Droit de Suite: A Tricky Issue
An article in the UK newspaper The Telegraph outlines the mess that is the EU's droit de suite levy being forced upon Britain. In principle, I totally support droit de suite laws (i.e., "a sliding scale royalty paid by the vendors of works of art to living artists, and for 70 years to the heirs of the artists"), but the British are probably right that the way it's being imposed will drive business away from their galleries to those in the US and Switzerland, where droit de suite seems light years away at best.Clearly, unless there is a law, many US art sellers won't share any resale profits with artists or their heirs (I've had secondary market dealers nearly bite my head off for suggesting they should). But the laws also have to make sense. For example, the UK law originally said that droit de suite should not apply to any work by a living artist sold for less than €3,000 (£2,040 or $3,555.77), but that was later lowered to €1,000 (or $1,185.29). As dealers working with emerging artists, a good deal of the work we sell hovers around these prices. I can see the negotiations to keep the price for a particular piece under that limit driving me around the bend, and given the extra paper work the droit de suite requires (and addtional headache for collectors and dealers), I can see all this working to keep an artist's prices lower than they should be, at least through a tricky but critical part of their pricing history.
Josh and I talked about our commitment to droit de suite just last night actually. We're committed to paying a percentage to our artists of any resale through the gallery (not that we have too much of that yet, but it's coming) and were brainstorming on the best way to ensure our collectors do too. One Chelsea dealer is infamous for making all collectors sign a contract ensuring they'll offer her the right of first refusal on any resales of work she sells, so that she can make sure her artists get a commission on the resale. She is much more powerful than we are, of course, so she can do that, but we may be heading in that direction. What effect that may have on our sales remains to be seen.
But what would make for a good droit de suite law in the US? How long after an artist's death should their heirs receive royalties? What percentage of royalties are appropriate? Would such laws send collectors to other countries to buy (I doubt China has droit de suite for example)?
And the flip side: What responsibilities does droit de suite place on the artist, if any? In thinking about their heirs, should artists strategize to ensure work already sold appreciates? Does this mean they have to continue to make work that supports work already sold (i.e., not make radical changes in what they're doing)? What effects do such concerns have on the artist's career and, more importantly, their ability to follow their convictions?
If rather than waiting for the law to catch up, galleries took the lead, wouldn't that sort out the best path forward? I mean, well-selling artists would flock to galleries that ensure royalites, forcing other galleries to follow suite. (Yes, I know there are forces in the market that will fight this tooth and nail, but I don't believe those forces have a moral leg to stand on.) Once the practice was more widely followed, then the reality of how it was working might indicate the best ways to codify it into law, no?
I think, yes. Younger galleries are already finding innovative ways to support their artists and safe-gaurd their interests (I'll do a round up survey on this in a later post). The galleries who don't follow in their footprints may find they can't attract the better artists, and the market will sort that out. So long as the market stays strong, I suspect we'll see the less-artist-centric galleries move that direction. In the end, it's only fair. And, if enough galleries go that path, it will be good business.
posted by Edward_ at
9:21 AM
33 Comments:
California already has a droit de suite law. I think a lot of people even in CA don't know about it.
http://www.cac.ca.gov/?id=95
I'd be interested in knowing if people think this is a good version of this kind of law or not. I'm not sure what I think about it.
you know, I kind of knew that, but then (out of sight, out of mind) promptly forgot....thanks for the reminder...I'll look over it and see what I think
Thank you Edward, for putting this out on the table. I've never been able to understand how our current exploitative model survives.
It's kind of an inverse version of capitalism: the artist produces a commodity that appreciates in value (that on some level is ABOUT appreciating in value), for which the escalating profit from each successive transaction goes to the consumer.
Crappy business model, at least for the artist.
I realize it's very frustrating juryduty, but I suspect it's moved much further toward a pro-artist point than many artists realize, on one front at least.
Indeed, of the two aspects of the business model, one has improved greatly over the past century. There was a time, not too terribly long ago, when dealers split sales 75% (to the dealer)/ 25%. With the rise of the artist as celebrity (and access to mass media), that started changing (I've heard that a famous artist who's in all the history books and recently had an exhibition in Chelsea gets a 90%-10% split on sales).
Essentially, on the split front, you should negotiate the best deal you can (of course it helps if you're in all the history books), taking into consideration, if you will, what a gallery has invested in your work before you get too anxious about changing any agreement. If they've still spent more in exhibitions, fairs, advertsising, etc. than your work has brought in, you're gonna have a hard time convincing them to make any changes (and rightly so).
None of which means that artists are not being totally ripped off wrt resales. I believe they are. When work resales, I see no reason royalties are not part of the deal. Everyone else is making money, why not the artist?
Oh, I know the overhead and uncertainty secondary market galleries face (what excuse primary market dealers have is totally beyond me), but markets evolve all the time toward a better (i.e., more moral) position. Compared to other markets, the visual arts market seems nearly feudal.
Edward, thanks for bringing up this excellent topic, and with such a thoughtful post.
The state-by-state system is not very practical, as it was never clear to me whether the CA law applied to sales that happen in california, or to artists who live and work in CA, or to galleries who do business in CA, three things which sometimes, but don't necessarily, coincide. (And what about sales at art fairs which occur in other states?). Also, it is hard to enforce.
This is an extremely important subject, and one that artists really should rally around. It's sort of like actors getting residuals for reruns of their tv performances. Who could possibly ( I mean on a moral level) be against this?
On a related topic, there was a law recently passed (or on its way?) to allow artists to deduct more than just the value of materials when they donate a piece to charity. Since collectors can already do this (declare the market value), it's shocking that artists couldn't until now.
ps: now I'm dying to know - I know you won't say, but is the 90/10 artist Chuck Close?
Oops, I meant to sign my name, such as it is, for purposes of identifiying the various anonymice. That last post, with Chuck C. speculation was by o.
o
Josh, there's one part of that law that seems a bit bogus to me:
Under this law, it is the seller's obligation to locate the artist and pay the royalty due. If the seller is unable to locate the artist within 90 days after the sale, the seller is required to pay the royalty due the artist to the California Arts Council where it will be held for the artist for seven years. If the artist fails to claim the money due within that time, the money reverts to the California Arts Council for use in its Art in Public Buildings Program.
The reseller is obligated to try and track down the artist or their heirs, but the CAC is not. Somewhat convenient, no? And why that money wouldn't go back to the reseller is a bit fishy to me as well...One assumes the CAC makes a good faith effort to find the artist, but I'd want a guarantee.
ON the other hand, this part seems very good:
To start this tracking from the initial sale of a work, be aware that artists have a legal right to know the name(s) of the buyers of their works, even if the works are or were consigned to a gallery at that initial sale. (See the California Penal Code, Section 536. http://www.cac.ca.gov/?id=97 ) When the information is obtained, artists may wish to write the new owners to ask for notification of when, or if, the piece is sold subsequently. When sold, the initial owner may be willing to give the artist the second owner's contact information, allowing for the tracking process to continue.
It's important for artists to be on top of this part of their career (especially as galleries close or artists change galleries).
The details of the law seem a bit odd (and certainly don't help video or other new media artists). Here's the lowdown:
* The work is a painting, drawing, sculpture or original work of art in glass.
* The work does not consist of stained glass permanently attached to real property. [say what? looks like you got some glass artists with significant connections in Sacramento to me]
* The seller resides in California or the sale takes place in California.
* The work is sold during the artist's life or within 20 years of the artist's death. [I'd increase that to at least 50.]
* The work is sold by the seller for money more than she or he paid.
* The work is resold for $1,000 or more.
* The artist at the time of the sale (or at time of death) is a United States citizen or has been a California resident for at least two years. [this is nuts...we represent artists who are not citizens...why single them out?]
* The sale is not made by an art dealer within 10 years after the initial sale by the artist, with the further proviso that the first sale and all intervening sales until the time of the resale have been made to art dealers.
Not sure what that last proviso prevents actually...anyone?
ps: now I'm dying to know - I know you won't say, but is the 90/10 artist Chuck Close?
Chuck may get that, but he's not the one. Think Royalty.
oops...the introduction to that list explains what it means:
Under California Civil Code Section 986, an artist shall be entitled to a royalty upon the resale of his/her work of art provided that:
Royalty, hmm... King Jasper perhaps?
o
you should not infer anything from my silence ;-)
The 90/10 was most probably Johns at Marks.
Droite de suite can only be established here when it is insisted upon by established artists. California shouldn't be blamed for not trying to track down innumerable artists, though in this day and age, it might be wise of them to allow artists to register with them online.
Curses, foiled again. Beaten to the punch by o. Well played, o.
California shouldn't be blamed for not trying to track down innumerable artists,
The reseller has to track down the artist, why not the CAC?
And it's not that so much as their assumption they get to decide what to do with the money should the artists not claim it. No offence to the CAC, but I simply don't trust agencies that much.
The 90/10 was most probably Johns at Marks.
rumors only.
My lips are sealed.
; o
The sale is not made by an art dealer within 10 years after the initial sale by the artist, with the further proviso that the first sale and all intervening sales until the time of the resale have been made to art dealers.
I think that's saying that so long as theart work is being passed only from dealer-to-dealer, the artist doesn't get a royalty until it is sold to a collector. Along the lines of retailers not having to pay sales tax on goods they plan to resell.
The reseller is obligated to try and track down the artist or their heirs, but the CAC is not.
I agree, that seemed strange to me.
Their definition of art is questionable to me too. What about video? Installation? Anything not made with paint, paper or glass? Is it all sculpture?
For example, The "flat" work I do isn't painted nor is it a drawing. Does that mean it isn't covered? However, the new 3-D work I've been doing is sculptural, so does that mean it is covered?
I understand they don't want just anyone claiming that anything is "art" and is therefore covered, but their 1977 art definition may need some tweaking.
"There was a time, not too terribly long ago, when dealers split sales 75% (to the dealer)/ 25%."
You've mentioned this before. There was also a time, I think it overlaps, that dealers would pay their artists a monthly stipend; an advance against sales. The market for the new wasn't as HOT then as it is now, shows wouldn't be expected to sell out. I think the 75% thing needs to be put into perspective.
Or, I don't know, does that still happen? Do Chelsea dealers pay artists a stipend?
Question: Do dealers still take 50% when the work is sold at an art fair? I think that sucks. If a dealer were to take a chance on my work, give me their space for a month, host a reception, print announcements, etc - the 50% makes sense. But at a four-day art fair in a booth crammed with work? I don't get it. Why is it still 50%?
Also, NADA is a non-profit; is sales tax paid on work sold at non-profit art fairs? What are the benefits of the non-profit thing?
Oy Vey!
Do dealers still take 50% when the work is sold at an art fair? I think that sucks.
To be really honest...my knee-jerk reaction to that is "don't let galleries take your work to art fairs then..." but I'll try to be a bit more patient than that (blame it on my sinus medicine if I seem a bit prickly).
When you add it all up, a gallery will spend about $12-15 thousand to do a fair like NADA (more if they have to ship big pieces or internationally). That's why it's still 50%. Morever, a gallery will spend from $20-50K easily to do, say, Basel in Switzerland. If you're selling, say, $3000 paintings at NADA, you must sell 9 to 10 of them before you break even, let alone make any money. If you're selling the same at Basel (unlikely you'll get in if you are, but for comparison), you'd have to sell about 30 of them just to break even.
More than that though, the artist is virtually guaranteed that their work will be seen by the creme-de-la-creme of the art buying world. Curators, critcs, the whole shebang. Much, much more than the average 4-5 week exhibition will bring in.
For all those reasons, I think the 50-50 split is more than fair (no pun intended).
There was also a time, I think it overlaps, that dealers would pay their artists a monthly stipend; an advance against sales. The market for the new wasn't as HOT then as it is now, shows wouldn't be expected to sell out. I think the 75% thing needs to be put into perspective.
Or, I don't know, does that still happen? Do Chelsea dealers pay artists a stipend?
That's a fair comment. Some do; some don't. We would like to be able to one day...we're working toward it. Also, the 75% - 25% split often applied to dealers who would buy the work up front...most contemporary galleries today, at least the younger ones, can't afford that...so you're right, it's a bit misleading that way as well...mea culpa. I guess I was thinking "it could be worse"...you could have the same system and still a worse split.
NADA is a non-profit; is sales tax paid on work sold at non-profit art fairs? What are the benefits of the non-profit thing?
Tax is paid on work sold at all fairs (or should be). As in any other setting, it may depend on whether the work is shipped out of state or invoiced later, etc., but the fairs are getting tougher about all that.
I see how financially it is necessary for the dealers to take 50%, but it does seem like the artist has ceded something.
I am poor so I guess I would probably let a gallery take one of my paintings to an art fair if asked, but it would give me a sinking feeling.
Actually, I took my paintings to the fairs myself (out front). Nothing sold, but I felt good about it. I rode the bus down with my paintings and think I spent about $300.00 total. Very fun time.
I saw at Aqua and elsewhere that a number of artist run "galleries" had rooms or booths. At Aqua you had Platform and Other Gallery, for example. I think the artists took care of it all themselves? Other Gallery doesn't physically exist, it's an on-line gallery.
I hope to see more of that type of thing next year.
I am poor so I guess I would probably let a gallery take one of my paintings to an art fair if asked, but it would give me a sinking feeling.
I don't think you're considering all the other opportunities that can arise from a fair...there's no guarantee, but I've seen careers get a huge lift from fairs.
The other aspect of fairs that makes me think the 50-50 split is appropriate is how much freakin' work they are. From the application process, to all the arrangements, to literally working out of a suitcase, to the grueling 18-hour days...as I've noted before, they're no vacation. Virtually every gallery person I know returned from Miami physically shattered.
It's not just a four-day group exhibition...it's the best four-day group exhibition you could ever hope to have as an emerging artist, and a bargain at 50%, IMO.
But we're off topic, so I'll redirect back to droit de suite, if that's ok.
The reseller has to track down the artist, why not the CAC?
Or put another way, the CAC doesn't need to track down the artist, why should the reseller?
I'd propose a central clearing agency. It would be the seller's lawful obligation to register their sales there (which could easily be verified by the state at tax time), and the artist's personal responsibility to register in order to receive royalties.
It might be the CAC's responsibility to provide this service, or to provide for the creation of a non-profit org which does so. This org might be funded by a small percentage of fees collected.
Regarding the 90/10 rumor, it wasn't that I had ever actually heard anything like that, but that the same thought had already occurred to me when I first read the New York Magazine article from last May, "Marks Nabs Johns." I believe that property sellers in the "royalty" range negotiate more favorable terms with real estate agents than the standard cuts, so I assumed the same practice occurred in other commissioned sales markets too.
Three points from, not really a collector, but an afficionado that opens his wallet.
1) If you're talking about this whole art world as stock market scene in NY then go ahead, fight it out. If you're talking about us poor schmoes who cobble together some funds and instead of buying a big screen or an old MG support a gallery and it's artists and then many years later sells the artwork for whatever reason then you know what; P**s off.
2) I'll be much more receptive to this when a gallery owner assures me that whenever I choose (even if s/he's no longer in business), I may return my artwork for the purchase price plus inflation no matter how low the value of that work drops.
3) In the end you could make this much easier on youselves by selling a license to display the artwork rather than the artwork itself. This is done in the software world. Look real close at your agreement and you'll find that you don't OWN Windows XP or Photoshop, you've purchased a license, a license that may be revoked. For software like XP, the license is permanent as long as you don't resell it. For 7-8 figure software deals the license is for a specific length of time from whence it must be repurchased (often there is a yearly maintenance fee, but that generally covers bug fixes and updates, things unneccessary for artwork one would hope).
I don't expect anyone to do #3 though, since what it sounds like is everyone really wants to make as much as possible as fast as possible and as often as possible the work be dam*ed and this idea would surely lowwer the amount of money paid by "collectors". The fact that there is even discussion about this says to me that the whole market there is fixed anyway. I just wish that y'all'd leave those of us who might buy some works and then sell them when we have to move into a retirement home or to get out of a financial jam alone.
PS. I'll be waiting to read in the NYT about how for some unexplicable reason gallerists who sell their property are writing checks to the families of the builders.
Crionna,
If you buy stocks and the price drops, then you don't get your full money refunded when you return them.
5% back to the artist makes good sense - the value of the art you've purchased won't increase if the artist doesn't push his/her career and art. The artist's work after you buy the piece is instrumental in the value increase.
Crionna,
What if the piece you buy appreciates something insane, like 300%...do you still feel the same?
re #3, The software model won't work, for the most part it's a razorblade business where companies might make money if the sell a lot of units. Custom software houses can charge a lot but it's a hugely risky enterprise. In either case few companies are consistently making money.
#2 won't ever happen it would bankrupt the galleries by creating a unknown liability.
Frankly, I doubt if the royalty idea can be implemented in a way that is efficient and actually works. One might try and adopt one of the models from the film or music industries but again both of these products rely on having a mass audience which is quite different form the art market.
From the point of view of a gallerist, there might be some other options which provide aspects of what a resale royalty actually does. If we eliminate the pure speculative segment and the few blockbuster artists, an artwork is doing well if appreciates faster than inflation. If it is sold and the artist receives a small royalty this really becomes additional income, like a dividend paid sometime after the work was originally sold.
Two things which could change the landscape.
First, if several galleries got together and negotiated for group health insurance or some other similar solution in this area.
Second, most young people don't really think about planning for future retirement. Some form of gallery supported IRA might be desirable, say x% of the sale from the gallery and from the artist would be contributed to an IRA in the artists name and invested appropriately. For a lot of artists this would probably produce a higher return over time than any royalty plan (of course except for the blockbuster artist who doesn't need it anyway) The IRA plan is independent of the success of the gallery, it's owned by the artist and the small percentage contribution by the gallery is the cost of doing business
I realize this is a corporate model but I think both ideas would be attractive to the artists and a positive attribute for the gallery in order to attract quality artists.
If you buy stocks and the price drops, then you don't get your full money refunded when you return them.
Right, and if I purchase an IPO stock and it appreciates I don't get a call from the software developers asking for a cut. They're happy that someone would take a risk in the first place allowing them to continue on with their work, making their own holdings more valuable while also increasing the value of any additional stock they might offer. That's the point, I take a risk, whether it's stocks, land, art or whatever. This is the only place I've seen where that risk isn't as well appreciated as everywhere else.
What if the piece you buy appreciates something insane, like 300%...do you still feel the same?
E. you know me as a pretty reasonable guy but tell me, if the artist has a stock of how many 25?, works at his gallery and another X in his head, all of which are now more valuable by 300%, why is that artist interested in spending time chasing down a little bit more cash rather than just a) thanking his lucky stars that the owner purchased the work in the first place and then managed to sell it for a huge increase in the second and b) making more work as fast as he possibly can while his star is shining bright. Sounds a bit petty to me. Seriously, be thankful and get back to work to take advantage of your hottitudeness ;)
In either case few companies are consistently making money.
Sorry, we don't know each other, perhaps you're more intimate with the software sales model than I am, but as a SFian who has sold software before, for a multitude of profitable companies, this model works quite well. And the similarity with art is nearly perfect. When I sold a 5yr license for $5M (or $15K as the case often was) there were often questions about the cost of purchasing the software or buying a perpetual license. Both hugely increased the cost.
Same thing with art, however, I'm betting that artists and gallerists would not be willing to risk taking say 20% of their "purchase" price as a license price to ensure that the work would definitely return to the artist/gallery in a predetermined timeframe. Why? It's too risky of course. Better to let the buyer take on the risk...and then complain when that one in a thousand shot comes in with a 300% increase that they didn't get a piece of that action, rather only the rest of the work the artist makes.
And I think I can hear the wheels grinding in heads out there "But art is different from stocks or land or software...it's auht" ;) And that may be true, I certainly think so, otherwise I wouldn't fill my house with art that just makes me happy and probably won't appreciate, I'd buy chunks of shiny metal instead. But here's the thing, to people like me, it's tough to hear people proclaim the value of auht but then bit*h about wanting a few percentage points down the road. Perhaps I shouldn't be reading this blog. Sometimes it's too much about how the sausage is made.
Wow, that last sounded worse than I meant it. Of course I'll continue to read this blog. Somtimes it's just about a different world than I'm generally a part of...
Hapy Holidays all!
I do know you to be a very reasonable guy crionna...sometime when you're on the East Coast I'll take you and your better half out for drinks and you can help me better understand why this seems so offensive to you. I must be missing something.
Happy Holidays to you as well!
c. I know a little about the software business from the development and investment sides. The kind of licensing fees you are talking about apply to a few companies, just as there are blockbuster artists. If you look at the yearly profits for the whole software industry, it's touch and go for most of the smaller companies.
I think the 'speculative' model in the art market generates sales (when times are good) and attempts to remodel this will most likely result in a giant collapse of the industry.
As I indicated before I think it's the wrong way to approach the problem and that the problem is not clearly defined. What is the desired result of the 'royalty' idea? What is the most likely actual result? Do these two points match when applied to a relatively large number of artists with differing degrees of success, I don't think so.
The idea behind droite-de-suite, and the difference between royalties and the stock market, is that while the price of a stock is the same for everyone, the prices of artworks on the secondary market do not necessarily match the prices on the primary market.
The idea is that speculators like crionna should be allowed to buy unrecognized artists today for small amounts of money, and artists should accept small amounts of money for their earlier works, but then as a positive consensus develops around that artist, and the artist's works become more valuable, the artist should be able to reap the benefit of their delayed fame.
If a public company wants to raise money, they can sell more of their stock, at the same value as everyone else in the world would have it. The stock price would go down a little bit, because obviously if the company makes more shares available, each share will be proportionally worth a little bit less, but it's vastly different from an artist selling current works for one price in a gallery and having previous works sell for many multiples of that at auction.
If you want to insist on the stock-market analogy, then you also have to consider the effects of initial financing. Did all these public companies sprout from the mouth of Zeus? We're seeing the ongoing condition but we're not considering the initial condition. At some point in every public company's existence, financial speculators poured millions of dollars into it, first in what are known as rounds of "private placement," and culminating with any luck in an "exit strategy" famously known as an IPO. Such speculators are happy if they make money on just a tenth of their investments, hoping the tenth will pay for the other nine.
Are those who claim similarities between the stock market and the art market ready to propose a private placement and IPO process for artists? Someone please let me know so I can start preparing a multi-million-dollar prospectus, based on my expected lifetime return, discounted at an appropriate compounding rate back to the present.
the idea is that speculators like crionna
See, that's where I have to stop you. I am absolutely NOT a speculator. That's what I meant by my reading about a different world.
Maybe there's a post in there for you E. The difference between the Chelsea art world and the rest of the world that just buys art that they love, expecting the value to be about $0 once hung on the wall unless something a bit crazy happens (well, not too crazy, I assume my Villerme will continue to be worth something more than $0, but surely not more than what I paid for it and never what it's worth to my wife and I personally.).
California artists have a legal right to know who is buying their work? Amazing. I would never have guessed.
But if one were to insist one would not get another show.
Many, many artists, lots of galleries, a few collectors. That is the reality of it.
Post a Comment
Subscribe to Post Comments [Atom]
<< Home