Is It Time For Artist Resale Royalties?

Image of Chuck Close partying, courtesy of Billy Farrell Agency and Blouin Artinfo http://www.blouinartinfo.com/news/story/807627/artists-score-backhanded-win-in-california-resale-royalties

Tuesday marked the ninety-fourth birthday of droit de suite, the world’s first artist resale royalties law– and yet, most New York artists remain unfamiliar with the concept. Since 1920, droit de suite has spread from France to Germany, Belgium, Italy, and even the State of California, though to this day, artist lawsuits and potential legislation in the US are quickly deflated.

But it looks as though at least a few artists could get a taste of resale royalties sooner than expected, thanks to a shift in conscience, and the efforts of attorney Franklin Boyd.

Boyd’s company Level Rights aims to hand royalty decisions entirely to artists, dealers, and collectors by creating NRRs, or Negotiated Resale Rights contracts. When a collector buys an artwork, he or she commits to giving back a previously agreed-upon percentage of the profits to the artist and dealer when the piece is sold again on the secondary market. The contracts only apply to one transaction, but they are independently negotiated, and they’re transferable, so artists can sell off their future royalties for immediate cash. Bushwick’s NEWD Art Show will be testing them out next week, with a presentation on NRRs by Franklin Boyd on Saturday at 2 PM.

You may have heard of Franklin Boyd from Boyd Level, a collector’s liaison service (of the Boyd Level Miami art fair guides). “Boyd Level is a smart organization, and if anyone stands a chance of making it catch on, it would be them,” art dealer, art fair founder, and author Edward Winkleman wrote us in an email. “[T]he element of it that impresses me is how it’s designed to get collectors and artists to collaborate on secondary market sales in a way that’s productive for both (as opposed to the current system which ignores the artist and often generates resentment).”

Unlike Seth Siegelaub’s unsuccessful 1975 Artists Reserved Rights Transfer and Sale Agreement (ARRTSA), for example, which attached too much contractual burden on the purchaser of the work. The single-use Level Rights contract doesn’t bite off more than it can chew, like dictating borrowing rights, exhibitor notifications, restoration rights, and royalties from every future sale.

“[E]xperience has shown that you will be more successful in keeping an agreement simple, easy to understand and with one specific purpose,”  Boyd wrote us in an email. “I’m not surprised that purchasers balked when confronted with the complexity of [the ARRTSA] contract.”

“In terms of encouragement from Level Rights, we believe that the first hurdle is overcome just by providing a well designed system that simplifies the process of creation and management of resale rights,” she continued. “We also have experienced that our approach– which is very much about negotiation and collaboration between the artist and the collector — has its own appeal to collectors.” Boyd uses NRRs herself when she buys artwork.

We asked collector David Carson, digital strategist and CEO of Proust, whether he’d try it. “I’m actually kind of into the idea of a system like that, because it creates something new for the artist-dealer-collector relationship,” he said. “It could create new markets for art, in some ways.”

Carson noted that digital collectors might be more attuned to the idea of resale royalties, because digital artworks inherently tweak traditional concepts of ownership. He cited Caleb Larsen’s black box, which perpetually sells itself on e-bay; Rafaël Rozendaal’s publicly-accessibly, but privately-owned URLS; and Kevin McCoy and Anil Dash’s Seven on Seven proposal to use Bitcoin’s block chain to establish provenance for digital artworks. “A royalty structure might work better for digital artworks, which are not necessarily ‘possessed’, than with the physical ownership of luxury tables or chairs,” he told me.

Carson thinks that an NRR might discourage more traditional collectors. “Automatically, it complicates the purchase. I think you’d really be looking at a different collector base.”

While we were unable to contact Boyd Level collectors, due to the confidential nature of third-party legal services, it appears that some collectors are actually volunteering to use the contracts.

“The conversation has always been started by collectors who wanted to do this,” artist Ellen Harvey told us in a phone conversation. She’d used NRRs in the sale of larger works in the U.S. (Harvey is represented by galleries in Germany and Belgium, which both have droit de suite laws. She’d also shown at Dodge Gallery before it closed last month).

“I think most serious collectors are aware of the fact that [resale royalties] are common practice, in many jurisdictions, in various forms,” Harvey said. “Work can accumulate value by being part of a great collection, and it can also accumulate value because of the efforts of the artist. The question is really whether you feel that that should be contractually reflected or not.”

“In theory, I think collectors may negotiate for a greater discount or some kind of incentive to sign on,” said NEWD fair founder Kibum Kim, “but in practice, many collectors– especially those focusing on the emerging level– see themselves as patrons and would be motivated more by what they believe is right and pro-artist.”

While Christies and Sotheby’s declined to comment on NRRs, Kim thinks Level Rights might even have a carrot for the auction houses, who lobbied against the American Royalties Too (A.R.T.) Act when it was introduced earlier this year.

“If anything, I think auction houses should be in favor of the Level Rights NRR,” Kim added, “as it was mentioned in the US Copyright Office as a good alternative to the resale rights legislation in its December 2013 report.”

Since NRRs only apply to first-time resales, they’re unlikely to affect most of the secondary market. And at least, they take the ball out of the hands of large auction houses and an inactive Congress, which, together, seem to have already squashed the baby A.R.T. Act. (A 2011 version of the bill, the “Equity for Visual Artists Act”, failed to attract a single co-sponsor, and the new bill hasn’t made progress since it was referred to committee in February. According to govtrack.us, A.R.T. currently has a 2 percent chance of being enacted).

“[T]he revised bill now known as the A.R.T. Act does not resolve a fundamental flaw in the original bill’s concept,” a Christies spokesperson wrote us in an email. “European studies have shown that resale royalty schemes provide support to less than 5% of working artists, and the artists receiving royalties tend to be those commanding the highest prices on the primary market.”

“In addition, the current bill carries over a central inequity of the 2011 version. Rather than seek royalties from every part of the art market, including galleries, dealers and other professionals, the bill narrowly targets only those companies who conduct auction sales.”

The argument that successful artists don’t deserve a cut of the profits made from their work wouldn’t hold much water in any capacity; as some would point out, market success doesn’t necessarily ensure financial security for artists. “I know some artists who were successful in the 1960s and ’70s and have since fallen on hard times and could really use the money,” Chuck Close told AFA News two years ago. In 2011, Chuck Close and other artists unsuccessfully sued Christies and Sotheby’s for resale royalties.

But personal wealth, some have pointed out, is irrelevant. “This is not an anti-poverty bill,” New York Democratic Congressman Jerrold Nadler told the New York Times. “It’s a fairness and equity bill.”

Unfortunately, the idea of an unfair advantage is built in to the A.R.T. Act, which would give independent dealers an advantage over auction houses, who would be the only sellers required to pay 5 percent to artists.

With NRRs, the responsibility falls entirely to individuals; would New York-based art dealers be more hesitant to take the plunge?

“I agree it’s potentially risky, and will only really be effective if it becomes the norm,” Winkleman wrote us. “[B]ut it solves one issue for us we’ve tried to solve outside anything formal, which is how to ensure our artists benefit from the resale of their work.” Past that, his only concern is “extra paperwork.”

“Make it straightforward enough, and I’m more than willing to try it.”

Tagged as: A.R.T. Act, American Royalties Too, Boyd Level, David Carson, Edward Winkleman, Ellen Harvey, Franklin Boyd, Jerrold Nadler, Kibum Kim, Level Rights, Negotiated Resale Rights, newd art show, Resale Royalties, Winkleman Gallery