Economics Art law USA

US Congress lobbied over resale rights

Campaigners push for reframed federal legislation that includes exemption for private galleries

The late Edward Kennedy speaking in 1986 in favour of artists’ copyright protection

WASHINGTON, DC. The Artists’ Rights Society (ARS), the main copyright and licensing collecting agency in the US, is pushing for legislation that would see droit de suite, or artists’ resale rights, become federal law.

Although previous attempts to bring a royalties scheme to the US have largely failed, the new legislation will be different, said Theodore Feder, president of the ARS. Resale fees “would not be applied to galleries”, partly because they are such vocal opponents of droit de suite, “but also because auction sales are public, while gallery sales are private, so it would be difficult to track resales”.

The late Senator Edward Kennedy tried to enact the resale royalty in 1987 as part of his original draft for the Visual Artists Rights Act (Vara) but it proved so contentious that it was removed from the otherwise successful act. Now, the “person leading the charge is Bruce Lehman”, said Feder, referring to the former Commissioner of the United States Patent and Trademark Office who helped draft the original 1976 US copyright law and the 1998 Digital Millennium Copyright Act. As we went to press in June, Feder said the organisation had appointments in Washington, DC to speak with senators and congressmen, before Congress went on its month-long summer recess in August.

“The rights collecting associations, the principal lobbying force for enacting the resale right in the US and abroad, would break out the champagne and dance in the streets,” if the resale law was made legal, said John Henry Merryman, emeritus professor of art and law at Stanford Law School in California and author of Law, Ethics and the Visual Arts. “The small minority of artists whose works have a significant secondary market would get richer. The great majority of artists, who have no significant secondary market, would have fewer gallery exhibitions and decreased sales in the primary market,” he said, adding that an application of the tax to auction sales only “would be seen as unfair discrimination. [The auction houses] would certainly lobby against it.”

Dealers also oppose the measure. Lucy Mitchell-Innes, the president of the Art Dealers Association of America (ADAA), said that: “Although the ADAA and its membership is a strong supporter of artists’ rights…it has long been our belief that a droit de suite law in the US would be extremely difficult to enforce and therefore be ultimately unsuccessful. The US collector base, many of whom are very generous philanthro­pists…would be resistant to a resale tax.”

Others argue that the tax is inconsistent. Although some 50 countries have a resale tax, they adhere to different rules. The EU states follow a sliding scale of 4% to 0.25%, capped at €12,500. Australia allows a flat, uncapped royalty of 5%, but exempts the first resale of the work. “It will just lead collectors to resell their art in other jurisdictions,” said dealer Edward Winkleman.

Feder calls this claim “an old canard. That was also said in the 1990s, and was an argument used by the auction houses when they adopted droit de suite in the UK. Far from business fleeing…UK auctions have increased and [are now] a very vibrant market.” But the debate in Britain has reignited as the country nears the 2012 deadline when it must extend droit de suite to cover artists' heirs or estates up to 70 years after their death.

Artists who support the scheme say it is only fair for the creator of a work to get a percentage of the proceeds when it is resold, considering that the seller and the middleman get a share. “There is no other way to put it but that the artist is the low man on the totem pole,” said painter and sculptor Frank Stella, who is a vocal proponent of artists’ rights and temporary president of the International Council of Creators of Graphic, Plastic and Photo­graphic Arts. “It seems always to be about the cost, somehow it’s going to affect the ability to do business. But the fees charged by the auction houses, for both the seller and buyer, are almost astronomical.”

The fate of droit de suite in the US may, in the end, depend more on the country’s general economic health. As politicians continue to fight over the national debt, with Congress passing a deal at the eleventh hour to raise the debt ceiling that includes trillions of dollars in spending cuts over the next decade, few may see the need for extra funds going to artists. As Merryman said: “Picasso and Warhol were billionaires. Damien Hirst’s works bring multi-million dollar prices. Where is the evidence of unfairness?”

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Comments

9 Aug 11
16:37 CET

MARCW, CHICAGO, IL

If your concern is older artists not having enough money, it would be easier and cheaper to just give them some. Otherwise the ones whose art still doesn't sell when they are older still don't *get* anything. If you are not just trying to free-ride off later sellers, that should tell you that droit de suite is not the appropriate solution for your alleged concern. While I still think it would be dumb, if that's what you want why don't you just impose a transaction fee on ALL art sales and use the money to give grants to starving artists?

9 Aug 11
14:42 CET

LOPEZ, MIAMI, FL

I am a collector. I appreciate fine art and invest my hard earned money on it when I can. I support galleries and sometimes contemporary artists directly. Sometimes I can sell a piece for a profit. The next person appreciated that piece more than I did. If these laws pass in the U.S. Why would I want to continue to support these artist? I can invest my money some place else. Would these laws benefit artist in the long run? Only the top 2% famous artists. All the other starting artists will feel the burden of having to pay an organization that is only looking to truly benefit themselves. It will not be as attractive to collectors. People will buy less art and the whole industry suffers as a whole. Frankly, this is disgusting. I am all for artist making more money. Get more schooling or more practice then market yourself to see how much you can make. The old fashioned way. Some artists and their heirs already make a fantastic living authenticating their parents work. :-(

8 Aug 11
16:56 CET

POOJA TIPIRNENI, HYDERABAD

Well, the whole idea of a resale right stems from the fact that when young artists do not get paid very much. It is really when one is older, and sometimes not physically capable of as much hard work that rewards are received. Maybe, 'VARA' could be structured in a way where artists below a certain income level would benefit or art works sold below a certain price would be considered....

8 Aug 11
15:8 CET

CHRISTOPHER BINGHAM, SNOHOMISH, WA

I'm a musician / composer who has watched the performance rights societies wreak havoc on small clubs and siphon royalty money out of commercial plays that are owed to smaller time artists. The bottom line is that the world does not owe us money every time someone experiences our work. We need LESS rent collectors, not more. The systems ALWAYS end up benefitting middlemen and screwing artists. If you sell the work, you've sold the work. We don't deserve to paid twice for the work any more than a roofer should be paid every time the house sells.

8 Aug 11
15:7 CET

MEPLING, MINNEAPOLIS

this is the biggest crock i have seen . i build houses and once i sale it i don't get royalties no matter if it goes up in price . hows this different ? don't use the starving artist because until i sold my first few houses i was a starving carpenter . this is just a money scheme to jump in and pad the bottom line .

5 Aug 11
15:4 CET

MARCW, CHICAGO, IL

James and West: If you think you should get resale royalties then put that in the terms of sale. Upending our entire system of property rights because you're mad that somebody is making money is idiotic. You SOLD it. It's not YOURS anymore. Respect for alienation is a fundamental principal of our legal system. If you think you should get licensing rights, then LICENSE THE PROPERTY. Lots of nice intellectual property lawyers would be overjoyed to assist you in this endeavor.

5 Aug 11
15:3 CET

MARCW, CHICAGO, IL

This. Is. Insane. If I resell my car, does Ford get a royalty? Does the guy who installed the windshield wipers? If I resell my house, should the previous owners, who did fix the place up nice and doubtless contributed to the price I will get, get a piece of the action? If I buy a share of stock, and the company does well and I resell it for a large gain, should the woman who sold it to me be entitled to a chunk? That last one is closest to the real problem here:artists have their knickers in a twist over the gobs of cash morons are laying down for their crap after critics convince said morons that said crap is worth its weight in interferon. They want a piece. Since they were too dumb to make a bargain in good faith that entitled them to what they want, they are now coming along behind and demanding that Big Brother rescue them and punish the Evil Rich Guys who had the gall to make money off something they sold for what they considered a fair price at the time. Pah.A pox on them.

5 Aug 11
14:57 CET

NETTIC, SYDNEY, AU

In Australia, the resale applies even the price goes down. ie. You buy a work for $100,000 and sell it for $20,000.. you then have to pay $1,000 resale tax. So not only have you lost $80,000 you also get taxed on your loss

5 Aug 11
14:57 CET

JOHN WALKER, CANBERRA AUSTRALIA

The artist resale royalty is only of benefit to the tiny minority of artists who have sold a lot of art. There artists are mostly dead. In the UK nearly 50% of all of the money collected has been paid to just 20 individuals. These type of schemes impose considerable transaction costs upon the art market in which artists seek to earn a living. Therefore they effectively transfer income from the weakest participants in the market (ie. emerging and unknown artists) to the famous and dead and the collection societies that endlessly lobby for these sort of compulsory collective tax-like rights. The biggest single beneficiary of these schemes is the collection society. You need look no further than the examples of the American organisation, Sound Exchange or the Canadian Access copyright organisations to see that these organisations are not aimed a primarily benefitting artists. Payments to artists, for these organisations, are merely a window dressing cost of their operations.

4 Aug 11
21:56 CET

JAMES C, NEW YORK, PARIS

All artists should get subsequent royalty rights payment on all resales. Absurd comments posted above without any thought. It's the artists work which is not like the gap as Craig Mattoli commented but then is that because you would like to copy the work as is common practice in China? Gap! Are you serious? Yes, you are missing something! Foolish. Well known or struggling is not the issue or the point. The point is that if there is a re-sale and the piece goes up it's the same as licensing... you need to pay the artist subsequent royalties. Think of it in the same way as licensing. Same principle.

4 Aug 11
21:30 CET

WEST, CHARLESTON, SC

In copyright law, for visual artist, publication is at exhibition. In cinema and TV exhibition establishes the point of royalty. As a visual artist I collect once at exhibition/sale and it is only fair that I collect a fee at subsequent re-sale. It is not unlike a capital call in corporate investment, I am the investor in my career and the purchaser of my work is the investor, I deserve some return on the increased value of my paintings due to the investment made in my career. If the work merits value to argue the point then the value is significant enough to carry added fees.

5 Aug 11
15:18 CET

VICTOR GINSBURGH, BRUSSELS

I think that this is a very bad idea. I have no space here to explain why, but you can have access to a paper that I wrote and which is posted at http://www.ecares.org/ecare/personal/ginsburgh/papers/176.%20towse.pdf

4 Aug 11
19:9 CET

VANESSA, LOS ANGELES

I whole-heartedly agree! Believe me when I tell you that the artists who would benefit from this kind of tax are doing just FINE. A working artist on average will walk away with $2K-$20K from every innitial sale (and often more). A struggling artist is not struggling because they are not receiving a royalty when their work is re-sold, they are struggling because they don't have good representation or they lack talent.

4 Aug 11
15:29 CET

CRAIG MATTOLI, GUANGZHOU, CHINA

Am I missing something? Why not give Chrysler a royalty when someone selss one of their cars? Should vintage clothing shops give a percentage back to The Gap? Why is an artist, then? Can I be one, if I decotrated the gallery [it is part of my art...physics is another]and someone else rents it out when I leave? Did the little guy who made bookshelves for me qualify as an artists, and if I sell his table to the junkyard in 5 years, should he get a percentage? Where would it stop? Could we all become artists, then, so if anyone quotes me on a phrase I coined have to pay me [I want to put up microphones along with the 1 million cameras in Guangdong to make sure]. Seriously, am I missing something? If so, tell me.

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