Quiggin, Robynne --- "The Resale Royalty (Part One)" [2004] IndigLawB 50; (2004) 6(5) Indigenous Law Bulletin 7

The Resale Royalty - Part 1

by Robynne Quiggin

For the past two decades Australian Governments and the arts sector have considered the advantages and disadvantages of a resale royalty for visual artists in Australia. The resale royalty, or droite de suite, is a percentage of the sale price of an artistic work in the secondary art market paid to the artist.

Part of the rationale for the resale royalty is to insert an equitable mechanism into the situation where there is a glaring disparity between the first sale price of a work and subsequent sales. There are some well known examples of this acute disparity. In the 1950s, Robert Rauschenburg’s Thaw first sold for $800 and was later resold in the 1970s for $85,000.[1] While the Rauschenburg example may be at the extreme end of the scale, it illustrates the situation faced by some artists.

Parity of Artists’ Rights

Writers and composers receive royalties from the publication or performance of their work for the duration of the copyright. Visual artists, in contrast, generally receive one payment at the time of the first sale of their work. A resale royalty arrangement would create a system of returns to some artists whose works are sold in the secondary market.

The resale royalty also provides a form of recognition of the ongoing relationship between some artists and their creative works.

Financial Position of Artists

The most recent survey of artists, Don’t Give Up Your Day Job,[2] found that half the artists surveyed had incomes of less than $7,300, though the average was $17,000.

Overall, actors, writers and musicians fared best in terms of average total incomes ... [Among] visual artists and community cultural development workers ... the median creative incomes were only $3,100 and $3,400 respectively.

The resale royalty is not intended and should not be regarded as a cure for the financial predicaments of artists. Where this distinction is not observed, unreasonable expectations are applied to evaluations of resale royalty arrangements and the resale royalty is found to fall short. It is just one measure among many which could support Australia’s arts sector and recognise the enormous contribution made by it to the national economy. It would provide benefits to some artists, implement a right for which artists’ groups have been advocating for years and bring Australia’s laws into conformity with trends in the European Union (‘EU’).

International Obligations and Options

Article 14ter of The Berne Convention for the Protection of Literary and Artistic Works[3] requires that members of the Union[4] provide for the protection of a resale royalty for artists. But the protection is available only where national legislation for the right is implemented. The nature of the legislation is to be determined by the member country. Therefore, as with many international law obligations, domestic implementation is required.

Indigenous artists

Like all artists, Indigenous artists have an interest in benefiting from successive sales of their work and the Indigenous art market has its share of impressive leaps in sale prices between the first and subsequent sales. The disparity between the first and subsequent sales price is patently unreasonable when the artist remains in poverty and receives no benefit from the commercial success. In some cases this is due to unscrupulous actions of dealers who purchase works directly from artists for far less than their value, maximising profits when the work is on-sold.[5]

In other cases, the professional success of an artist is recognised in the rise in the value of the works. For instance, Tracey Moffatt’s photographic series, Something More, initially sold for between $1,000 and $2,500 in 1989[6] and was recently resold by Christie’s auction house for $225,000 - $227,000.[7]

The disparity between the first and subsequent sales is not the only rationale for a resale royalty for Indigenous artists. In supporting the introduction of the right, the Report of the Contemporary Visual Arts and Craft Inquiry[8] (the ‘Myer Report’) stated:

[T]he disadvantaged position of Indigenous visual arts and craft practitioners in the market, and the extensive financial and social obligations of Indigenous artists to the community arising from the communal ownership of cultural property and traditional imagery, has strengthened the call for the introduction of resale royalties in Australia as a tool for increasing the income of Indigenous artists. The resale of Water Dreaming at Kalipinypa by Indigenous artist Johnny Warangkula Tjupurrula for $486 500 in July 2000 – after its original purchase in the 1970s for $150 – has stimulated further debate.[9]

The nature of Indigenous art and the Indigenous art market give a particular strength to the case for a resale royalty arrangement. Indigenous art embodies so many forms of Indigenous culture; there are increasing numbers of acclaimed and emerging Indigenous artists; Indigenous art provides an important source of income and expression for Indigenous artists; and Indigenous artists make an exceptional financial and cultural contribution to the Australian art market.[10]

Driving the Resale Royalty back onto the Agenda

A number of recent events have refocused the Australian government spotlight onto the resale royalty. Firstly, Directive 2001/84/EC of the European Parliament and of the Council on the resale right for the benefit of the author of an original work of art[11] requires EU member states to harmonise their laws in relation to the resale royalty for artists.[12]

Secondly, the Myer Report

recommends the Commonwealth Government:

Thirdly, Australian Labor Party Senator Kate Lundy introduced a Bill into Federal Parliament in late 2003 which would amend the Copyright Act 1968 (Cth) and set up a resale royalty scheme for artists.[14]

The Bill proposes a royalty of five per cent of the total resale price paid by the seller to the artist,[15] the creator of the artistic work.[16] The proposed right to the resale royalty exists for the duration of copyright[17] in the artistic work and, for the purpose of the right, copyright may not be waived or transferred.[18] A minimum threshold sale price would be set by regulations.[19]

The royalty is to be paid by the seller to the secondary art market representative, generally an auction house, gallery or agent, who is responsible for payment of the royalty to a collecting society.[20] Failure to make the payment can be pursued as a debt recovery action in the Federal Court by the collecting society.[21]

The Attorney-General may make a declaration that a company limited by guarantee, which meets certain criteria, is the collecting society.[22] A declared collecting society would be required to keep accounting records which would be audited annually, to provide an annual report to the Attorney-General and to meet all requirements of incorporation.[23]

The Bill requires art market intermediaries to ‘retain information necessary to determine and calculate the amount of resale royalty’.[24] This must be available to the artist for a period of three years for the purposes of securing a resale royalty payment.[25] Records may be inspected by an authorised person.[26]

The Bill has been heavily criticised by the Minister for Communications, Information Technology and the Arts, and the Minister for Art and Sport on a number of grounds[27] including:

Most recently, the Department of Communications, Information Technology and the Arts released the ‘Proposed Resale Royalty Arrangement’ Discussion Paper.[28] The Paper compiles the research conducted by government since the Myer Report recommended the introduction of the royalty, and calls for responses. While the Discussion Paper canvasses practical options for the implementation of the royalty, it does not include any promise to implement a resale royalty, despite the Myer Report’s recommendations.

No matter who wins the next election, we can only hope that the momentum of the current dialogue will continue as either the passage of the Lundy Bill or as positive outcomes from the Discussion Paper. Hopefully the momentum and interest will not suffer the familiar fate of temporarily fading away, only to rise again requiring more discussion, more submissions and more resources in a notoriously resource-stretched area.

Robynne Quiggin is an Indigenous lawyer currently working as a Senior Researcher at Jumbunna Indigenous House of Learning, UTS.

This article is Part One of a two-part article looking at the options of a resale royalty arrangement in Australian law. Part Two will be published in the next edition and looks at how such an arrangement could be implemented in the art market.

[1] Ben W Bolch, William W Damon and C Elton Hinshaw, ‘Visual Artists’ Rights Act 1987: A Case of Misguided Legislation’ (1988) 8 Cato Journal 71, 72.

[2] David Throsby and Virginia Hollister, Don’t Give Up Your Day Job: An Economic Study of Professional Artists in Australia, Australia Council (2003) 45.

[3] The Berne Convention for the Protection of Literary and Artistic Works of 9 September 1886, Article 14ter.

[4] ‘The countries to which this Convention applies constitute a Union for the protection of the rights of authors in their literary and artistic works’. Ibid Article 1.

[5] Specialists such as former Director of the Aboriginal and Torres Strait Islander Arts Board of the Australia Council commented that unscrupulous conduct is increasing. Gabrielle Coslovich, ‘Aboriginal Works and Artful Dodgers’, The Age (Melbourne), 20 September 2003, 3.

[6] Reports on the original sale price differ.

[7] ‘Modern Art Auction Smashes Records’, Australian Associated Press (Victoria), 27 June 2002, reported a resale in 2002 at $226,575. In August 2004, Christies resold the series for $227,050 - Australian Art Sales Digest (2003) <http://www.aasd.com.au/NewHighsCurrent_By_AH.cfm> at 26 September 2004.

[8] Commonwealth (DCITA), Report of the Contemporary Visual Arts and Craft Inquiry (2002), (‘Myer’).

[9] Ibid, 158.

[10] The Myer Report stated: ‘It is estimated that the Indigenous visual arts and craft industry has a turnover of approximately $200 million per annum.’ Ibid 151.

[11] Directive 2001/84/EC of the European Parliament and of the Council on the resale right for the benefit of the author of an original work of art [2001] OJ L 272/32.

[12] Article 1, ibid 3.

[13] Myer above n9, Recommendation 5, 14.

[14] Resale Royalty Bill 2004 (Cth).

[15] Resale Royalty Bill 2004 (Cth) s 253(2).

[16] Resale Royalty Bill 2004 (Cth) s 250.

[17] Resale Royalty Bill 2004 (Cth) s 252(1).

[18] Resale Royalty Bill 2004 (Cth) s 252(2).

[19] Resale Royalty Bill 2004 (Cth) s 253(3)(b).

[20] The secondary art market representative is called an ‘art market intermediary’ defined in s 250 of the Resale Royalty Bill 2004 (Cth) as ‘an auction house, online auction, private gallery, agent or other art market professional who acts on behalf of the seller of an artistic work.’

[21] Resale Royalty Bill 2004 (Cth) s 254(2)(3).

[22] Resale Royalty Bill 2004 (Cth) s 255.

[23] Resale Royalty Bill 2004 (Cth) s 257.

[24] Resale Royalty Bill 2004 (Cth) s 259.

[25] Resale Royalty Bill 2004 (Cth) s 260.

[26] Resale Royalty Bill 2004 (Cth) ss 261, 262.

[27] The Hon Daryl Williams MP and Senator The Hon Rod Kemp, ‘Lundy’s Headlong Rush to Nowhere’ (News Release, 7 September 2004).

[28] Commonwealth, ‘Proposed Resale Royalty Arrangement’, Discussion Paper, Department of Communication, Information Technology and the Arts, 2004.