Franklin Einspruch May 22, 2014 at 11:38 am

The core distinction to make here is that the NRRs are voluntary, while the A.R.T. Act and its ilk, if ever passed, would not be. All you’re doing with the latter is inviting regulatory capture, as I’ve been saying for a while.

WhitneyKimball May 22, 2014 at 12:13 pm

Thanks for the link to your piece. Why so worried about potential measures to help level the field? Auction houses, dealers, and collectors make huge profits on artworks all the time, and it’s a widely accepted cost of doing business. Why shouldn’t Sotheby’s lower their buyer’s premiums and commissions to help cover some of artists’ proposed 5 percent royalty?

Franklin Einspruch May 22, 2014 at 6:23 pm

Disqus ate my first reply – I’m sorry if this double-posts.

The idea is fine, and those who want to enter into such contracts should be allowed to do so. I object to turning it into legislation because:

1. Houses like Sotheby’s will be able to shoulder the regulatory burden easily. Next-tier competitors will have a harder time of it. I’m not interested in insulating Sotheby’s from competition.

2. Resale rights laws mostly benefit artists who command high prices. They increasingly work against the sale of art lower price points until you reach maximum resistance at the bottom of any legal cutoff. I’m not interested in burdening myself so that Jeff Koons’s can enhance his lifestyle.

3. Resale rights work in favor of artists whose prices are skyrocketing and against artists whose prices are moving upward a modest pace. If there’s a 5% droit de suite on a work that goes up 3% in value between sales, then there’s no incentive to sell it, and consequently less incentive to buy it. Artists going up 15% between sales will be less affected, and the greater the increase the less the effect. I’m not interested in a law that gives the Oscar Murillos of the world even more market advantage.

WhitneyKimball May 23, 2014 at 11:37 am

I see your points, but I think this makes a lot of assumptions.
We have a system where collectors and auction houses are entitled to huge profits, and artists get nothing. A law would change the culture by giving artists the right to expect and demand what, in other fields, they’d be owed.

It’s premature to expect that a droit de suite law would never work, and so, we should kill the whole concept. People find ways to shoulder all kinds of burdens, like art fair booth costs, rental of storefront galleries, shipping costs, taxes, etc, so I don’t think this one relatively negligible tax will end the party for emerging art markets. And if it will, then that’s not the fault of a 5% tax.

Also I have a hard time believing that Bushwick collectors are in the market for a Jeff Koons or an Oscar Murillo; it’s not like they’re getting an extra edge by getting paid what they deserve for their work. I don’t think people will stop collecting emerging art because taxes went up, just like how people continue renting apartments in NYC, and collectors bought at the same rate from Sotheby’s and Christies when they raised their buyer’s premium by 5% back in the early nineties.

And then who’s to say artworks’ value typically goes up by only 3%? Who’s to say that collectors of emerging art are in it for the profit?

The first version of the A.R.T. Act, the Equity for Visual Arts Act, built in an option for 3.5 percent of royalties to go toward nonprofit museum acquisitions budgets. That would be great! A portion of Sothbey’s millions could potentially help emerging artists. I just think that the outcome of a balanced, equitable royalties law could so easily be better than what US artists have now, which is practically nothing.

Franklin Einspruch May 23, 2014 at 7:02 pm

By that last paragraph you pretty much lost the standing to say that my argument was relying on a lot of assumptions. So you confiscate a portion of auction sales and give it to museums. Why would they buy emerging art with it? Since museums are generally not in the emerging-art market, I think it’s far more likely that they’ll buy the stuff they’re already inclined to buy, but on top of it you’ve stimulated demand for it. How do prices respond to stimulated demand? They rise. This is exactly what we don’t want to happen to artists who have already been anointed by the museum system.

I’m not saying that resale rights laws are going to stop everyone from collecting emerging art, or that it’s typical for art to go up 3%. I’m not sure where you got that. I’m saying that if you impose costs on a system, someone and maybe everyone is going to have to pay them. It won’t do to say that people will figure out how to shoulder the burden and things will go on as before, but with additional benefits X, Y, and Z. Nothing, and I mean nothing, works like that. In fact, people who study complexity are telling us that when we decree top-down impositions on complex systems, they tend to respond by kicking us in the back.

Left as a voluntary arrangement, Franklin Boyd can tweak his NNRs one contract at a time until he figures out a good range of tradeoffs for a good range of people, and everyone who doesn’t want to be part of the experiment doesn’t have to be. If I infer correctly (pardon me if I don’t) that you’re hoping that voluntary NNRs will lead to resale rights legislation, I think you’re missing the whole reason why they’re working in the first place.

john Walker June 1, 2014 at 10:03 pm

Statutory Art Resale Royalties are compulsory for artists, regardless of their individual needs and situation. Because the vast majority of art does not resell, or resells for small prices, most artists will never see a benefit , but they will experience the risk of lower first sale prices or less buyers for their artworks.

Under the proposed US legislation the Resale Right will be transferable (but not extinguishable) and therefore the following strange scenario is a certainty :

In order to get a better first sale price a artist agrees to transfer the Resale right to the first buyer of their artwork, this means that when/if that artwork is eventually resold the person making the resale would both be the person paying the resale royalty and the person receiving the royalty payment (minus the compulsory administration levy).
The compulsory administration levy is the only eternal purpose of the resale royalty, everything else is just for show.

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