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@Derek Anderson: Base64 encoding increases the size by about 1/3, yes, but gzip compression brings the size down to about what it was before.
@Colin Williams: That’s why I mention the Font Generator. It’s a one-step process to generate an EOT, SVG, and modified TTF/OTF file. It even gives you a CSS file to work with. Yes, there can be rendering issues and Ethan from Font Squirrel (among a few others) have been working hard to understand these issues to produce better output.
@David Rojas: IE7 doesn’t support data URIs but it also doesn’t support TTF font embedding, just EOT. Therefore, the data URI approach is intended for all browsers but IE (even IE8). Those browsers would still continue to access the EOT file from the server. Subsetting would still reduce the overhead though, and this is still an important takeaway from this article.