Saturday, December 28, 2013

Copyright Office reverses its position on droit de suite in the US

The organisation recommends that Congress enact a resale royalty for visual artists

US Copyright Office says "the art world is becoming less an exclusive club and more a general market"
In a report published on Friday, the US Copyright Office has encouraged Congress to consider enacting a resale royalty, or droit de suite, for visual artists. The recommendation, which is the result of a year-and-a-half-long review, is a volte-face for the organisation. In 1992, when it last considered the subject, the office was “not persuaded that sufficient economic and copyright policy justification exists to establish droit de suite in the United States”.
Several factors contributed to the reversal, the office wrote in its 124-page report. First, the art market has grown exponentially since the early 1990s (from around $9.7bn in 1991 to $59bn in 2012). “The art world is becoming less an exclusive club and more a general market,” the office writes. Second, the increase in online art databases and analytics makes it easier to predict how a resale royalty might affect the art market as a whole. 

Most importantly, more than 40 foreign countries have adopted a resale royalty provision since 1992, including the United Kingdom and the European Union. Studies show that “the adverse consequences predicted in the 1992 report”—including a loss of market share in the global auction business, decreased incentive for artists to produce new work and a negative ripple effect on the primary market—“have not materialised for countries who have adopted droit de suite”. 

Because it is still unclear exactly how a resale royalty might affect the art market, the copyright office recommended that the royalty only be applied proactively and only for the duration of the life of the artist. The estates of deceased artists like Picasso, for example, would not benefit from the proposed royalty. This differs from the European model, where droit de suite is applied for the artist’s life plus 70 years.

The office’s recommendations are timelier than ever. A revised bill for the Equity for Visual Artists Act, which would enact a resale royalty for visual artists in the US, is due to be introduced in the Capitol in January. The new legislation, which succeeds a 2011 version that stalled in Congress, proposes a slight reduction in the amount that would be put aside for artists when their work is resold at auction, from 7% to around 5%. The copyright office recommends that figure be reduced further, to 3% to 5%, bringing it in line with Europe, where the fee is calculated on a sliding scale starting with a maximum of 4%. 

Speaking at an event hosted by the International Foundation for Art Research (Ifar) last month, Congressman Nadler, who is sponsoring the bill in the House, said the new legislation would only apply to auction houses, to eliminate any additional opposition from dealers. However, the Copyright Office recommends the royalty be applied to commercial galleries and private dealers as well as auction houses, in order to ensure the maximum number of artists benefit from the scheme. “A law limited to public auction transactions would exclude vast numbers of artists from royalty eligibility given that fewer than half all art sales are made through public auction,” the office writes.

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