The call for Artist Resale Rights has never been louder.
Influential contemporary artists advocate for it. New companies are forming with the specific goal of making them a reality. So...
What's the holdup? Are royalties inevitable?
Let's create a working definition for the Artist Resale Rights. For brevity, I'll use the acronym ARR from here on.
The idea is simple, with a profound impact:
Artists should receive a percentage of the profit from the resale of their work.
What does this look like in practice? Here is an example:
An artist sells a painting to a collector for $100
The collector resells the painting sometime later to another collector for $300.
The artist receives a portion of the $200 profit the collector made. That portion, calculated as a percentage, is the ARR.
Where We've Been
The roots of the ARR, like many ideas in the art, trace back to France in the late 1800s.
War and poverty hit working artists hard, and an idea started circulating. Artists are starving. What can be done?
A painting by the Realist Jean-François Millet became the poster child for the ARR.
In 1865, industrialist Eugène Secrétan purchased The Angelus from Millet for 1,000 francs. Millet died in 1875, and his family established an estate. In 1889, Secrétan resold the work for 553,000 francs. (a tidy 55,200% return on investment)
The contrast between the resale price and the impoverished status of Millet's estate was too much to accept. The ARR became a mainstream idea and law in France by 1920.
Quiet decades followed. But the clarion calls for a widespread ARR crescendoed again in 1973 at a Sotheby's auction in New York City.
"I've been working my ass off just for you to make that profit!" Robert Rauschenberg barked at the mega collector and taxi mogul Robert Scull.
So what exactly was Rauschenberg's gripe with the taxi king of New York?
Robert Scull managed to amass an impressive treasure trove of contemporary art. Willem de Kooning, Barnett Newman, Mark Rothko, Franz Kline, and Robert Rauschenberg.
That evening, Scull sold 50 works that generated $2.2 million, equal to $14.5 million today. Rauschenberg accused Scull of being "unfaithful" and the auction house of greed.
The Millet movie found a public sequel. One US state had enough.
In 1977, California became the first state in the US to enact an ARR. The law entitled artists to receive a 5% royalty from the resale price of their work.
Yet, by 2011, a group of artists and estates grew restless. Chuck Close, Laddie John Dill, the Robert Graham estate, and the Sam Francis Foundation banded together.
The group sued Sotheby's, Christie's, and eBay for failing to pay the required royalties under California law.
The defense lawyers argued that the law was unconstitutional. The judge agreed and dismissed the case in 2012.
Still unhappy, the artists challenged the decision in the appeals court. A death blow came in 2018 when a judge declared the law invalid, stating the US would not recognize an ARR.
Since this ruling, no other states have enacted an ARR, likely due to the fear of similar legal challenges.
ARR proponents in the United States hit a dead end. But the policy was alive and well across the pond.
In 2001, the European Union pushed its members to establish an ARR. Under the proposal, artists would receive a royalty governed by a sliding scale. The royalty was based on the sales price and capped at €12,500 per work.
Over 80 countries have since adopted a more or less similar system. By estimates, hundreds of millions of dollars have gone to artists, estates, and heirs in the form of a royalty. The policy is undoubtedly successful to some degree.
Although Europe's law continues to chug along, the continent is no longer the epicenter of the art market. The United States sits as the biggest market, followed by China. Both of which do not have any form of an ARR.
Where We Are
We now arrive at today and the present status of the ARR debate. Proponents of the ARR point to two specific supporting arguments
Economic:
A 2013 report found that visual artists earn less than other creators. They do not enjoy the long-term financial success of their work in the secondary market. According to the report, financial rewards of sales skew in favor of collectors.
Proponents also argue that the appreciation of an artwork's value is due to the artist, not the collector. The artist produces new work, exhibits in galleries, and increases visibility. The collector may hold the work in storage.
Creative Equity:
Visual artists have very different rights to their creations than other art forms.
Filmmakers and musicians continue to benefit from their creations over time. Not the case for visual artists. Granting visual artists the same rights as other art forms creates a level playing field.
These are credible and compelling points. So again, what's the holdup?
For some, the ARR doesn't do what it promises.
The original motivation for the ARR was to address the "starving artist" problem. This term alludes to an artist with immense talent without a steady income to live a quality life. An ARR would help.
Some have looked at the effects of the ARR in practice and at which artists benefited.
It turns out the 1% did.
Most royalty payments went to the wealthiest artists or their wealthy estates.
A simple way to understand this dynamic is to think about volume and sales totals.
The EU policy only includes resales at auction houses. It does not include any private sales by galleries. Auction houses predominantly sell works by established, famous artists. Few of these artists may be young and alive, but many are old or have passed away.
Of the top 20 selling artists in the world in 2022, 17 are no longer alive. Of the three living, the youngest is 85. This group makes up ~$5 billion yearly across 8,000 total sales.
Younger artists are likely to be targets of speculative collectors looking to profit. Thus, on paper, good candidates to receive an ARR. This group gets some headline attention from the press and the auction houses. But this attention pales in comparison to the old superstars.
Further, the EU policy caps the ARR at €12,500 per work. Thus, younger artists receive a tiny portion of the overall ARR.
Take, for example, a 2020 work by popular contemporary artist Flora Yukhnovich, Warm, Wet N' Wild. The piece was resold at Sotheby's in London in 2022 for an artist record of $3.6m. The result is incredible and certainly made the original collector happy.
According to the EU ARR, Yukhnovich's royalty owed was €16,500, but due to the cap, that figure was reduced to €12,500. 0.35% of the record-breaking price.
To ARR skeptics, the EU framework signals the right messages to the broader working artist community. But in practice, it skews in favor of the blue-chip household names.
Artists like Flora Yukhnovich and others have great primary markets that offset paltry royalties.
What about the artists who do not have a robust primary or resale market? Does the ARR address them? One day it may. But statistically, that day will come when they need the money the least.
It is true that without an ARR, artists do not directly benefit from the resales of their work. But do they indirectly benefit? Opponents of an ARR say yes.
A strong auction result for a young, emerging artist creates demand. Thus, primary prices are likely to see an increase.
If artists' primary prices rise too fast, chasing auction results could lead to a boom and bust. Not good.
But a steady, controlled rise after strong auction results may lead to a favorable situation.
According to ARR opponents, new questions then arise.
Should artists encourage auction sales of their works?
Does an ARR disincentivize collectors from reselling? After all, the ARR comes out of the collector's profit. Do we want to have an extra tax on art sales?
What happens if the work decreases in value? Does the ARTIST owe the COLLECTOR a royalty?
Where We're Headed
Crafting a modern ARR framework in the US is an enormous effort.
It requires the following ingredients and more, all balancing in perfect harmony.
Total Buy In
All stakeholders in the art market must participate. From galleries, museums, art fairs, auction houses, and collectors, each has a role to play. Without total buy-in, resales and royalties will slip through the cracks.
Enforceable
The framework has to be standardized, legally sound, and airtight. The California ARR showed how tricky the US court system could be. Sliding scale percentages? Caps? Legal contracts? Only auctions, not galleries? Added complexity creates a more challenging environment to navigate. The more simple, the better.
Proportionate.
The framework has to benefit living, younger artists in a reasonable proportion to estates and the older guard. Maybe the modern ARR should redistribute royalties from the 1% artists to those without robust markets. But let's not get too greedy.
Perhaps the recent boom in contemporary art prices has completed the Millet Trilogy (Millet Strikes Back? Millet Revolutions? I guess the title is TBD). After all, we are seeing a fresh push for a modern ARR globally.
Will these attempts be successful? There's undoubtedly momentum.
Whoops. I left out what collector Robert Scull's response was to Robert Rauschenberg in that infamous 1973 exchange.
"I've been working my ass off just for you to make that profit!" Robert Rauschenberg said.
Robert Scull jovially but nervously responded, "How about the prices that you're going to sell now? "I've been working for you too. We work for each other".
Robert has a point.