Congress and the Art World: Fattening the Fat Cats

Those of my readers who are not members of the legal or art communities may not be terribly interested in a recent about-face by the U.S. Copyright Office, which has now recommended the expansion of royalty rights for artists.  However if you are interested in politics, business, and society, I suspect you will find much to chew over in legislation headed to Congress next month. For when we look at the underlying arguments in favor of this change to our legal system, one has to wonder whether we are creating a law which will benefit those who may need protection, or whether we are fattening the bellies of some already rather fat cats.

Droit de suite, or what we might call a “royalty right” for artists, has been developing internationally for quite some time.  I studied and wrote about it long ago, during my M.A. program at Sotheby’s Institute in London, when debate over EU passage of a law giving such rights began to alarm the British art market; that law, with some modifications, has been in place since 2001.  Now America is poised to follow Europe into playing what is little more than a nonsensical con game, but unfortunately no one seems to be paying any attention.

The basic concept of droit de suite is that, subsequent to the initial sale of a work of art, the artist who created it is entitled to receive a fee every time that work is sold, for a fixed period of time.  Under European law, this term is the life of the artist plus 70 years.  Thus, any time that a work of art is re-sold during the artist’s lifetime, and up to 70 years after he has died, he or his heirs are entitled to receive a royalty, based on a sliding scale percentage of the work’s sale price, not subject to sales tax (known as the “VAT”.)  And of course legally an artist’s “heirs” could be almost anyone: the artist’s family, a foundation set up in his name, his dealer, his accountant, etc.

Like many well-intended ideas, the original intent of droit de suite was to do something good.  Some 19th century artists in Paris were quite literally starving, selling their work to dealers for very low prices and barely being able to survive on the proceeds.  The dealers would turn around and hugely inflate the sale pricec they charged for these works in their galleries, and would pass little or none of the resulting profits along to the artist.  This parasitic relationship often lead to problems such as substance abuse, violence, and suicide.  Laws creating royalty rights for artists were therefore supposed to help them get out of these situations.

Yet today while droit de suite would, in theory, guarantee the starving artist some level of income to protect him from starving, in reality the net effect of the law is not to help the unsung artist, but to make rich artists even richer.  We can assume that the majority of  unknown artists who are dependent upon selling their work in order to survive are not commanding particularly high prices, nor are people who buy their works going to be selling and re-selling them with any frequency.  Thus, we have the rather ludicrous result of the law not actually helping those whom it was originally intended to benefit.  This is thanks in part to a market situation created by the art world itself.

What the art dealers and auction houses have taught the public over the last couple of decades, particularly with respect to contemporary art, is that if you buy a work of art now, and hold onto it for twenty years or so, when you resell it you will probably make a profit.  Thus, that unknown sculptor whose piece you bought in a gallery for $5,000 today, might turn out to be the next Rodin.  To protect your investment then, naturally you put it on a high shelf or in a bank vault, and then forget about it for the next 20 years.

Yet you can perceive the resulting conundrum for the starving artist: it would be impossible for him to benefit from droit de suite at the time he could really use that royalty assistance, when the collector has no intention of selling his work on to someone else for quite awhile, thanks to the advice given by financial planners and the art dealers/auction houses.  In addition, one can foresee how the resale market for up-and-coming artists will suffer in this environment as well.  Collectors may not want to take a chance on paying both the auction price and a droit de suite royalty on work by an artist who has not yet been proven to be a standout.  Again, this hurts the artist trying to make it, not the well-established artist whose work routinely sells for millions of dollars.

As one might expect, forthcoming legislation to pass this so-called “Artists’ Rights Bill” is being co-sponsored by three rather leftist members of Congress in possession of little common sense, Congressman Jerrold Nadler of New York, Senator Tammy Baldwin of Wisconsin and Senator Edward Markey of Massachusetts.  I suspect it will pass, for the simple reason that everyone will be far more intent on budget matters, the debt ceiling, and so on come January.  The argument that all other civilized countries have similar laws will carry some degree of resonance with a body not particularly famed for its understanding of the art world, and which does not particularly care about what goes on there – well, apart from Congressman John Mica of Florida of course.  Fortunately the recommendations on the drafting of the legislation from the Copyright Office would exclude people like Paloma Picasso from continuing to profit from resale of her late father’s work in this country, but living multi-millionaire artists such as Jeff Koons would benefit from this law immediately, and indeed throughout their lifetimes.

Clearly this legislation is not going to help the struggling artist: it is going to help the rich one, which strikes this scrivener as being fundamentally unfair.  It may even be an unconstitutional restriction on property ownership in this country, although given our present Chief Justice I imagine he would find a way in any court challenge to declare that it is not.  How this impending new law will actually apply to the art market in the United States we shall see, but given the general lack of public interest in the arts, it will almost certainly become law without anyone taking much notice.

Detail of "Portrait of Manuel Osorio Manrique de Zuñiga" by Francisco de Goya (1787-1788) Metropolitan Museum, New York

Detail of “Portrait of Manuel Osorio Manrique de Zuñiga”
by Francisco de Goya (1787-1788)
Metropolitan Museum, New York

2 thoughts on “Congress and the Art World: Fattening the Fat Cats

  1. Pingback: Resale Royalties: Beating Back the Bad | Blog of the Courtier

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