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New U.S. Artists’ Equity Bill is an Auction-House Inequity Bill

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Congressman Jerrold Nadler

I’m all for artists’ resale royalties—a cause I’ve been espousing since the ’70s. But it’s not a good plan to redress one perceived inequity by creating another.

That’s what the newly introduced Equity for Visual Artists Act of 2011 appears to do, by singling out large auction houses as the only sellers required under the proposed law to collect a 7% royalty on works resold for more than $10,000. The bill’s full text is not yet, at this writing, on the Library of Congress’ website. I obtained a copy from the bill’s sponsor, Congressman Jerrold Nadler, D-NY. (My link to that document is at the top of this paragraph.) It’s not clear to me, from the language of the bill, whether the “price” used for the purpose of calculating the 7% royalty includes the buyer’s premium that auction houses add to the hammer price.

H.R. 3688 would “apply only to resales in excess of $10,000 occurring at public auction houses [emphasis added] with more than $25 million in sales in the prior year. Resales at auction houses operating only online [i.e., eBay] would be excluded,” according to Nadler’s summary, published on his website. Also exempt would be sales by galleries and individuals.

The 7% resale royalty would be funneled to a “visual artists’ collecting society” (such as VAGA or the Artists Rights Society), which could skim off a commission of up to 18%. Half of the remaining amount would be conveyed to the creators of the sold works or their successors as copyright owners. The other half of the net resale royalty proceeds would go into a new fund to bankroll museum purchases of works by artists living in the U.S. This 50-50 split and the collecting society’s commission of up to 18% could effectively reduce the artists’ cut to a mere 2.87% of the resale price.

In other words, once you exempt non-auction sales and split the 7% of the remaining pie three ways (artists, collecting societies, museums), there’s not much equity for secondary-market artists in this “artists equity bill.” Encouraging museums to buy new art is a worthy goal, but I don’t think the secondary-market artists should be legally required to subsidize that with royalties that would otherwise be theirs.

Mike Boehm of the LA Times received this explanation as to why the bill targets only the major auction houses:

Bruce Lehman, who played a key role in drafting it as counsel for the Visual Artists Rights Coalition, …said that focusing only on the big auction houses will capture most of the resale market [will it?] while simplifying enforcement and avoiding what would otherwise be a likely outcry from the far more numerous ranks of art dealers….

Allowing museums to share in art royalties serves a double purpose, proponents of the federal bill said: As a matter of practical politics, it figures to put a potentially powerful constituency in their corner—just as excusing art dealers and individual collectors from paying royalties stands to preempt a good deal of potential opposition.

Sounds to me like “divide and conquer.”

All of this is lightened by a bit of unintended humor in Boehm’s above-linked LA Times piece, which at this writing still muddles “droit de suite” (another term for “resale royalties”) with a very different sort of “droit.”

Boehm wrote:

It has long been different in Europe, where laws commonly recognized a “droit du seigneur”—the right of a creator to take a cut whenever a work is resold.

“Different in Europe,” indeed! Boehm’s howler prompted the Dallas Museum of Art’s incoming (on Jan. 9) director, Max Anderson, to tweet this “LOL” quip:

New bill: Love how droit de suite became droit du seigneur! Do artists get to sleep w successor collectors?

Noblesse oblige. I suspect that many art dealers and online sites, which are responsible for a sizable portion of the secondary market, may respond graciously to a bill that uniquely disadvantages their rivals, the auction houses, in contemporary-art transactions. Then again, they may still object, knowing that the obligation to kick back some profits to artists may eventually be extended to all contemporary-art sellers.

What do the auction houses themselves have to say about this droit plot? Boehm’s and my requests for comment from Sotheby’s and Christie’s, have not, at this writing, been answered. (Perhaps they’re still trying to figure out how to phrase their responses without resorting to profanity.)

Meanwhile, various lawsuits brought by  prominent artists or their heirs to get sellers to comply with California’s long-standing resale royalties law are still pending in the courts.

an ArtsJournal blog