Type 1 and Type 3 outline fonts were developed by Adobe for professional digital typesetting. Using PostScript, the glyphs are described with Bezier curves, and thus one set of glyphs can be resized through simple mathematical transformations. In practice, however, very large or very small versions of a font need extra hints to look good.
Type 1 was effectively a simplification of the PS system to store outline information only, as opposed to being a complete language (PDF is similar in this regard). Adobe would then sell licenses to the Type 1 technology at a very high cost to those wanting to add hints to their own fonts. Those who were happy without hints, or didn't want to spend the money, were left with the so-called Type 3 Font. Type 3 fonts allowed for all the sophistication of the PostScript language, but without the standardized approach to hinting. Other differences further added to the confusion.
The cost of the licensing was considered by many to be too high, and Adobe continued to stonewall on more attractive rates. It was this issue that led Apple to design their own system, TrueType, around 1991. Immediately following the announcement of TrueType, Adobe published the specification for Type 1 fonts. Retail tools such as Altsys Fontographer (on January 1995 acquired by Macromedia, owned by FontLab since May 2005) added the ability to create Type 1 fonts. Since then, many free Type 1 fonts have been released; for instance, the fonts used with the TeX typesetting system are available in this format.
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