Pencil gives you two kinds of AI model. Standard models come from providers Pencil holds direct agreements with, and your agreement with Pencil covers them in full, including warranties and IP indemnification.
Marketplace models add range from third-party providers. They come "as-is", with no Pencil warranties or indemnities, and your prompts and files go to the provider outside Pencil's regional hosting. Pencil's SOC 2 Type II controls, workspace privacy and role-based access apply to both. Marketplace models stay off until your Account Owner signs the Marketplace Model Terms, and a workspace admin then switches each one on. Signing amends your organisation's agreement with Pencil, so bring in your legal team before anyone signs.
What are standard models?
Standard models are Pencil's vetted, production-grade models. Pencil accesses each one through a direct agreement with its provider, and they sit under the full terms of your agreement with Pencil. Pencil recommends them for client-facing and production work.
A workspace admin switches standard models on and off in AI governance. If you can't see a model you expect, read accessing all models.
What are marketplace models?
Marketplace models are frontier and specialist models from third-party providers. They extend the copy, image, video and voice models available to you beyond the standard catalogue, and Pencil adds new ones regularly.
They come "as-is". Pencil gives no warranties or indemnities for these models or for anything they generate. They are off by default, and they appear only in workspaces with Scribble enabled.
How do the two compare?
| Standard models | Marketplace models |
What is it? | Vetted, production-grade models, accessed through Pencil's direct agreements with each provider. | Frontier and specialist third-party models that add range beyond the standard catalogue. |
Where it appears | Any workspace, once an admin switches the model on. | Only workspaces with Scribble enabled, once the terms are signed and an admin switches the model on. |
Pencil warranties | Yes, under your agreement with Pencil. | No. The models and their outputs come "as-is". |
IP indemnification | Yes, under your agreement with Pencil. | No. Pencil's output indemnities don't apply, in whole or in part, to outputs from these models. |
No-train policy | Yes. Your content doesn't train Pencil's models or the provider's. | Pencil doesn't train on your content. The third-party supplier also commits not to train on it, but Pencil is not able to offer any guarantees for that commitment. |
SOC 2 Type II | Yes. Pencil's SOC 2 Type II report covers the Pencil platform. | Yes. Pencil's SOC 2 Type II report covers the Pencil platform. |
Data processing and regional hosting | Pencil's Data Processing Addendum and regional hosting apply. | Pencil's Data Processing Addendum applies to your content on the platform. To generate, your prompts and reference files go to the third-party provider, which processes them outside Pencil's regional hosting. |
Data ringfencing | Yes. Your inputs and outputs stay private to your workspace. | Yes. Your inputs and outputs stay private to your workspace. |
Role-based access | Yes. Only admins manage models. Members have no governance controls. | Yes. The same admin controls apply, plus the Account Owner signature. |
Licensing for commercial use | Commercial use is backed by Pencil's warranties and IP indemnification under your agreement. | Pencil makes no promise that outputs are original, non-infringing or fit for commercial use. Commercial use is at your organisation's own risk. |
Cost or credit usage | Credits per generation, at the cost shown against each model in AI governance. For more information about pricing, please see this article. | Credits per generation, at the cost shown against each model in AI governance. For more information about pricing, including pricing and credit usage for marketplace models, please see this article. |
Who can switch it on? | A workspace admin, per workspace, in AI governance. | The Account Owner signs the terms once for the whole account. A workspace admin then switches on each model, per workspace, with an acknowledgement. |
For Pencil's SOC 2 Type II report and security documentation, visit the Trust Centre. For data processing terms, read Pencil's Data Processing Addendum.
What happens when you switch marketplace models on?
Please make sure you have read and understood the following points before activating marketplace models in your organisation's workspaces.
No indemnity. Pencil's output indemnities don't cover anything you generate with a marketplace model.
No warranties. Pencil disclaims all warranties, representations and undertakings for marketplace models. To the maximum extent the law allows, Pencil isn't liable for your use of them, your reliance on them or their outputs.
Your agreement changes. The Account Owner's signature amends your organisation's agreement with Pencil. The terms apply notwithstanding anything to the contrary in that agreement.
Data leaves regional hosting. Your prompts and reference files go to the third-party provider to generate each output.
Your organisation carries the risk. Each time an admin switches a model on, they confirm that your organisation accepts responsibility for its use in that workspace.
One signature, every workspace. The signature unlocks the catalogue for every workspace on your subscription. You can't sign separately for each workspace.
Workspaces stay separate. Signing doesn't switch any model on. Each workspace admin chooses which marketplace models to enable, so different workspaces can keep different model allowances.
Standard models stay covered. The Marketplace Model Terms apply only to marketplace models and their outputs.
What does Pencil recommend?
Pencil recommends standard models for production and client-facing work. Marketplace models suit trying new models on your own briefs, so you can see how they perform and decide for yourself.
Keep them off when your clients require the strictest legal guardrails, when your contracts or internal policies require indemnified outputs or regional data processing, or if your legal team hasn't yet reviewed the Marketplace Model Terms.
Switch them on when you need a model the standard catalogue doesn't offer, and your organisation has reviewed the terms and accepts the risk. Enable only the models you need, and only in the workspaces that need them.
Please involve the following stakeholders before anyone signs:
Legal. The signature amends your agreement with Pencil and removes indemnity cover for marketplace outputs.
Procurement. The terms change your commercial position with Pencil.
IT or security. Your prompts and reference files may be sent to a third-party provider, outside Pencil's regional hosting.
Your Account Owner. Pick someone with authority to sign agreements for your organisation.
How do I switch marketplace models on or off?
Switching marketplace models on takes three steps: assign an Account Owner, sign the terms, then enable each model in the workspaces that need it. If your organisation signed the Marketplace Model Terms with its Pencil contract, the catalogue is already unlocked. In that case you can go straight to switching models on. Navigate to Settings > AI Governance, and then scroll down to Marketplace Models.
Assign an Account Owner
The Account Owner is the only role that can sign the Marketplace Model Terms. Choose the person who can legally sign agreements for your organisation, because their signature applies to every workspace on your subscription.
Open Team members. As a workspace admin, go to Settings, then Manage team, then Team members.
Change the role. Find the person and change their role to Account Owner. You can't make yourself Account Owner, so another admin needs to do it for you.
Log in again. The new role takes effect the next time that person logs in.
Sign the Marketplace Model Terms
Until someone signs, the Marketplace Models section shows a Not enabled badge and a preview of the models you'd unlock. Workspace admins see a prompt to talk to their Account Owner. Pencil doesn't show who that is, so make sure your admins know.
Open AI governance. As the Account Owner, go to Settings, then Workspace, then AI Governance, and scroll to Marketplace Models.
Review the terms. Select Review & sign terms and scroll to the end of the document.
Sign. Type your full legal name, tick the box confirming you have authority to sign for your organisation, then sign. Your typed name is an electronic signature, with the same effect as a handwritten one.
You receive a confirmation email with a View signed terms link. Pencil's legal team receives a copy of the signed document at the same time. The catalogue then unlocks for every workspace on your subscription.
Switch a marketplace model on
Find the model. As a workspace admin, open Marketplace Models in AI governance. Use the Copy, Image, Video and Voice tabs or the search box to find the model you want.
Switch it on. Turn on the model's Enabled switch. A dialog shows the model, its provider and its risk disclaimer.
Acknowledge and confirm. Tick the acknowledgement and confirm. The model becomes available in this workspace only.
The acknowledgement reads:
"I acknowledge that this model and its outputs come 'as-is', without Pencil warranties or indemnities, and that my organisation assumes responsibility for its use."
The model then appears alongside standard models wherever people in that workspace choose a model, including Scribble, Workflows and Sheets.
Switch a marketplace model off
You can toggle any of the marketplace models off again in the same place: the AI Governance page under Settings, in the Marketplace Models section. The change is immediate, with no confirmation step.
View the signed terms
Select View signed terms on the AI governance page, or use the link in the confirmation email. Pencil versions the terms. If Pencil issues a new version, your Account Owner needs to sign again.
Where can I get help?
Contact your Pencil Customer Success manager or the Pencil support team. For questions about warranties, indemnities or how the Marketplace Model Terms interact with your agreement, ask your account team, who involve Pencil's legal team.