Quiggin, Robynne --- "The Resale Royalty: An Overview" [2006] IndigLawB 19; (2006) 6(18) Indigenous Law Bulletin 9
The Resale Royalty: An Overview
by Robynne Quiggin
Introduction
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 sold in the secondary art market which is paid to the artist.
Support for a resale royalty in Australia does not extend uniformly across the arts sector. While artists generally support a resale royalty, some parts of the art dealer sector are strongly opposed. Both advocates and opponents of the introduction of a resale royalty arrangement frame their arguments in terms of the best interest of the artist and the art market. The contentious policy issues straddle a mix of economics, business and philosophy.
Arguments for a Resale Royalty Scheme
Like all artists, Indigenous artists have an interest in benefiting from rising prices of the subsequent sales of their works. The Indigenous art market has its share of impressive leaps in sale prices between the first and subsequent sales. In general, artists are some of the lowest paid workers in Australia[1], and yet they receive no direct financial benefit from the increasing sales price of their works in the secondary market.
Ensuring that Artists Benefit from their Successes
For some artists there is a strong disparity between the prices paid to them at the first sale of the work, and the prices paid among collectors and dealers in subsequent sales. This is reportedly due in some cases 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.[2]
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[3] and was resold in 2004 by Christie’s auction house for over $227,000.[4]
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[5] (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.[6]
The nature of Indigenous art and the Indigenous art market itself gives 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.[7]
Proponents say that resale royalty is also one form of recognition of the ongoing relationship of artists to their artwork. For Indigenous artists, an important feature of this relationship can include the role of visual art in the expression and transmission of Indigenous culture.
Arguments Against a Resale Royalty Scheme
No Panacea to Financial Disadvantage
This argument misunderstands the purpose of a resale royalty. Resale royalty is not premised on uniform returns to artists, like a wage or other payment. It is premised on returns to artists for commercial success in the marketplace.
If a resale royalty is expected to remedy or uniformly ameliorate the financial disadvantage suffered by artists, it is destined to be considered a failure, at least in the short term. The purpose of a resale royalty is not to uniformly cure visual artists’ financial disadvantage. It is one measure, among many, to financially support Australia’s visual arts sector, recognise its enormous contribution to the national economy and bring Australian laws into conformity with trends in the European Union (‘EU’).
The resale royalty is often criticised for providing a benefit to few artists, generally those who are successful and financially secure as a result of their success. The expression ‘dead white males’ is used describe the main beneficiaries. But clearly, artists like Tracey Moffatt and Julie Dowling do not fit this description.
On the other hand, many highly successful Indigenous artists and their heirs are not wealthy for a number of reasons.[8] It seems unreasonable to expect financially disadvantaged, but professionally successful, artists to forgo a share in any increase in the sale price of their works.
Damage to the Art Market?
One argument made against the resale royalty is that it will damage the Australian art market because the imposition of an additional cost will deter purchasers. Further, some opponents argue that ‘artists who do not have a resale market, will suffer since purchasers will nevertheless pay less in the primary market, factoring in a possible future royalty.’[9]
Arts advocacy organisations note, however, that the introduction of the buyer’s premium by auction houses has had no identifiable detrimental impact on the art market. The buyer’s premium is a charge of between 10 and 20 per cent[10] levied on the final bid price by auction houses. Goods & Services Tax (‘GST’) may also be payable on the sale price, including the buyer’s premium.
Non-Legislative Models
An alternative proposal advocated by the Art Trade Association in its 2004 submission to the Department of Communications Information Technology and the Arts,[11] is that an amount be paid to ‘a communal fund dedicated to the support of targeted programs in the areas of health, education, community development, and crisis management.’[12] An example of this model is an arrangement brokered by Art Trade whereby the Lawson Menzies and Deutscher Menzies auction houses voluntarily pay two per cent of the resale price into the Aboriginal Benefits Foundation, a company limited by guarantee and run by trustees. The trustees use the initial resources to support ‘organisations and projects that are cost effective and demonstrably beneficial programs in the field of Indigenous health, education and community welfare.’[13]
These arrangements are however, based on voluntary payments by buyers, which are then administered by a trust fund, rather than by the artists themselves. Other advocates of the royalty envisage an arrangement in which the establishment of trusts and other collective arrangements are an option to be exercised at the artist’s discretion. The resale royalty is conceived as a mechanism to provide immediate benefits for some artists, but with the seeds of potential to achieve long term benefits for greater numbers.
How Would a Resale Royalty Scheme be Administered?
Complex administration has been another major objection to the royalty. Increasingly, however, administrative costs are driven down by technology. Transactions already require vendors and purchasers to calculate amounts including buyer’s premium, GST, Capital Gains Tax (‘CGT’) and currency exchange rates. Calculation and distribution of royalties for musical and literary works is currently conducted by industry collecting societies. The Australian collecting society, Viscopy is well placed to undertake this role for artists.
Conclusion
Despite opposition, it is clear that the resale royalty is a right which artists in Australia seek, overwhelmingly, to have implemented. They are joined in this campaign by sections of the secondary art market and others. The EU’s directive to harmonise laws in favour of the resale royalty is a firm endorsement of the importance of the right.
The resale royalty ought not be seen as the panacea to the economic difficulties of Indigenous and non-Indigenous artists, but as one of a suite of measures, derived from the right of visual artists to benefit from commercial success, the right of visual artists to benefits from dealings with their work, the right of artists to recognition of their ongoing relationship to their work, and to share in the benefits arising from reciprocal arrangements in other jurisdictions.
Robynne Quiggin is an Indigenous lawyer currently working for Vincent-Quiggin Consulting.
[1] David Throsby and Virginia Hollister, ‘Don’t Give Up Your Day Job: An Economic Study of Professional Artists in Australia’, Australia Council (2003).
[2] Gabrielle Coslovich, ‘Aboriginal Works and Artful Dodgers’, The Age (Melbourne), 20 September 2003, 3; Nicholas Rothwell, ‘Scams in the Desert’, The Australian (Sydney), 4 March 2006.
[3] Reports on the original sale price differ.
[4] Geoff Maslen, ‘Records for Some, But...’, Sydney Morning Herald (Sydney), 27 August 2004.
[5] Commonwealth (Department of Communications Information Technology and the Arts (‘DCITA’)), Report of the Contemporary Visual Arts and Craft Inquiry (2002), (‘Myer’).
[6] Ibid 158.
[7] 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.
[8] Exclusions from the labour market by racism, removal from the land base, unpaid wages child endowment, workers’ compensation and deceased states have slowed accumulation of wealth by Indigenous people. See Professor Marcia Langton, ‘A New Deal? Indigenous Development and the Politics of Recovery?’ (Speech delivered at the Dr Charles Perkins Memorial Oration, Sydney, 4 October 2002) <http://www.koori.usyd.edu.au/news/langton.pdf> at 3 May 2006.
[9] Bernhard Berger, Why Resale Rights for Artists are a Bad Idea (2001) Harvard Law School <http://www.law.harvard.edu/faculty/martin/art_law/why_resale_rights_for_artists.htm> at 3 May 2006.
[10] Australian Art Sales Digest, Prices Shown <http://www.aasd.com.au/using07.cfm> at 3 May 2006 and Deutscher-Menzies, Buying at our Auction <http://www.deutschermenzies.com.au/page/buying_at_our_auction.html> at 3 May 2006.
[11] Adrian Newstead, ‘Submission on the Proposed Introduction of a Resale Royalty in Australia with Particular Reference to Indigenous Artists and their Communities’, (Submission to DCITA, Australian Indigenous Art Trade Association, 2004).
[12] Ibid 7.
[13] Ibid 12. See also Newsteas, above n 11, 31.