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WHEREFORE THOU ART #45
GETTING WHAT'S DUE

We've all heard the starving artist stories, the struggling artist who dies penniless, and whose artworks are later recognized as works of genius, and sell for astronomical sums. Van Gogh died penniless and in despair (or at least with a good absinthe buzz on) and now his works are selling for gazillions. Less dramatic, perhaps, are situations where an artist sells works for hundreds of dollars, then achieves fame years alter. The early works his the auction houses like a ton of bricks, but the artist only cashes in on new works. The early works are now selling for thousands of dollars at auction, and the proceeds are pocketed by collectors, speculators, dealers, and auction houses. The artist doesn't realize a dime from the appreciation of the works.

Hardly seems fair, does it? Artists in other mediums don't have this problem. A musical artist goes platinum on a third album, and the first two albums, which may have been initial commercial disasters, will start to sell, and the artist profits, because the artist's recording contract provides for that.

Of course, this has to do with the fact that the visual artist's original work is generally the thing of value, while the musical artist is selling copies. Sure some visual artists can make plenty of money selling prints or licensing the images for decorative purposes, those are the lucky ones. The nature of "fine art" and the fine art market is that the original paintings are where the overwhelming value and action resides.

So far, California is the only state in the U.S. that has addressed this issue. In 1976, the California legislature passed the California Art Resale Act, modeled after the "droit de suite" laws that have been on the books in France and several other European countries dating back to the 1920's. The law entitles fine artists to collect 5% on downstream sales of their works that occur in California, generally on sales that are in excess of $1000 and where subsequent sales are for amounts greater than the original price. Artists are expected to police their payments themselves. Sellers of fine art have the responsibility to locate and pay the artist, and if the artist cannot be located, to deposit the 5% royalty with the California Arts Council, which is charged with maintaining a database of working artists. If the artist can't be found within 7 years, the money is spent on public art projects. This right exists for the life of the artist plus 20 years.

How's it working? It's a little hard to tell. A couple of Google searches failed to reveal much information on the California experience. The California Arts Council reports that it has distributed "a substantial sum to a good number of artists over the years" and cites a "case study" about a distribution it made in 1981. The Council admits that it has no way of knowing how much money has actually been transferred to artists, as most payments (at least hypothetically) take place directly from the sellers to the artists. The most recent annual report of the Council doesn't even mention resale royalties.

The Council does admit that sales are no doubt taking place without payments to artists, both because of "intransigence" of sellers as well as because of ignorance of the law by both sellers and artists. It lists a number of things artists should be doing to keep track of their works, including how to track downstream sales, and resources for help in recovering royalties (see www.cac.ca.gov/95).

The UK adopted a similar law about a year ago, to bring it into closer conformity with its European Economic Union partners. The initial reports of the law's efficacy show that fears that the royalty requirement would slow down the red-hot London art market are unfounded.

The British law works on a sliding scale, with declining percentages the higher the resale price of the art, starting at 4% on the first 50,000 pounds, and going down from there. Unlike in California, which allows direct payments to artists (and the accompanying inability to track payments), the British system has all payments channeled through royalty organizations. In the first year, over 400 payments were made to artists in amounts ranging from around 10 to over 25,000 pounds, with three-quarters of the payments coming from auction houses. Payments were received by well-known artists like Lucien Freud and Damian Hirst, as well as relative unknowns. In other words, the system appears to be working just fine, if perhaps rather modestly

The law in Britain has its vociferous opponents, including an association of art marketers who claim that the law has been a failure and only hurts the British art market. Several prominent artists, including some who have received money on their downstream sales, say the law primarily benefits artists who are already successful, and who don't need the money, and hence is a waste of time and effort.

In Britain, the resale royalties only accrue to living artists, and it appears likely that the law will be extended to track copyright ownership of the works-to extend payments to an artist's heirs for 70 years after the artist's death. Critics argue that this will only worsen the rich-get-richer aspects the law. In France, which allows payments to heirs, almost 70% of these royalties go to the heirs of superstar dead artists like Matisse and Picasso. In Germany, payments to heirs outpace payments to living artists 7 to 1.

While at first glance this may appear horrendously unfair and show that the law has unintended consequences, I don't think this is the case. Of course "famous" artists are going to collect more than the rest, and that doesn't negate to value of these payments to lesser known, late blooming artists. If this seems inequitable of unfair, then cap the payments, or adopt the sliding scale of percentages as is done in Britain.

As to a dampening of the art market, the empirical evidence throughout Europe and in California shows this hasn't been the case. Sales of fine art are by and large luxury events, and a couple of percentage points one way or the other aren't going to change what seems to have become a perpetually hot market.

As to tracking, accountability, and enforcement, these things are always going to be problematic, imprecise and difficult. This just comes with the territory, and doesn't strike me as reason to do nothing. A little bit of relief is better than none at all.

While in Australia there is considerable momentum to adopt a resale royalty law, there isn't much of movement to institute such a law on a national basis here, which may have more to do with the fact that until recently all of the branches of the federal government have been focused on maximizing the concentration of wealth than anything that might benefit our culture or its grass-roots creators. As previously mentioned, California is the only state in the union to have a fine art resale royalty law. I suppose having such laws in Massachusetts and New York would be better than nothing, but frankly, a patchwork quilt of different laws in different states would be just plain stupid and confusing; a federal law would be infinitely preferable. A federal law would recognize that art sales and the movement of art, like almost everything these days, doesn't have much respect for state boundaries. It's time.

© 2007 Paul Rapp
This article originally appeared in The Artful Mind and is intended to provide the reader with an awareness of intellectual property law and not legal advice.