Apr 9, 2008

Strong Criticism of the Artist Resale Right in the UK (UPDATE)


There exist strong differences of opinion with respect to the question of whether the sale of contemporary art--such Damien Hirst's next "pickled shark", or For the love of God --should be subject to a royalty scheme which takes a piece of the sale price and gives it back to contemporary artists. For two years now, the UK has implemented such a royalty scheme, commonly known as "droite de suite".

A report by Toby Froschauer, sponsored by the Antiques Trade Gazette has strongly criticized the Artists' Resale Right (ARR). The report indicates the ARR has "caused serious problems since its introduction in the UK two years ago." The ARR pays royalties to artists on a sliding scale, and was dictated by an EU directive. Directive 2001/84/EC of the European Parliament was adopted in 2001. The ARR in the UK was implemented in the UK in February 2006 by SI 2006 No. 346.

Melanie Gerlis of the Art Newspaper explained the royalty scheme and Froschauers's findings:

The royalty, which is paid to artists on a sliding scale of up to 4% of their works resold above E1,000 ($1,500; and with a E12,500 threshold), was found to have benefited just 1,004 EU artists (of which 568 were British) in the first 18 months of implementation. The top 20 artists—including Damien Hirst, David Hockney, Peter Doig and Banksy—were found to have received 40% of the total amount collected (£3.8m; $7.6m) in the first 18 months since ARR’s introduction. The bottom 30% received payments of less than £100 ($200), the report said. In his foreword to the report, Antiques Trade Gazette editor Ivan Macquisten, said that the ARR “singularly fails to benefit the very people it was set up to help”.


The Design and Artists Copyright Society (Dacs) is responsible for distributing the royalty payments to artists. The art market in the UK has claimed that the ARR puts it at a disadvantage when compared with other art markets without these so-called droite de suite arrangements. Dacs has responded to this study by saying the interviews with dealers and auctioneers are "not an acceptable scientific methodology", and also that they are preparing data to send to the Antiques Trade Gazette.

A different survey by Maven Research, commissioned by Dacs last year found "87% of art market professionals say that the resale right has not damaged their business." That would seem to comport with another recent study conducted by Katy Graddy, Noah Horowitz and Stefan Szymanski, "A study into the effect on the UK art market of the introduction of the artist's resale right". The study, sponsored by the UK Intellectual Property Office found "there is no evidence that ARR has diverted business away from the UK, where the size of the art market has grown as fast, if not faster, than the art market in jurisdictions where ARR is not currently payable." It also found that there have been difficulties in establishing the nationalities of artists, and a "significant minority of art market professionals, including the major auction houses, deem the administration of ARR to be intrusive and burdensome".

As an aside, one wonders if more of these royalty schemes might be implemented in the future, and whether they will expand. It strikes me that such a royalty scheme for antiquities might be a potential model for reinvesting the proceeds of antiquities transactions into source nations; though given the controversy surrounding the program with respect to contemporary art, the likelihood of such a change may be remote.

UPDATE:

Jamie Grace, who has done some research of his own on this topic has forwarded me a letter he wrote to the Art Newspaper with respect to their article:

Dear Sir/Madam,

I am an associate lecturer at the University of Derby, and I myself am conducting research into the resale right as part of a PhD programme over the next three years. Firstly, I must highlight how simply expected Froschauer's findings are - the 2006 legislation is experiencing predictable teething problems. These are problems that need to be resolved, but a campaign for better understanding of the resale right itself might allow DACS and other organisations to better serve the interests of commercial artists.

Allow me to give one example:

Toby Froschauer has been attributed as reporting, by the ATG, that galleries are discouraged from promoting younger artists' work as a result of the resale right reducing their margins - and instead are relying more so on established artists, whose prestige allows those galleries to preserve more of their profit.

I believe this is an incorrect assumption on the part of Froschauer; or perhaps a misinterpretation of the legislation guiding the resale right by the galleries concerned.

The 2006 Regulations quite clearly state (Regulation 12(4)) that no royalty be paid by a gallery or other art market professional on an original work sold within three years of direct purchase from the creator his or herself; and where the later sale by the gallery etc. does not exceed 10,000 Euros.

Clearly this exemption leaves a great deal of scope for the promotion of the interests of younger, up-and-coming or lesser-known artists.

Kind regards,

Jamie Grace.
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