Australia Moves Forward With (Weakened) System To Have Artists Paid Multiple Times For Same Artwork

from the down-under-confusion dept

Thu, Dec 3rd 2009 2:55am — Mike Masnick

There are a few countries out there that have "artist resale rights," which make little sense and do a lot more to harm artists than help them. Earlier this year, we wrote about plans for Australia to implement such a right and Michael Scott alerts us to the news that a watered down version of the plan is moving forward. If you're unfamiliar with it, the concept is that even after an artist has sold a piece of artwork, such as a painting, if the owners later decide to sell it, they must give back a percentage of the sale price to the original artist. The (faulty) thinking on this is that poor, starving artists sell their paintings or sculptures or whatever for next to nothing, and it's only later, when they're famous, that they're actually worth anything -- but the artist will never get a cut of that value.

Of course, that's not true. In reality, if those earlier works are so valuable, so are many newer works as well -- which the artist can create and sell for much more than ever before. Meanwhile, the problem with an artist resale right is it actually decreases the incentive for anyone to buy the original artwork, knowing that they'll have to sell it for that much more before they can actually make a profit -- since they'll have to kick back fees to the artists. It adds an unnecessary tax that acts as friction in the art market. The Australian plan tries to limit at least some of this issue by only having the resale tax kick in after the second resale. But, of course, this just moves the unnecessary friction up a level, and doesn't change the thought process that goes into the buying decision. With any other product, once you sell it, you've sold it. It makes no sense to allow the original creator to retain a cut of any later sale. Imagine if that were the case with cars or houses as well? Who would ever think that was reasonable?

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Filed Under: artists, australia, copyright, resale rights

48 Comments

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Anonymous Coward, 3 Dec 2009 @ 3:17am

It applies to all works by living artists and up to 70 years after their deaths, so long as they are sold commercially and for more than $1,000.

Then they won't be sold commercially. Problem solved!

What if the work in question turns out to be a forgery? Does the artist have to give the money back? Or just 5% of it? What if a serial killer sells your art? Is the artist going to be required to accept money from a serial killer? That's rude.
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John Duncan Yoyo (profile), 3 Dec 2009 @ 3:40am

Simple effect of the law
So the main effect of this law is that all effected art sales will happen outside of Australia.
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Anonymous Coward, 3 Dec 2009 @ 5:12am

So what if like, you know, you just GIVE the artwork to somebody for like, free, and then, like, kinda, sometime afterwards they like, oooh I don't know, decide to give you some money, just to, you know, return the kindness. That's not the same as, like, selling it, is it, so you wouldn't have to like pay anything back then, would you, like?
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rw (profile), 3 Dec 2009 @ 5:21am

Simple, just destroy it when you're sick of it, then there is no other resale.
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Ima Fish (profile), 3 Dec 2009 @ 5:33am

Who in the frick will keep track of all these transactions?!

I'm imagining yet another collection society which will collect transaction fees for each resale. Of course the soceity will keep a portion for itself, to cover costs and salaries, right?

A mandatory system will need to be setup for the reselling of art pieces. It will be a felony for any Australian to sell or buy art outside the system.

Small time artist will not be paid out what is collected by the society. They will be told that in order to collect they must become famous artists first. Defeating the entire purpose of the law in the first place.

And of course it will be only a matter of time before schools, hotels, and individuals will be sued for displaying art without paying the collection society. Police powers will have to be given to the society so it can send agents into homes and businesses to ensure compliance. A telephone hotline will be set up so that employees can rat out their bosses for hanging art without an approved society license.
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Anonymous Coward, 3 Dec 2009 @ 5:37am

I'd support this only if the artist agrees to reimburse me if his work goes down in value.
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Ima Fish (profile), 3 Dec 2009 @ 5:48am

Re:
I realize you said that as a joke. But let's imagine you do buy a painting for $1,000 bucks. You're able to find someone to buy it for $500. He decides to sell it for $200. Exactly why in the frick should the artist get a percentage of that sale, when the seller lost $300 bucks on the deal?
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ScaredOfTheMan, 3 Dec 2009 @ 6:06am

Sounds like
Sounds like all future art produced in Australia will come with a EULA.

Way to go Australia
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Anonymous Coward, 3 Dec 2009 @ 6:06am

Tracking the transactions isn't that much of a problem, since the documentation that is required to prove the authenticity of the artworks (and their chain of custody) is already such an ingrained part of the art market.

However, there's an emerging trend in European countries that have had these droit de suite laws for a really long time to pass the cost on to the buyers, when it's supposed to be paid out by the seller. This is, of course, not even slightly surprising.

There are a couple more really interesting issues it brings up, too. The first is that it assumes the entirety of the art market involves a fairly small number of artists who will or have "made it" and the small number of very wealthy collectors who support them. Within a system like that, the process is a matter of peanuts and is likely to just be accepted. It's the overwhelmingly huge amount or art being made and sold outside that system where it really gets to be a problem, but the high dollar market participants assume that since the market outside of their own is beneath their notice, it doesn't exist.

The other major problem is it creates the very same resting-on-laurels issue that we see in other creative/inventive markets. Frankly, early work (of the type that probably gets sold cheaply) is just not usually as good as more mature work. Those who keep producing are going to be able to make money just fine on the first sale as their work improves and increases in popularity.
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Ima Fish (profile), 3 Dec 2009 @ 6:17am

Re:
"Tracking the transactions isn't that much of a problem, since the documentation that is required to prove the authenticity of the artworks (and their chain of custody) is already such an ingrained part of the art market."

Very interesting. But that ignores the fact that there is a huge black market for art.
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Jeff, 3 Dec 2009 @ 6:18am

Obfuscation
I personally don't think this is about art but weakening the right of first sale...

If you looked deeper, I wonder if this is supported by the **AAs?

Just a thought.
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Chronno S. Trigger (profile), 3 Dec 2009 @ 6:22am

Here's a question
Would this work for recreations? Photos of the art are created by someone, do they get extra money if their work is resold? Do the original artists get some of that money?
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Dex Terious, 3 Dec 2009 @ 6:24am

A giant brain-fart from down under! The EULA comment hits it smack on the head. What happens when the artwork is say sold in Australia, and then resold in say Canada. Is the Canadian obligated to abide by Australian law and pay up. That should be fun.
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Anonymous Coward, 3 Dec 2009 @ 6:28am

I wonder who will be deciding what is and isn't considered art ...
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ChurchHatesTucker (profile), 3 Dec 2009 @ 6:39am

Re:
"I wonder who will be deciding what is and isn't considered art ..."

That's not a designer dress, it's fiber art! That's not a brick patio, it's an installation!
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Calvin (profile), 3 Dec 2009 @ 6:43am

Architects as artists
So I'm an architect and design a custom houses, can I call them art and have a cut of all future sales please.
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Kazi, 3 Dec 2009 @ 7:24am

Re: Re:
I think the artist should compensate one for the loss. If I buy it for 1,000 and sell it for 500 the artist owes me 500. Simple.

Wait, it's a 1-way street.
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Kazi, 3 Dec 2009 @ 7:27am

Re: Architects as artists
What if I buy just the land? Does one charge the artist for demolishing the "art"?
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Anonymous Coward, 3 Dec 2009 @ 7:48am

Who would ever think that was reasonable?

Several sovereign governments, including one near and dear to your heart. See:

California Resale Royalty Act, California Civil Code Sections 986 - 988.
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fogbugzd (profile), 3 Dec 2009 @ 7:49am

Screw the kids, I want my money NOW!
This is only going to reduce the original sale price of artwork. On the other hand, the kids of the artist, and probably the grandkids will enjoy the long tail (and no doubt lobby for extending the 70 year limit).

In the past I have talked the issue over with the two commercial artists that I know. Both would rather have the money now. One of them told me "If my kids want to make money off of art, they should learn to paint."
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ChurchHatesTucker (profile), 3 Dec 2009 @ 7:53am

Re:
"See: California Resale Royalty Act, California Civil Code Sections 986 - 988."

Notice all the important auctions take place in NYC.
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Call me Al, 3 Dec 2009 @ 7:57am

And in one stroke they will have majorly devalued the art produced in Australia. A lot of art is bought for investment purposes these days and people won't pay as much money for a piece of art if their resale profit will decrease.
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Anonymous Coward, 3 Dec 2009 @ 8:07am

Re: Re:
The point is not about the fact there are limitations in the California act that are needed to avoid federal issues under the US Constitution, but that California has embraced in its civil code a concept that finds its origins in European law, a concept that has not gained traction before the federal judiciary and the Congress.
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Jesse, 3 Dec 2009 @ 8:23am

That is the case with cars here in BC, and I believe houses as well. You have to pay sales tax every time you resell the good. Makes a whole lot of sense, given that the tax has already been paid the first time.
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Anonymous Coward, 3 Dec 2009 @ 8:41am

In the end, it is only moving the sale of art from a complete sale to a conditional sale.
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bikey, 3 Dec 2009 @ 10:30am

artist resale right
You're wrong on this one. First of all, it is not a percentage of the sale price, it's a percentage of the rise in value. Bureaucratically it's easy - all the transactions are recorded on the back of the work itself. This has worked in Europe for many years without any problem (and sales continue to take place in those countries that include these provisions). This benefits artists who had to sell early in their careers at a very low price. What makes anyone think that the vultures and parasites who keep turning over works of art for increasingly ridiculous prices should make money off someone else's work, especially where that author of the work may well be left with nothing. The only answer is the famous American saying: it's not about the money, it's about ALL the money. Artists often have no benefits, no pensions, no health insurance, nothing. This is one of the most mean-spirited debates I've seen on this website.
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thornintheside, 3 Dec 2009 @ 12:25pm

very easy to get around the law
You have a painting you want to sell for $100,000. Instead of selling it for this price, sell it to them for $1, along with $99,999 fee for the shrink wrap you put around it.

Or simply take the art, transform it by adding a brush stroke, and claim it as new art. this is no different than artists taking garbage and transforming it into art. You can then sell the piece as original art, and the original artist has no claim to resale.

Finally, don't sell your artwork commercially. This will lead to new enterprises selling art offshore from Australia.

One last thought - just destroy the artwork in an accidental fire and claim back the insurance value. You get all the money, the artist gets $0.
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Chargone (profile), 3 Dec 2009 @ 12:54pm

Re:
Sales taxes are a slightly different thing, i would expect.

They're a consumer tax, going to the appropriate level of government for the situation, and a dodge to avoid raising/implementing income taxes while achieving approximately the same effect, though admittedly allowing one to make exemptions and variable rates based on different factors. [plus a lot more paperwork for all concerned except said consumer, but never mind].

That's the case here, anyway. Might be different where you are.

While it may achieve the same net effect on the market, the logic, at least, makes a heck of a lot more sense.
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Chargone (profile), 3 Dec 2009 @ 12:55pm

Re: very easy to get around the law
clever, though that last one might get you done for insurance fraud if the 'accident' isn't sufficiently accidental.
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nasch (profile), 3 Dec 2009 @ 2:24pm

Re: very easy to get around the law
Maybe you could give the customer a million year lease for $100K. No sale, so no cut back to the artist.
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Fentex, 3 Dec 2009 @ 3:44pm

Our last P.M suggested this for NZ as well
Helen Clarke, a past Prime Minister of New Zealand and admirer of the arts proposed such a thing in NZ once too.

She was obviously trying to be nice to he artist freinds but the idea sunk pretty quickly when it became standard to refure the suggestion with the question of why not apply the logic to houses?

Shouldn't builders and architects, their reputation improved by their ongoing work, also receive a portion of home sales with increasing value?

Which obviously every person with a mortgage could see was preposterous - they weren't going to work so hard to buy a property only to find themselves legally indebted to people they had paid an already agreed price.

And the succesful tying of that understanding to the idea of applying the logic to art destroyed the argument.

It didn't help that Clarke was exposed as defrauding someone by signing her name to a painting sold at auction she did not paint.
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Mike Masnick (profile), 3 Dec 2009 @ 6:00pm

Re: artist resale right
You're wrong on this one.

How so?

First of all, it is not a percentage of the sale price, it's a percentage of the rise in value.

Don't quite see how that makes a difference. It still acts as a tax that decreases incentive to sell and harms artists.

Bureaucratically it's easy - all the transactions are recorded on the back of the work itself.

This works for sculptures too?

This has worked in Europe for many years without any problem (and sales continue to take place in those countries that include these provisions).

Yes, but at the expense of up and coming artists. No one said it gets rid of the overall market, but it does harm those at the bottom.

This benefits artists who had to sell early in their careers at a very low price.

No, it doesn't. It makes it HARDER for them to sell their products. Do you not understand how increasing the cost of resale decreases the incentive to buy in the first place?

What makes anyone think that the vultures and parasites who keep turning over works of art for increasingly ridiculous prices should make money off someone else's work, especially where that author of the work may well be left with nothing.

They're the ones who invested in the artwork in the first place. Do they not have the right to benefit from making that bet?

What if the artwork *loses* value? Should the artist pay up then too? How do you support one without supporting the other?

Artists often have no benefits, no pensions, no health insurance, nothing.

What does that have to do with anything?

This is one of the most mean-spirited debates I've seen on this website.

Wait, by making a basic economic point about how this clearly HARMS up and coming artists, it's "mean spirited"? Wow.
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Lawrence D'Oliveiro, 3 Dec 2009 @ 8:33pm

Re: artist resale right
bikey wrote:

... it is not a percentage of the sale price, it's a percentage of the rise in value.

So what about a fall in value? Does the artist compensate the seller for the loss, in the same proportion as they would benefit from any profit?

If not, why not?
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bikey, 4 Dec 2009 @ 1:57am

Re: Re: artist resale right
Hi Mike and thanks for your response. Look, to say no one will buy if the price goes up is crazy. People buy art because they think the price will go up further. Just check out the art market - collectors and speculators do not buy things because of their rock bottom price, most do not have the courage. They want to get in on the climb and they take risks. Yes, this the practice of indicating the sale history of the item is on the bottom of sculpture works as well. What's the problem with that. To compare this with the record industry, etc. is really off the mark. There is one work, whose value goes up and up because of speculators - why are they privileged over the artist, without whom these guys would have to do honest work. I don't understand the perspective of penalizing the most creative, rewarding the speculators far beyond their their dreams. Re artists with 'no benefits', this provides a basic income for artists. We're talking her about a very small percentage of the rise in value, often under 5% (though I don't know the Australian figures). To say it will kill the art market because no one will buy, well, in Europe where it is the law, the art market has not suffered one iota. And re 'it's still a tax', well tax isn't a bad thing. If California (my birthplace, alas sweet land, what have they done to you) had not passed its Prop 13, limiting 'tax' at the expense of the humans, it would not be in the sorry state it is today. I just have to rest my case here. I didn't think greed would reach your shores, but it seems I was wrong.
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bikey, 4 Dec 2009 @ 2:34am

Re: Re: artist resale right
Further to my earlier response (not yet printed - I am in far time zone), case in point: http://www.bloomberg.com/apps/news?pid=20601088&sid=aWWwa_gv3_bA
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Gene Cavanaugh, 4 Dec 2009 @ 11:50am

Artist resale rights
Also, the tendency would be to donate the work when the resale provision would kick in, since the value can be more easily concealed (it would show up only on a tax return, and that would normally not be public).
Eventually, the word would get out; "that artist's stuff is being given away - who wants it?"
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Mike Masnick (profile), 4 Dec 2009 @ 1:25pm

Re: Re: Re: artist resale right
Look, to say no one will buy if the price goes up is crazy

I didn't say no one will buy. I said it decreases how much will be bought, and how much will be paid for it. That's incontrovertable. You are decreasing the net expected value of a purchase, and that decreases what anyone would pay.

People buy art because they think the price will go up further. Just check out the art market - collectors and speculators do not buy things because of their rock bottom price, most do not have the courage. They want to get in on the climb and they take risks.

Sure, but your penalizing new artists by decreasing the value of any rise in price.

. I don't understand the perspective of penalizing the most creative, rewarding the speculators far beyond their their dreams.

You're the one in favor of penalizing them. This HARMS up and coming artists.

e artists with 'no benefits', this provides a basic income for artists. We're talking her about a very small percentage of the rise in value, often under 5% (though I don't know the Australian figures). To say it will kill the art market because no one will buy, well, in Europe where it is the law, the art market has not suffered one iota

I never said it would kill it. I said it harms it, especially for up and coming artists.

As for income for artists, if their older works are selling for such high value, so will their newer works -- and then they can capture all of that value.

I just have to rest my case here

I note that you didn't respond to the questions (asked by multiple people) if people are expected to pay if the value of the painting goes down as well...
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bikey, 5 Dec 2009 @ 12:26am

Re: Re: Re: Re: artist resale right
I didn't think that question was serious, sorry. As mentioned, the payment (again a small percentage of the rise in value) to the artist only exists when the value goes up. Obviously if the value goes down, there is nothing for the artist to pay, it's just a speculation (by a speculator, i.e. one who makes his/her iving taking risks) gone wrong. I still don't entirely understand the question. The purpose is to support artists.
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slander (profile), 5 Dec 2009 @ 6:25pm

Re: Re:
Wait a minute--are you implying that black-marketeers might (gasp) break the law? That does it--we have to get a law passed that requires them to pay their fair share...
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Mike Masnick (profile), 6 Dec 2009 @ 11:05am

Re: Re: Re: Re: Re: artist resale right
I didn't think that question was serious, sorry. As mentioned, the payment (again a small percentage of the rise in value) to the artist only exists when the value goes up. Obviously if the value goes down, there is nothing for the artist to pay, it's just a speculation (by a speculator, i.e. one who makes his/her iving taking risks) gone wrong. I still don't entirely understand the question. The purpose is to support artists.

Why would you support harming the investor who was willing to put his hard earned money up to support the artist. Now he's losing money by having to sell the painting at a loss? Why do you support the artist, but not the poor investor?
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JOEL A, 13 Dec 2009 @ 1:43pm

Bad idea
The article gives the analogy to later resale of a house. Believe it or not, in California, some crooked realtors sneak in a clause in a sales contract, giving them a cut of later resale of the house, even though they are not involved. The clause is probably unenforceable, and because it is added at the last instant, probably criminally fraudulent as well. I am not yet aware of any court tests on it.
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painter, 16 Dec 2009 @ 5:27pm

Re: "the art market involves a fairly small number of artists who will or have "made it" "
In the Uk just twenty artists got %47 of all the money collected ( from just 72 individual sales !). Art like life, is a very unfair biz.
This figure raises the question; Why is the gov going to all this expense and special laws to benefit those artists who are most favoured by the market? And if its such a great idea for these same artists why all the compulsion- why the mandated duty placed on same artists to collect it?

Its also a monopoly restraint of the terms of trade that I can sell my own artworks under, provably at odds with trade practices law.

Apart from that I agree with you.
Now for the Twist:
the Australian scheme as legislated is not actually compulsory for artists , clause 22/23 requires the collection agency to in effect gain the consent of the right holder before collecting a particular royalty payment.

The scheme is also too tax like to be part
of copyright law and is thus stand-alone and is not a copyright.

The blank tapes levy ruling of the high court (1992), that the blank tapes levy was tax-like and thus could not be part of copyright has been a major problem for the collection management industry. Hence the extrorinary amount of energy they ALL put into trying to establish a precedent for tax-like- compulsory royalty's , something that has never happened in australia. Thus the actual result from their perspective has been a defeat.

It is also possible that it will be administered in a way different to normal true copyrights.
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painter, 16 Dec 2009 @ 5:30pm

Re:
anything can be art- we should have a royalty on the re-use of every thing, No?
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Anonymous Coward, 16 Dec 2009 @ 5:37pm

Re: Re: Re: artist resale right
Bikey it is a flat %5 paid on losses as well as gains.
A scheme that allowed just for inflation alone would not generate enough turnover to pay out anything much. It has to be very unfair morally wrong to be worth doing.
Art as an investment mostly keeps up with inflation, the gross value of the auction market in Australia when adjusted for inflation is the same now as it was 30 years ago
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painter, 16 Dec 2009 @ 5:43pm

Re: very easy to get around the law
In most places this is often the truth, except that the resale of art for lots of dosh needs lots of publicity, auctions. New Zealand canned its resale scheme, and it is a short flight away and a nice place to visit, It could be boom time for the NZ auction Bizz... Bro.
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painter, 16 Dec 2009 @ 6:02pm

To Mike Masnick
The actual Australian scheme is nothing like the scheme the copyright mob were after . The CEO of VISCOPY (the collection agency at the center of the decade of lobbying) has described Minister Garretts scheme as "completely pointless".

What exactly is its real point? Hard to say,but the answer is provably ou in the desert.
Suggest you have a look at the records of the committee of the parliment 6-7 feb 09 , the arguments came down to radically diverging views as to what 'it' actually is. And their claim that they the collection industry should decide what its for.

One of them described the ministers scheme as "silly" another wanted to " throw cold water over it",tantrums and insults appear to have not worked too well so far.
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painter, 16 Dec 2009 @ 6:08pm

To Mike Masnick
The actual Australian scheme is nothing like the scheme the copyright mob were after . The CEO of VISCOPY (the collection agency at the center of the decade of lobbying) has described Minister Garretts scheme as "completely pointless".

What exactly is its real point? Hard to say,but the answer is provably ou in the desert.
It is definitely not the collection industry's idea of a good scheme .
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painter, 16 Dec 2009 @ 7:03pm

Mike Masnick
link to the Australian
HOUSE OF REPRESENTATIVES
Clause 22-23 requires the collection society to publish a list of effected resales and in effect seek individualised consent before collecting royalties ...
parlinfo.aph.gov.au/parlInfo/download/committees/.../toc.../6508-2.pdf;...
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