are especially valuable when you consider how much work goes into creating one of them. Zarnicki says it's a lot harder than meets the eye. Let's take the lowercase e. It has to look like a lowercase e, but it can't look exactly like any other lowercase e that's ever been made. And then once you finish that, You have to do the same thing with the H and the O and the P and the A and the Q and every other letter and number and piece of punctuation. That's just for the regular style. You have to add italic. When you do italic, some of the forms completely change. A changes, E changes, G changes, etc. A typeface might include many different font styles. Bold, medium, light, thin, and there are a myriad of smaller details to consider.

19:41Each letter or glyph has a complex anatomy, arms, legs, tails, eyes, ears, spines, and shoulders. There are endless iterations of the crossbar, that horizontal line on a capital A, or the tittle, that little dot on the lowercase i. Now let's say you've been able to walk that fine line for all of those glyphs, and you've managed to make them interesting.

20:09Then there's the added question of do they look good together as a coherent system? It is closer to architecture in that the entirety of the system needs to work well and Every constituent part needs to support the rest around it This whole process might take anywhere from a few months to a few years But if a typeface designer reliably creates hit fonts the rewards can go beyond licensing deals or even six-figure custom jobs Earlier this year, Lucas Sharp and John Traumalee got the ultimate payout. They sold around half their font library to Monotype. It didn't really make sense to me when they first approached me because we weren't ready to retire. But you know, it was a way to get really well compensated and to be able to just focus on doing what we really love, which is to just draw cool new stuff, telling a story with each typeface.

21:10is the exciting part. It's not continuing to build out and maintain and sell the same, you know, geometric sans-serif forever. For the economics of everyday things, I'm Zachary Trackett. This episode was produced by me and Sarah Lilly, and mixed by Jeremy Johnston. We had help from Dalvin Abouwaji and Daniel Moritz Rapsen. And thanks to our listener Logan Granger, who suggested this topic.

21:43As always, thanks for listening to this little show of ours.