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Artists add their voices to US resale royalties debate

New York panel pits lawyers against practitioners

It has become a common adage to say that the art industry is one of the last unregulated markets in the world—alongside the arms, organs, sex and drug trades. This view was aired by an audience member on Wednesday evening, 22 July, at a debate on the pros and cons of American resale royalty legislation held at Artists Space in New York.

The German-born artist Hans Haacke and the painter R.H. Quaytman joined legal experts at a discussion prompted largely by the possible re-introduction of the American Royalties Too (ART) Act, as proposed by the New York Representative Jerrold Nadler. If passed, ART would require sellers to pay living artists a 5% royalty on works sold at auction for $5,000 or more, capped at $35,000. A similar royalty system exists outside of the US, for example in the UK and most European Union countries where all works re-sold (not exclusively at auction) by living artists and those who died within the past 70 years are subject to a royalty. 

Naturally, artists are generally in favour of such a proposal. Without a federal resale royalty law in place in the US, some have resorted to drafting their own terms instead. "I've always said, 'You play by my rules or you can't have it,'” said Haacke this week. He requires his collectors to sign a contract that grants him 15% of future resale profits. However, “if I had to litigate it would be burdensome and very expensive. If instead there was a law that would do the litigation for me, that would give me an advantage.”

Artists ought to pause before jumping too eagerly on board the resale royalty bandwagon, said the New York State Supreme Court Justice Barbara Jaffe, also speaking on the panel. Jaffe said. "Do they really want their trade regulated? When you have regulation you also have the government coming in and examining you—the IRS [Internal Revenue Service] and all those other wonderful things." Plus, she said, “there’s no contract that can’t be gotten around.”

Increasingly pricey secondary market sales do more than just cut artists out of the deal, said another panellist, Maxwell Graham, the owner of the New York gallery Essex Street: "The secondary market has become an inspiration to a lot of the art that gets made today, and not always in the best ways." While Haacke said that having a contract has never changed the way he thought about his work, Quaytman was not so convinced: "It might come to mind if you think you're getting a percentage at auction," she said. "I do think it would affect me."