Originally written by Catherine Jewell, Communications Division, WIPO and published by WIPO Magazine in June 2017 (View Source)
“Artists do not live on thin air.” This simple statement by the late internationally acclaimed Senegalese sculptor Ousmane Sow is a stark reminder of the importance of the resale right for visual artists around the world.
Since 2014, the International Confederation of Societies of Authors and Composers (CISAC) and others have been actively campaigning to push the issue of the artist’s resale right up the international copyright agenda, calling for reform of the law so that visual artists benefit each time their work is resold.
About the artist’s resale right
Unlike novelists and musicians, visual artists such as painters and sculptors do not directly benefit from downstream payments when their works change hands in global markets and do not generate significant income from the reproduction and communication rights provided to other creators under copyright law. The artist’s resale right seeks to correct this imbalance by ensuring that artists receive a small percentage of the sale price of a work when it is resold. Just as the art market has become global, proponents argue, so the artist’s resale right should be global.
Although the right is recognized in the Berne Convention for the Protection of Literary and Artistic Works (Article 14ter), which sets minimum international copyright standards, it is optional. And while around 80 countries recognize the right, many others, including major art markets like the United States and China, do not.
Visual artists want a new treaty that makes the right mandatory, and their efforts are starting to pay off. With a mandate from WIPO’s Standing Committee on Copyright and Related Rights, WIPO hosted an international conference on the artist’s resale right in April 2017. Key actors from across the art market – artists, dealers, galleries, auction houses, academics and collective management organizations (CMOs) – exchanged views and experiences, shedding light on the various challenges associated with developing and applying resale royalty schemes that both benefit artists and support a robust and transparent global art market.
Opening the event, WIPO Director General Francis Gurry said: “The digital environment and the globalization of markets present both vulnerabilities and opportunities, and it is appropriate that we consider how we might address the gaps that exist in connection with the artist’s resale right.”
The artist’s resale right does not always work as well as it should for artists, Mr. Gurry said, pointing to the need to support the development of CMOs in the smooth and efficient running of resale royalty schemes.
The Minister of Culture and Communication from Senegal, Mr. Mbagnick Ndiaye, noted that while the value of the African art market has increased more than a thousand-fold since 2007, the artists responsible for these works rarely enjoy any of the benefits of their commercial success.
The artist’s resale right is a question of equity, he said. It ensures that artists are fairly compensated regardless of where their work is sold and establishes a balance between artists and those who trade in their works. He said the right also allows artists to maintain a permanent link with their work, which is of the utmost importance in an era of globalization marked by increasing circulation of art works.
The legal landscape
France was the first country to enact a law providing for the artist’s resale right. In 1920, concerned about the welfare of artists and their families, lawmakers introduced the artist’s resale right (or droit de suite) to ensure artists and their heirs received a share of the increasing commercial value of their artworks. The right’s origins date back to the experiences of the family of French painter Jean-François Millet, who initially sold his painting The Angelus for around USD 100. Fifteen years after his death, The Angelus sold for around USD 150,000. The seller made a handsome profit but the artist’s family was destitute, prompting lawmakers to act.
The right was incorporated into the Berne Convention in 1948, but on an optional basis (see box), and in 2001 was enshrined in European Union law with the Resale Rights Directive (2001/84/EC). EU-wide harmonization was achieved in January 2006.
Today, artists are calling for the mandatory and universal application of the right.
The case for the artist’s resale right
Artists favor the artist’s resale right for various reasons. The first is economic. The income of visual artists is lower than that of other creators. As a 2013 report by the United States Copyright Office notes, visual artists “are at a material disadvantage vis-à-vis other authors” and do not in general “share in the long-term financial success of their works”, with any financial gains from resale going primarily to art professionals.
Hervé di Rosa, President of the International Council of Visual Artists (CIAGP), explains that the royalties flowing from the sale of works, many of which sell for under USD 10,000, provide artists and their heirs with a modest but vital source of income.
Resale royalties account for a fraction of the sales price of a work and are only payable under certain conditions. Under the EU Directive, for example, payment applies only to works sold by an art professional for more than EUR 3,000, although member states may opt to apply resale rights to sales of less than EUR 3,000 at a resale royalty of not less than 4 percent of the selling price. The EU Directive also introduces a tapering scale of rates across five bands of selling price. Each band establishes the percentage of the resale price an artist will receive for the sale of their work, ranging from 4 percent for sales up to EUR 50,000 to 0.25 percent for sales of more than EUR 500,000. The royalty an artist can receive from a single sale is capped at EUR 12,500. The resale royalty is payable to living artists and for up to 70 years after their death.
The optional nature of the right and its fragmented international application means artists only benefit from it when their works are sold in countries where the right exists or where reciprocal artist’s resale right arrangements are in place. This means that if works are sold in major art markets that do not recognize the right, artists and their heirs receive nothing at all. It also means that artists from those countries cannot benefit from the right in countries where it does exist.
Artists believe that in a globalized world, the right will highlight their contribution to a work’s value, and will enable them to establish a permanent link with it. They argue that universal application of the right would improve the traceability of artworks and the transparency of the global art market.
This is borne out in countries with established resale royalty schemes such as Australia, France, Sweden and the United Kingdom. “All parts of the market are seeing real value in the transparency and provenance that the scheme engenders,” notes Judy Grady, manager of Visual Arts at the Copyright Agency of Australia, where the scheme has been running for six years. The scheme is significantly benefiting aboriginal artists and promoting a better understanding among artists of the market value of their work, which in turn is leading them to make better decisions about who to sell to and at what price, she explains.
Artists should be treated equally wherever their work is sold. This is a plea for artists’ futures.
Mark Stephens, Chairman of the UK’s Design and Copyright Society (DACS)
Artists’ heirs and estates also have an interest in the artist’s resale right. Meret Meyer, granddaughter of Marc Chagall, highlights the “crucial importance” of the right in funding the work of the Marc Chagall Committee. Cataloguing an artist’s work, authenticating it and tackling counterfeits are time-consuming and costly undertakings made possible by resale royalties. This work, she notes, contributes to the stability of the global art market and to our common artistic heritage. The “artworks we defend daily and of which we are only trustees… fundamentally nourish over and over again, the vital tissue of our universal heritage.”
Arguments against the artist’s resale right suggest it will have a detrimental effect on global art markets, lowering prices, reducing sales volumes and generally making markets less competitive. They also claim it places a heavy burden on art professionals. But is there any hard evidence to support this?
Various empirical studies, including an ongoing study by Professors Kathryn Graddy of Brandeis International Business School, USA, and Joëlle Farchy of the University Paris I in France, to be published later this year, show no demonstrable detrimental impact in terms of the price of artworks or the competitiveness of art markets. Indeed, quite the contrary. Mark Stephens, Chairman of the UK’s Design and Artists Copyright Society (DACS), notes that since the artist’s resale right took effect in the UK, the number of commercial galleries has grown five-fold and art prices have soared. “It is hard to find where the economic arguments exist,” he says. “In the UK, artists and estates have received over GBP 50 million in resale royalties since it came into law in 2006. That money supports artists’ practices, estates and legacies, which in turn benefits the art market and the creative economy and our cultural heritage.”
What the Berne Convention says about the Artist’s Resale Right
Article 14ter of the Berne Convention for the Protection of Literary and Artistic Works states:
“The author, or after his death the persons or institutions authorized by national legislation, shall, with respect to original works of art and original manuscripts of writers and composers, enjoy the inalienable right to an interest in any sale of the work subsequent to the first transfer by the author of the work.”
It further states the artist’s resale right “may be claimed in a country of the [Berne] Union only if legislation in the country to which the author belongs so permits, and to the extent permitted by the country where this protection is claimed.”
Finally, it states that “the procedure for collection and the amounts shall be matters for determination by national legislation.”
And the impact on art professionals? French art dealer Jany Jamsen says that despite initial fears of the artist’s resale right being “another tax”, its application is proving quite straightforward and even beneficial in that it enables dealers to establish the “pedigree” of works.
Data compiled by ADAGP, the French CMO for graphic and visual artists, show that the cost of managing the artist’s resale right is “relatively light”, representing around 0.027 percent of the turnover of galleries and auction houses. “The economic argument against the artist’s resale right is just a fallacy,” says Marie-Anne Ferry-Fall, ADAGP’s CEO.
Challenges and opportunities
How to establish effective systems for collecting resale royalties and remunerating artists is a challenge confronting policymakers in many countries. The experiences of countries with established schemes highlight the central role of CMOs. These organizations enable the smooth, transparent and efficient application of resale royalty schemes and “lift a heavy burden from the art market,” notes Mats Lindberg, CEO of Bildupphovsrätt, the Swedish CMO.
There is, however, a clear need to support countries in building the infrastructure they need to operate effective resale royalty schemes. “I think it is now time for us in the established collecting society community to support those in emerging communities and from the Global South to develop their own,” says Mark Stephens. “African, Chinese and South American art and artists being equally appreciated, we now have the opportunity to set up societies with knowledge sharing and a treaty where… practical support can be given to all those that might benefit.”
But what types of practical support will this entail?
Accurate data and honest reporting are the bedrock of an effective resale rights scheme. Estimates of the value of the global art market for 2016 range from USD 46 billion (Art Basel) to USD 56 billion (TEFAF), highlighting the difficulties associated with gathering reliable sales data. Greater transparency in the art market would clearly help CMOs recoup the royalties due to artists and their heirs. Cost-effective online reporting procedures and systems that enable art professionals to easily upload their reports directly and artists to track the resale of their works will go a long way in helping to capture these data and support monitoring of market trends.
Accurate reporting of sales and effective enforcement of the artist’s resale right are major issues that require attention. “So many of the people making secondary and tertiary sales do not make returns or honest returns to the collecting society, and there is no way that we are allowed to go in to audit their books and we need to do so,” says Mark Stephens.
Mats Lindberg agrees. “We need a strong position to be able to collect remuneration. It is not only about the artist’s’ right to remuneration, it is also about respect for the right and the system.”
But compliance also hinges on building awareness about the resale right among artists and art market professionals, especially in countries with nascent CMOs or where the right does not yet exist.
At present, the artist’s resale right, where it exists, is payable to living artists and usually for up to 70 years after their death. It is an “inalienable” right, meaning that it belongs to artists and their heirs and cannot be sold or waived. But are there circumstances under which it makes sense for an artist to be able to transfer the right to a third party, such as an art foundation? Who is responsible for paying the resale royalty – the buyer or the seller? What is an appropriate royalty rate? And what should be the basis for its calculation – the sales price or the auction price? These and many other legal issues will undoubtedly occupy the minds of international policymakers in years to come. As will the question of how, in practical terms, to support the development of the institutions, systems and procedures that ensure the easy, efficient and cost-effective application and management of resale royalty schemes in emerging economies.
Momentum is building, but there still some way to go. As Mark Stephens puts it, “we still have a great distance to go and we need to use the momentum here and from everyone involved in the worldwide market to actually make it over the finish line.”
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