resale royalty

On Saturday, the Age carried a story about the proposed resale royalty right.

The details (yet to be implemented in legislation) are up here (pdf) and here (rtf):

The scheme will start on 1 July 2009.  It will cover:

resales of original works of visual art sold through the secondary art market where the seller has acquired the work after the legislation takes effect. It will not be restricted just to works created after the scheme starts.

If such a qualifying work is resold (in the secondary market) for AUD$1,000 or more, there will be a 5% fee payable to the artist. This is the option the then Government’s 2004 study found would generate the highest level of royalty payments. (There is no indication whether or not the $1,000 will be indexed.)  Liability for payment will be joint and several and will cascade: seller, buyer’s agent, buyer.

For these purposes, a ‘ resale’ will include:

all resales involving art market professionals, public institutions or organisations, and all resales subsequent to the first transfer of ownership, regardless of whether the first transfer was made by sale, gift or any other means.   

A ‘work of visual art’ will be:

work of art original works of graphic or plastic art, such as a painting, a collage, a drawing, a limited edition print, a sculpture, a ceramic, an item of glassware or a photograph. This definition reflects similar arrangements in the EU. 

To qualify, the author will have to be an Australian or permanent resident (or their heirs) – I wonder if this will require qualification at the time the work was made?

The fact sheet indicates the possibility of reciprocity under foreign schemes.  It suggests this might have something to do with the Berne Convention.  A resale royalty (or droit de suite) is not covered by art. 6bis, but art. 14ter.

Joshua Gans looks at the economics here.  Anyone familiar with ‘artist’s rights’ legislation in Australia could have told him that artists, like children and the mentally incompetent, won’t be getting any right to ‘opt out’.  The fact sheet confirms:

The right will be inalienable and unable to be waived. 

The then Government’s 2004 study estimated that the scheme now proposed to be adopted would have captured 72% of sales at public auction in Australian in 2003. 823 artists would have benefited, with an average royalty of $3,300.  One artist would have generated a royalty of $207,000 and, at the other extreme, another $40.  Administration costs would have been $600,000. This is much higher than the UK estimates of £1 million start up costs and £50,000 pa on-going.

For those of you concerned that this might be the end of the auction market in Australia, a UK study (where a (somewhat different) scheme is operating, didn’t think so.