On Monday night at Scandinavia House in Manhattan, a panel gathered to discuss the newly re-drafted “Equity for Visual Artists Act,” a proposed amendment to the federal Copyright Act that would include a resale royalty provision to enable visual artists to collect payment for future sales of their work. In essence, it aims to let artists profit from the growing value of their work, as collectors, dealers, and auction houses already do. A version of the bill was first introduced by New York Democratic representative Jerrold Nadler in 2011, but died at the close of the 112th Congress. In a matter of weeks, a revised version will be completed and the bill will be re-introduced.
Hosted by the International Foundation for Art Research (“IFAR”), the discussion was convened to address both the merits of the bill and the complaints against it. The panelists included Congressman Nadler; Theodore Feder, founder and president of the Artists Rights Society; Karyn Temple Claggett, director of policy and international affairs at the U.S. Copyright Office; Sandra Cobden, general counsel at Christie’s; and Philippa Loengard, the assistant director of the Kernochan Center at Columbia Law School. Sharon Flescher, executive director of IFAR, moderated.
Congressman Nadler’s original bill called for a seven-percent royalty fee on sales of art exceeding $10,000, when the sales took place at auction houses with annual revenue over $25 million. The money would be paid to a collection society, which would, after covering administrative costs, would split it 50-50 between the artist and a fund to help museums purchase the work of living artists.
Many criticisms of the last bill came to the surface when it was circulating, and during a public roundtable discussion held this past April this year. Some commenters complained that the seven-percent rate was too high; others, including some museums, criticized the provision that gave half the money to museums. Some criticized the bill for only applying to sales for works above $10,000, which they believed would exclude too many artists.
In light of such complaints, Nadler has made a few changes to the new bill. The limit on sales has been reduced from $10,000 to $5,000, and the flat rate is to be cut from seven percent to something in the range of five percent (the exact number has not yet been determined). The threshold amount of business that an auction house must do to be covered by the bill is also being reduced, from $25 million to a still-to-be-determined lower number, in order to include more than just the major houses. And the new bill also does away with the provision that split the resale royalty with museums. (“We heard from some museums,” Nadler said on Monday night. “They didn’t want that money.”)
But other provisions of the act that were criticized will remain the same. Some people thought the royalty fee should apply to gallery as well as auction sales, but it remains limited to auction houses because they offer the most transparency and are thus seen as a good place to start. “In terms of passing the bill,” Congressman Nadler said, eliciting chuckles from the audience, “it eliminates an entirely new source of opposition.”
Resale royalty rights (also known as droit de suite) have their roots in France in the 1920s, and by now some 70 countries around the world have provisions for them, including Australia and members of the European Union. But the U.S. and China, the strongest art markets in the world, have failed to pass similar laws. Of American states, only California has enacted a version, the Resale Royalty Act of 1976, which was found unconstitutional this year in a case brought by various artists including Chuck Close, Laddie John Dill, and the estates of Robert Graham and Sam Francis against Sotheby’s and Christie’s. That case is still on appeal. (Interestingly, the artists involved in that suit have not spoken up in the federal resale royalty debate, according to Congressman Nadler.)
Other countries have instituted the resale right in a variety of ways. Most of the E.U., for example, introduced a regressive version in 2006, under which works get “taxed” at lower rates the more they sell for. That version also caps the fee at $12,500 euros.
By far the biggest bone of contention over the resale right in the U.S. is its potential impact on sales. Several people on the panel seemed to agree that there has been a dip in the European market since the resale royalty was introduced, though some also said that there are so many factors affecting the market that that it’s impossible to blame just one. Many invoked statistics to back up their often conflicting points of view
Claggett, from the U.S. Copyright Office, discussed how her agency had reviewed several government studies in considering the “perceived inequities” of resale right systems. For the most part, it did not find significant harm to the existing markets. She referred to studies done in the E.U. and the U.K. (which has somewhat different rules from the Continent) between 2002 to 2012, and cited findings like an increasing market share for living artists in the E.U. “There was no discernible pattern to suggest that member states that did not levy the royalty performed better than those that do,” Claggett said.
Feder, of the Artists Rights Society, took a similar position. “So little does the resale royalty affect the nature of the market,” he argued, that “a number of NY based galleries have opened up ambitious operations in London, including David Zwirner, Gagosian, and Pace.”
Arguing that the resale right does hurt the art market, Cobden, Christie’s general counsel, threw out her own numbers, from a survey by Clare McAndrew of the independent research company Art Economics. Looking at the recovery from the recent recession, McAndrew noted that during the year that art markets rebounded most vigorously, 2009 to 2010, the U.S. market rebounded by 120 percent, and the Chinese one by 121 percent. The E.U. art market, in contrast, rebounded by 39 only percent, and while Cobden conceded that the resale right couldn’t be wholly responsible for the difference, she said it was a contributing factor.
Perhaps the most apt observation came from Claggett, . Noting how difficult it is to come by specific data about the market—given both how little it is regulated and the secrecy that pervades it—she pointed out almost everyone uses the same sources.
“It’s like a Rorschach test,” she said. “Everyone is looking at the statistics and seeing what they want to see.”
