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Art

REPLY TO AAD ARTICLE TITLED “DROIT DE SUITE IN THE US”

THE PROPOSED US ACT DOES NOT APPLY TO GALLERIES

It is important to note that the Resale Royalty Bill presently before the U.S. Congress (ART Act H.R. 4103) does not apply to galleries or private sales, first because these are difficult to track, and secondly because it may disadvantage numerous small galleries. Instead it applies only to auction houses whose sales of contemporary art exceed one million dollars per annum. The resale right or Droit de Suite as it is popularly known exists in some 70 foreign countries, including all member states of the E.U.

VISUAL ARTISTS RECEIVE NO ROYALTIES OR RESIDUALS

FOR THE LATER SALE OF THEIR WORKS

Please also allow me to note at the outset that visual artists are the only members of the creative community in the U.S. who do not receive residual payments for the later sales of their works. Composers and lyricists will collect some two billion dollars this year in royalties for their compositions, distributed by their rights societies, chiefly ASCAP and BMI. Playwrights and screenwriters get public performance royalties akin to residuals for later productions of their works. Actors in film and TV get residuals. All of these are revenues garnered by creators after their initial creative output. Unfortunately, visual artists receive none of these and do not earn a penny in residual or resale payments.

A QUESTION OFTEN POSED; DO ONLY WEALTHY ARTISTS BENEFIT?

The answer is a resounding NO! In point of fact, the data gathered in the United Kingdom, Germany, and France, where the resale royalty is in effect, show that it is of wide benefit to many working artists who are little known. The specific number of individual beneficiaries in the U.K. for 2012 was 1302, for Germany in the same year. 1235 and for France 2201 individual beneficiaries.

History abounds with examples of impoverished artists whose works achieved acclaim only late in life or after their deaths. That the resale royalty might benefit successful artists is assuredly no argument for withholding its benefits from all. The need for the royalty does not exclude artists who have even experienced a degree of success, but whose economic status remains somewhat precarious. A case in point is the artist Rosalind Drexler. She writes:

“I have nothing to leave my son but my work when I die. Much of it has been sold at bargain rates; most of it my best work. Thinking about it, oddly enough, I feel left out of my own story… why should only the present owner turn a profit, while the artist is left with nothing? I’ve worked to do my art, I won’t last forever, I’m 87 years old,, but the paintings will go on a lot longer than I will. It is very important for me to be able to know that I have taken care of my son who suffers from disability. This resale royalty thing is not only about money, it is about love, and being able to give. It is about legacy. In the end, it is the best kind of generosity”

ADOPTION OF THE RIGHT IN EUROPE

The history of the right goes back to France which adopted the resale royalty nearly 100 years ago, in 1920. There, and in the rest of Europe. the resale right is known as the Droit de Suite. The adoption was spurred on by a cartoon created by Andre Forain which showed two impoverished children observing a group of top hatted men vying to purchase one of their father’s works at auction, as one ragamuffin exclaims to the other, ‘Tiens, ils vendent un tableau de Papa (Look they’re selling one of Papa’s works”) Belgium followed the French example in 1921, as did Italy and Germany later on. A European Union directive of 2001 (2001 / 84 / EC) mandated the adoption of the droit de suite by all European member states, and now a harmonized resale royalty rule exists in the EU countries.

ELIGIBILITY AND RECIPROCITY AMONG NATIONS

It must be emphasized that beneficiaries of the resale royalty in countries possessing that right, must hail from a nation which also accords its resale right to foreign nationals on a reciprocal basis. As the U.S. does not afford this right to foreign artists, let alone to its own citizens, American artists are precluded from obtaining resale royalties abroad. Thus, the very significant sale of U.S. works overseas produces no revenue for their American creators.

PROPOSALS FOR THE ADOPTION OF THE RESALE ROYALTY IN THE U.S.

A bill calling for the adoption of the resale royalty was introduced in Congress in the early 90s by Senator Edward Kennedy and Congressman Robert Kastenmeier, with the result that formal hearings were held by the Copyright Office in 1991 and 1992. While the Copyright Office report refrained from recommending the adoption of the Resale Royalty at that time, it went on to state: The international community is now focusing on improving artists’ rights, including the possibility of harmonization of droit de suite, within the European Community. Should the European Community harmonize existing droit de suite laws, Congress may want to take another look at the resale royalty, particularly if the community decides to extend the royalty to all member states.” It has been 12 years since the European Community adopted a harmonized droit de suite rule for all member states, and consideration of an American right is long overdue.

THE CALIFORNIA RESALE ROYALTY ACT

[[There has never been a national resale royalty law in the U.S. One state, however, California, has instituted the resale royalty but no matter how well-meaning the California Act, it has been relatively easy to circumvent, and compliance with it is rare

On May 17, 2012, the Federal District Court of California (Ninth Circuit) appeared to have invalidated the California Resale Royalty Act on the grounds that it also purports “to regulate transactions that take place wholly outside of California[1] Although we believe the Court erred in its reasoning, it serves to point up the need for a Federal law, which would obtain in all the States and which the bill before Congress is designed to accomplish. On June 6, 2012, Judge Michael W. Fitzgerald, in reviewing a petition of the Plaintiffs, held that the court’s “order is not a binding precedent on other district courts either within or outside the Ninth Circuit.”[2] The matter is now under appeal, for which ARS has submitted an amicus brief in support of the right. The uncertain situation in California reinforces the need for a Federal Resale Royalty Act, applicable in all the States.]]

WOULD THE U.S. AUCTION MARKET SUFFER?

AND WHAT HAPPENED TO THE AUCTION HOUSES IN THE UK WHEN THEY ADOPTED THE RESALE ROYALTY

Our opponents maintain that the institution of an Artist Resale Royalty in the U.S. would impair or diminish auction sales in this country. This was precisely the argument made by the opposition prior to the UK’s adoption, that it would wreck sales in Britain.. However this is completely belied by the subsequent experience of the Auction Houses in the U.K. There, the concern was that after adoption in Britain, the market would flee to the U.S. or elsewhere where there was no royalty. Far from declining, art market sales in the U.K have increased appreciably since adoption. An article appearing in the Huffington Post, September 25, 2012, bore the title “U.K.’s Artist Resale Royalty Law Didn’t Damage the Art Market (Despite All the Claims).” The article begins “Wasn’t the sky supposed to fall… and wasn’t it supposed to have a ‘corrosive effect’ on the British Art Market.” To the contrary, sales have reached record levels in the U.K. and exceed those that occurred before the adoption of the law, nor has the market fled elsewhere.

Indeed, Pilar Ordovas, a long time head of Christies Contemporary Art Department in London and Former Deputy Chairman of Christies UK, remarked, after the institution of the rule there, “The year brought the best sales ever in contemporary art in our history and as far as paying resale royalties, nobody seems to be concerned” (The Art Net Magazine, December 2, 2007) Anthony Browne, Chairman of the British Art Market Federation admits that the resale royalty law has no visible effect on the British Art Market. “There has been a substantial boon on the contemporary side, and this law isn’t going to knock it off its perch.” Glen Scott Wright, Director of London’s Victoria Miro Gallery, noted in the “Gallerist Section” of the New York Observer (January 31, 2014) that “Sales [in the U.K.] have been as healthy as before the law came into effect. Clients haven’t indicated that they were unwilling to buy because of the royalty. In fact, there hasn’t been much discussion of the law.”

Indeed, so little does the resale royalty figure in art market calculations that a number of major American art galleries have recently opened important branches in London. These include those of David Zwirner, Gagosian, Pace Gallery, and Michael Werner. It is important to note that a resale royalty is applied to Gallery sales in London, where none of course exists in New York. If the resale royalty discourages sales as our opponents maintain, one would think that US Galleries would not venture abroad, and especially not to London. Judd Tully writing in Art and Auction about this phenomenon stated,, “Essentially what the richer New York galleries are doing is establishing new beachheads in London to find new collectors…

Lastly, a submission made to the Copyright Office by the attorneys for Christies and Sothebys,

States that “the global art market in 2011 totaled euros 46.1 billion or U.S. dollars roughly $59 billion, of which 29%, or 17.1 billion dollars occurred from sales in the U.S. Needless to say neither foreign nor domestic artists received a penny from these US proceeds, which are also very likely to be higher in the present year. Earlier this month in New York, On November 13 eve alone, Christie sales brought in $691.5 million dollars, those of Sotheby’s the next night, a less staggering $380 million dollars, still its biggest one night sale ever.

According to reports: Auction houses typically charge a 25% buyers commission on the first $100,000 of the purchase, a 20% commission on the next 1.4 million dollars in the case of Christies, and 20% on the next 1.8 million dollars on the part of Sotheby’s. The commission thereafter is 12%. The auction houses also customarily charge sellers’ commissions which can range anywhere from zero to 10% (NY Times 2/18/13, Arts Beat.) The artist of course receives none of these fees..

Theodore Feder, President of ARS.

 [1]Estate of Graham v. Sotheby's Inc.,860 F. Supp. 2d 1117 (C.D. Cal., May 17, 2012).

[2]CV-11-8604-MWF (C.D. Cal., June 6, 2012).

                                            Main Image: Laura Strauss Photography

Editor's note: In response to Margie FitzSimons article titled 'Droit De Suite in the US? Ack', Theodore Feder of ARS, sent the above response which was first published in August 2014. To read Margie FitzSimons' article, click here.

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