American Royalties Too Act (A.R.T.) - Droit De Suite - Auction Re-Sale Royalties

As Christies and Sothebys post record numbers for their recent Contemporary Art auctions, Representative Jerrold Nadler of New York, the ranking Democrat on the Courts, Intellectual Property, and Internet subcommittee of the House Judiciary Committee, continues to push his bill titled the American Royalties Too Act (A.R.T.).  The American Royalties Too Act (A.R.T.) proposes that artists receive 5% of the price of art that is resold at public auction for more than $5,000. The proposed bill caps the royalty paid to artists at $35,000 on resale works.  Musicians, composers, and writers all have royalty protection under United States Copyright Law; however, that protection doesn't apply to visual artists.  Artists may retain the copyright to their images for reproductions, but the rights to ownership of the original works belong to the collector who purchases the painting.  There are valid arguments for both sides as collectors have benefited for years from reselling works for a profit, and the artists don't receive any of the resale prices.  Many people believe that the artist's hard work, talent and devotion to a career in art contributes to the higher prices when collectors resell original works, so it's unfair that the artists don't receive compensation.  On the other hand, there are just as many people who think the artists receive benefits in the way of enhanced notoriety, profits from the original sale, and increased value of an artist's work as their career progresses and they sell new works.

Giants like Sothebys and Christies have spent nearly a million dollars on lobbyists in opposition of the proposed bill.  The Internet Association also doesn't support the proposed A.R.T. bill, and many think it's unfair that the bill only targets public auction houses and not galleries and dealers, because the proposed resale royalty only applies to public auctions at this time.  The Copyright Office did hold a public round table that included major and minor players in the art world before issuing their report.  You can view that round table here.

70 countries around the world including some from the European Union have adopted some form of the artist's resale royalty act.  California had a resale royalty law, but it was struck down as unconstitutional in 2012 by a federal district judge.  This is a potential game changer in the art business, but the chances of the bill being passed is approximately 2% according to Govtrack.us.

In the Western market, we've all seen works by Howard Terpning, Martin Grelle, and many other artists sell at museum shows and gallery shows, then find their way to auction to sell for significantly more than their original price points.  Many people in our industry say that you shouldn't buy art as an investment; however, it doesn't mean you can't sell original works for more than you paid originally.  The question is, should artists receive a royalty for resales?  Where do you stand on the issue?  There are some advocates who believe that it's like selling a house, and the builder and architect don't receive a royalty when the house is resold.  What if the collector loses money when he resells the painting?  I'm not sure what the answer is, but I think we can all agree that we should continue buying art regardless of the outcome of the A.R.T. bill.

Here are a few other articles about the American Royalties Too Act:
  1. Famous Paintings Sell For Millions At Auction, But the Artist Gets Zero
  2. New Bill Proposes Auction royalties for Artists - NY Times 
  3. Lobbyists Set to Fight Royalty Bill for Artists. Auction Houses Taking No Chances on American Royalties Too Act - NY Times 
  4. Shouldn't Artists Benefit WHen Their Paintings Auction for Millions?

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