4.2 Resale Royalty Rights
3 min read•august 9, 2024
Resale royalty rights aim to give artists a cut of the profits when their work is resold. This idea started in and spread across Europe, with the EU setting standard rules. It's meant to help artists benefit from the increasing value of their art over time.
The US tried something similar with California's Resale Royalty Act, but it didn't stick. Now, there's ongoing debate about whether these rights help or hurt the art market. Some say it's fair to artists, while others worry it might make selling art more complicated.
Resale Royalty Legislation
Origins and European Implementation
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- originated in France in 1920 to protect visual artists' economic interests
- Allows artists to receive a percentage of the profit from resales of their work
- European Union adopted resale right directive in 2001, implemented by all member states by 2006
- Harmonized resale royalty rights across EU countries, creating uniform standards
- Applies to sales of artworks by living artists and for 70 years after their death
California Resale Royalty Act
- Enacted in 1976 as first resale royalty law in the United States
- Required 5% royalty payment to artists for qualifying resales of their work
- Applied to sales of $1,000 or more when the seller resided in California
- Faced legal challenges, ultimately ruled unconstitutional in 2018
- Highlighted ongoing debate about artist compensation in secondary art market
European Union Resale Right Framework
- Standardized resale royalty rights across EU member states
- Applies to sales by art market professionals (galleries, auction houses, dealers)
- Covers original works of graphic or plastic art (paintings, sculptures, prints)
- Sets sliding scale for royalty rates, ranging from 0.25% to 4% of sale price
- Caps maximum royalty at €12,500 per sale to balance artist and market interests
Royalty Calculations
Secondary Market Sales Criteria
- Applies to resales after the first transfer of ownership by the artist
- Typically excludes private sales between individuals
- Covers sales conducted by art market professionals or institutions
- May include online sales platforms specializing in art transactions
- Often sets minimum sale price thresholds to trigger royalty payments
Percentage and Price Considerations
- Royalty rates vary by country and sale price
- EU directive establishes sliding scale:
- 4% for portion of sale price up to €50,000
- 3% for portion between €50,000 and €200,000
- 1% for portion between €200,000 and €350,000
- 0.5% for portion between €350,000 and €500,000
- 0.25% for portion exceeding €500,000
- Some countries set fixed percentages (: 5% flat rate)
- Calculation based on hammer price or total price paid by buyer, including fees
Qualifying Artworks and Exceptions
- Covers original works of visual art (paintings, sculptures, photographs)
- May include limited edition prints, cast sculptures, or tapestries
- Often excludes works of applied art or functional design objects
- Some jurisdictions set time limits (works created after a certain date)
- Exceptions may exist for sales below certain price thresholds
- Special provisions for works by multiple artists or collaborative pieces
Artist Rights and Challenges
Lifetime and Posthumous Rights Management
- Artists retain resale rights during their lifetime in most jurisdictions
- Rights often extend to heirs or estates for a set period after artist's death
- EU directive specifies 70-year posthumous term, aligning with copyright duration
- Artists may need to register with collecting societies to receive royalties
- Some countries allow artists to waive or transfer their resale rights
- Challenges in tracking and claiming royalties for lesser-known artists
Enforcement and Implementation Hurdles
- Difficulty in monitoring all qualifying sales, especially in private market
- Varying levels of and reporting among art market professionals
- Cross-border sales complicate royalty collection and distribution
- Administrative costs of collecting and distributing small royalty amounts
- Resistance from some market participants citing increased transaction costs
- Debate over economic impact on art market and potential for market relocation
- Challenges in verifying authenticity and provenance for royalty claims
Key Terms to Review (16)
Artist's resale right: The artist's resale right is a legal provision that grants artists the right to receive a percentage of the sale price whenever their artwork is resold. This right ensures that artists benefit financially from the increasing value of their work over time, acknowledging their ongoing contribution to the art market. It is an important mechanism for supporting artists economically, particularly in a system where they often rely on initial sales for income.
Artists' rights society: An artists' rights society is an organization that advocates for and manages the rights of visual artists, particularly concerning the resale royalty rights they may have over their artwork. These societies aim to protect artists' financial interests by ensuring they receive a percentage of the sale price when their works are resold in secondary markets. By facilitating the collection and distribution of these royalties, artists' rights societies play a crucial role in enhancing the economic wellbeing of artists and recognizing their ongoing connection to their work.
Australia: Australia is a country and continent located in the southern hemisphere, known for its unique cultural heritage and diverse landscape. In the context of resale royalty rights, Australia plays a significant role as it was one of the first countries to formally introduce a legal framework that ensures artists receive a percentage of the sale price when their artworks are resold. This system recognizes the ongoing economic contribution of artists in the art market, aiming to promote fairness and support their livelihoods.
California Resale Royalty Act: The California Resale Royalty Act is a law that entitles artists to receive a percentage of the sale price when their artworks are resold. This act aims to support artists financially by ensuring they benefit from the appreciation of their works in the resale market, which often does not involve the original creator.
Compliance: Compliance refers to the act of adhering to established rules, regulations, and ethical standards within a particular field. In the context of art, it is essential for maintaining trust and integrity between art dealers, artists, and buyers. Following compliance ensures that transactions are conducted fairly, protecting the rights of creators and consumers alike.
Droit de suite: Droit de suite, or 'right of follow-up,' is a legal concept that allows artists to receive a percentage of the resale price of their artwork each time it is sold. This right ensures that artists benefit from the appreciation in value of their work over time, connecting them directly to the market success of their creations. By granting artists a stake in subsequent sales, this concept addresses issues of fairness and equity within the art world, as it supports the financial interests of creators amidst the often-lucrative art market.
Economic Rights: Economic rights refer to the legal rights that enable creators to control the use of their works and receive financial benefits from them. These rights are essential for artists and authors, as they ensure that creators can monetize their creations and protect their interests in a competitive marketplace. Economic rights are closely related to issues surrounding copyright, public access to works, and the balance between protection and the encouragement of creativity.
EU Directive on the Artist's Resale Right: The EU Directive on the Artist's Resale Right establishes a legal framework that entitles visual artists to receive a royalty payment each time their artwork is resold. This right aims to provide financial compensation to artists, reflecting the increasing value of their work in the secondary market. By ensuring that artists benefit from the resale of their creations, the directive promotes fairness and supports the livelihoods of creators.
France: France is a country in Western Europe known for its rich cultural heritage and historical significance, particularly in the realm of art and intellectual movements. It plays a pivotal role in the concept of resale royalty rights, which ensure that artists receive compensation for the subsequent sales of their works, thus recognizing their ongoing contribution to the art market.
International Confederation of Societies of Authors and Composers: The International Confederation of Societies of Authors and Composers (CISAC) is a global organization that represents authors and composers, aiming to protect their rights and promote their interests in the creative industries. CISAC works to ensure that creators receive fair remuneration for the use of their works, particularly in the context of licensing and collective management. This organization plays a crucial role in advocating for resale royalty rights, which allow artists to earn a percentage from the resale of their artworks.
Licensing Agreements: Licensing agreements are legal contracts that allow one party to use the intellectual property of another party under specific conditions. These agreements are crucial in the art world as they dictate how artists and their works can be utilized, including reproduction, distribution, and public display, all of which can raise ethical considerations, influence artist rights in digital spaces, and affect resale royalty rights.
Marlene Dumas Case: The Marlene Dumas case refers to a significant legal dispute involving the artist Marlene Dumas, primarily focusing on issues of authorship and resale royalty rights. This case highlights the complexities artists face regarding their rights in the resale market, especially concerning how their work is valued and the compensation they receive from subsequent sales. It underscores the importance of establishing clear resale royalty rights, which aim to ensure that artists benefit financially from the increasing value of their artworks over time.
Moral Rights: Moral rights are the personal rights of an artist to protect their personal and reputational interests in their works. These rights allow artists to claim authorship, object to derogatory treatment of their work, and control how their creations are used, ensuring that their integrity and legacy remain intact.
Percentage of sale price: The percentage of sale price refers to a specific portion of the final selling price of an artwork that is allocated to the original artist as a royalty upon its resale. This concept is integral to resale royalty rights, which ensure that artists receive financial compensation when their work is resold, reflecting the increasing value of their creations over time. This practice highlights the ongoing relationship between artists and their works, supporting their financial stability even after the initial sale.
Stefan Simchowitz Case: The Stefan Simchowitz case revolves around a high-profile legal dispute that highlights issues of resale royalty rights, particularly regarding the art market. This case has garnered attention due to its implications for artists' rights, especially their ability to benefit financially from subsequent sales of their work. The outcome of this case could set important precedents that influence how resale royalty rights are enforced and understood in various jurisdictions.
Threshold sale price: The threshold sale price refers to the minimum price point at which a seller must sell a work of art in order for the resale royalty right to apply. This concept is important because it sets the benchmark that determines whether an artist receives a royalty payment when their artwork is resold. It ensures that artists are compensated fairly and helps to maintain the economic value of their works in the secondary market.