The art market can be incredibly lucrative, as galleries and auction houses the world over will attest. Artworks sell for record millions, making legends of the artists who create them. And it’s not just Picasso and kin who lure the big bucks. Sometimes a hot up-and-comer will unexpectedly command a small fortune from a buyer, setting tongues wagging and boosting the artist’s reputation. As with any dynamic market, there are both surefire and sudden success stories. But how much of that success translates to an artist’s wallet? Does a million dollar sale mean much more than preferential treatment and prestige?
The answer is too often, no. Artworks that are likely to appreciate in value do so over time, so their ultimate value under the hammer is a far cry from their original creation in the artist’s studio. It is quite possible, even common, for an artist to sell a work for a meager sum, only to witness that work rapidly appreciate in dollar value across the next decade. Because the work is out of their hands they reap none of the economic benefits – the profits rest with private sellers who trade in aesthetic ‘futures’ while the artist continues to battle financially.
To address this conundrum, some countries have drafted resale royalties for visual artists into law. Similar to royalties derived from the purchase or use of other artistic works like books, plays or songs, resale rights for visual artists hinge on the idea that those artists have an ongoing relationship with their creations (an idea enshrined in the Berne Copyright Convention). If that relationship is legally recognised, then it should extend to economics, the argument goes. An artist is entitled to share in the benefit his or her work brings others – if a buyer resells, the creator gets a slice of the profits.
France was the first country to experiment with resale royalties. Their droit de suite became law in 1920 after Jean François Millet’s widow was left to starve while his paintings fetched millions. Since then the EU has fallen into line, with others following at their own pace, and in their own way. Countries that currently employ some form of royalties include: Algeria, Belgium, Benin, Brazil , Burkina Faso, Cameroon, Chile, Congo, Costa Rica, Denmark, Czechoslovakia, Ecuador, France, Germany, Greece, Guinea, Hungary, Iceland, Italy, Ivory Coast, Luxembourg, Mali , Morocco, Peru, the Philippines, Portugal, Rwanda, Senegal, Spain, Turkey, Tunisia, United States (California only), Uruguay, and Yugoslavia.
The mechanics of each schemes varies dramatically between countries – in Belgium artists receive 2% of the sale figure as a royalty, in Iceland, 10%. In Hungary the royalty is collected by government agencies, in Norway it is awarded to a dedicated arts fund. Some facilitate payment to artist heirs and estates, others limit the amount of time an artist has to claim their royalty.
Whatever the means, the primary argument of artists and artist advocates pushing for worldwide royalties is equity amongst creative peers. Most authors and composers draw royalties on their works – a system unchallenged by cultural consumers, or society at large. Why then shouldn’t visual artists enjoy the same?
Royalties are also seen as a reasonable way to improve artist income – even a possible alternative to the “welfare” effect of government arts subsidy.
The paucity of artist incomes is well documented and many high profile artists, whose work attracts a pretty penny at auction, still struggle to support their practice because they see no return from those appreciative gains. Observed the Guardian after Britain gave the green light to royalties in 2005: “Eduardo Paolozzi, whose sculptures adorn many major public buildings including the British Library, lives in a nursing home and can no longer work. If the measure had been introduced earlier, he would have earned more than £5,000 from the auction of 14 pieces two years ago.” The paper points to other classic examples: Damien Hirst’s shark first sold for £50,000, sold last year for around £7m; and Jack Vettriano, whose The Singing Butler earned him £3,000 13 years ago, and not a penny in 2004 when it sold for £750,000.”
Based on the assumption that artists’ live on the profits derived from sale of their works, many believe resale royalties would reverse this outcome. Chief Executive of the British Copyright Society, Joanna Cave is in their number. After Britain’s resale rights kicked in this January, Cave said the move would make “a huge difference to thousands of working artists in this country.”
Across the globe, the Antipodes were having none of it. After decades of lobbying at 20 paces by artist organisations and professional sellers, Australia’s Federal Government firmly rejected the introduction of royalties in their 2006 Budget announcement. “The Government carefully considered the issue of a possible resale royalty scheme and concluded that a resale royalty right would not provide a meaningful source of income for the majority of Australia’s artists,” declared Arts Minister Rod Kemp. “It would bring little advantage to the majority of Australian artists whose work rarely reaches the secondary art market and would also adversely affect commercial galleries, art dealers, auction houses and investors.”
With rare exception, this is the position of the commercial art sector. International president of the London-based Phillips Auctioneers, Chris Thompson, has argued the end result of royalty schemes will be to “divert the art trade” to countries like Switzerland and the US, where lower taxes on sales and less bureaucracy makes transactions more appealing. “France used to have an art market, but it shot itself in the foot. There is a reason that both Sotheby’s and Christie’s moved their headquarters from London to New York,” he said. Gilbert Edelson, of the Art Dealers Association of America, concurs, heralding England’s introduction of royalties as “a break for American artists.”
Another complaint against royalties is the anticipated red-tape in their application. Who collects and administers payment? How are artists’ alerted to the sale of their work? How does the system line up with existing tax laws?
Some leading lights from the arts world have broken ranks to side with dealers on these and other concerns. Sir Anthony Caro, David Hockney and Sigmar Polke were among a group of artists who lobbied against droit de suite in 2000 with a petition (Artists Against Droit De Suite: the European Directive violates artists’ human rights) and a poster campaign. Said Caro: “…the scheme would be terribly complicated to administer and just create more bureaucracy. When the artist sells a work, he or she gets a payment that is reasonable at the time. The value may go down as well as up; this is the risk the buyer takes. The comparison with composers is not valid, since they do not normally get a substantial payment for the work upon completion, but rely on continuing royalties from performance.”
Though it has been debated there since the 1970s, the US has resisted the European model on royalties, questioning its practical benefit for working artists and voicing concerns about the impact on the art market at large.
Expert copyright and ‘content’ lawyer Elliott Alderman laid out some key arguments against US royalty introduction in his 1992 paper, Resale Royalties in the United States for Fine Visual Artists: An Alien Concept: “The droit de suite depends on frequent resale, making the right valueless unless art changes hands within the term of the royalty…Moreover, most artists, not having a resale market, will suffer as purchasers pay less in the primary market, factoring in the future royalty…For smaller galleries particularly, the resale royalty could reduce the number of exhibitions of inexperienced artists.”
He suggests instead “an infusion of capital either directly to financially needy artists or into the primary art market…instead of the creation of a new right based on the possibility of resale, which might trickle down benefits eventually from secondary and later markets.”
Fellow American Bernhard Berger, of Harvard Law School, adds: The price of art, like other commodities, varies with supply and demand, and the artist is only one of the many factors that impact on price.”
Above and beyond these monetary, legal and moral concerns, many feel there is a fundamental disconnect between the European royalty model and America’s frontier marketplace: see Alderman’s ‘alien concept’. Australian analyst firm Caslon summarises their position neatly: “In the US the droit has largely been regarded as a curiosity, a potential exotic import like a designer cheese or the bidet.” California bucked that otherwise unbroken trend, launching their own twist on the scheme in 1976.
Whether the pundits predictions about royalties paving the way for market gloom are on the money, only time will tell. It doesn’t alter the fact that govenment’s must find their own way on the issue, mindful that as long as resale rights continue for artists’ in some countries, those in others will want their share.
