Suite for the Sweet

Artist Resale Rights in the United States

By Michael McCullough

Whenever I read about efforts to legislate an “artist resale royalty” in the United States, there comes back into my mind the memory of a conversation I had about ten years ago when the British Parliament was debating the implementation of the EC Directive on artist resale rights.

I was interviewed by an aide to a British MP who was writing a report on the likely effect of the artist resale right upon the British art market. The artist resale right was adopted by the European Parliament in September 2001, and those countries like the UK that did not already have a resale right at that time were required to put one in place in 2006. The Brits were one of the last in Europe to adopt the right; the artist resale right was first introduced to Europe by France in the 1920’s (for auction sales only) – which is why it is often referred to by the French term “droit de suite”.

My interview focused on the competitive disadvantage brought about by the artist resale right to those British auctioneers who competed with auctioneers in the United States for consignments. It was my opinion at the time that the resale royalty put auctioneers in Europe at a competitive disadvantage to auctioneers in countries without the royalty. This is especially true at the high end of the art market where a seller can choose a sale venue in one of several different countries around the globe. I still believe this to be true, but I don’t think the royalty’s effect on the market is so great as to make it punitive; by way of example, the maximum payment under the UK law is €12,500, a miniscule amount in light of today’s nine-figure sale prices. In consequence of this, I don’t believe an artist should be denied the right to share in the financial gains upon the later resale of an artwork. I do, however, believe that-for very different reasons- there will not be an artist resale royalty in the United States anytime soon.

One of the founding principles of American jurisprudence is the idea that private property can never be taken by the government without just compensation. This is the concept of “what’s mine is mine and what’s yours is yours,” and Americans prefer things organize in this clear and tidy manner. In other countries, artwork and other types of personal property can be taken away by the government without any compensation; in other words, “what’s yours is mine.” Americans don’t care much for others coveting their wares; envy and jealousy are fine, but no coveting.

In light of this principle, the artist resale royalty looks very much like a version of “what’s yours is mine.” Most visual artists retain the copyright to their artwork, so they are free to exploit their images commercially should they choose to do so. And an artist can, and many do, create images in series or multiples, so that a single image or concept can be exploited over and over again. Many who favor the artist resale right point to the ability of authors and composers to be remunerated for the reproduction or performance of their work, and the artist resale right is intended to create a parallel benefit. This comparison breaks down very quickly when you realize that in the artist example no additional instance of the original artwork is brought to the market; the correct analogy would be if Salmon Rushdie could claim some further payment for every copy of Midnight’s Children resold in a used bookstore above the $13 price at which it was originally published in 1981. No such right exists today for the author or composer. In fact, what is being proposed in the artist resale royalty is a new right that is not really a royalty at all- it’s more like a profit share- and fits awkwardly with existing concepts of property and ownership. As I said earlier, such a right seems like a good idea at first blush, as most things do, but to justify the right upon the comparison of payments to authors and composers is dubious.

The strongest argument against the resale royalty is also the most fundamental; it simply doesn’t work. The high end of the global contemporary art market is driven by the sale of artworks done by about a thousand artists. The other million-and-a-half artists who worked at some point in the past seventy years are excluded from the revelry. The same is true for the visual artists of the Impressionist and Modern eras. If you don’t believe me then visit any regional auctioneer to view their auctions and you will find that many very good paintings and sculptures can be purchased for under $1000. Most of the artwork created over the past century, when adjusted for inflation, has not appreciated in value at all, so the concept of helping the poor, starving artist is little more than a fiction. The experience in Europe is that the vast majority of artist resale royalties are paid to artists or the families of deceased artists who are financially secure. The fact is that successful artists, just like successful authors or composers, are rewarded commercially; if you compare the art-derived income of creative individuals of equal seriousness and achievement across creative platforms, then you will find that visual artist do very well. Compare Damian Hirst in relation to Cormac McCarthy and Thomas Ades; Marina Abramovic to Joyce Carol Oates or Jennifer Higdon; or pick your own comparison. If you do it fairly, you will find that visual artists usually fare better than their peers who work on royalties.

Creating an artist resale royalty in the United States would also tarnish the attractiveness of art as an investment, thereby decreasing the pool of funds available to purchase artwork. Any legislation aimed at helping struggling artists should address the need for an initial market for their work, as today’s artist struggles for access but manages quite well once the market accepts them. A good way to help artists would be to give collectors incentives to buy more artwork- to abolish the sales tax on purchases of artwork below $5000 or to defer capital gains on artwork that is sold to purchase more artwork. Like it or not, the free market works very well for many artists and the goal should be to keep it that way.

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About mcculloughllc

Michael McCullough has extensive experience in art, cultural heritage, and international trade matters. He is a former associate counsel to Sotheby's worldwide where he advised the company on the sale and financing of fine art, the decorative arts, cultural property, antiques, jewelry and special collections. Mr. McCullough is credited with the development and implementation of global policies and procedures related to the acquisition for consignment and sale of some of the greatest artworks in the world. Mr. McCullough is also experienced in U.S. Customs regulations, international trade agreements, export controls, economic sanctions constraints, anti-corruption rules, U.S. Fish and Wildlife regulations, and other government agency requirements. Mr. McCullough has represented clients before U.S. Customs and Border Protection, the Department of State, Immigration and Customs Enforcement, the U.S. Fish and Wildlife Service, the Food and Drug Administration, the United States district courts and the Court of Appeals for the Second and Fourth Circuits.
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