‘With friends like this’…. Part II

 

My previous post – With friends like this’: Labor policies and the commercial, independent visual arts sector- was kindly posted by Ken Parish, 6 June.

In many ways, artist resale royalties are intrinsically a throwback to the pre-reform days of the 1970s and ’80s.

The royalty is both punitive and market distorting in design. For example: A collector buys a painting for $10,000.  After some years the collector  re-sells that painting for  $11,000 gaining  a profit of $1000; the 5% royalty on this resale being $550 or 55% of the profit on that resale. If this painting was instead to resell  for $9000, a loss of $1000 on the initial purchase price, there would be an additional loss of $400 in royalty due on that resale, bringing the total loss to $1,400.

The royalty does not apply to non-Australian artists; it does not apply to Australian artists who have died 70 or more years ago and it does not apply to many other forms of art-like collectables such as Ming porcelain and non-art furniture. The artist resale royalty is a serious deterrent to purchasing art by living Australian artists.

In 2008-09, DEWHA was assessed as non-compliant by the Office of Best Practice Regulation for the Resale Royalty Right for Visual Artists Act 2009 and a post-implementation review was required to commence within one to two years of implementation. However, the Act’s compliance with the post-implementation review has been delayed till June 2013. Thus the scheme will have operated for three years without meeting minimum best practice requirements. Best practice involves clear need, clear cost-benefit evidence, avoidance of substitution and unintended market distortions. Given the large costs relative to benefits delivered and the punitive and distorting effects upon the market, it is hard to see how it could ever pass a best-practice test.

The scheme harks back to pre-GST days of non-uniform transaction levies and market-distorting tariffs.

 

Part III of ‘With friends like this’  Artist resale royalties: a strange loop

4 thoughts on “‘With friends like this’…. Part II

  1. Guy Rundle:

    “In visual art, in Melbourne as everywhere, it is increasingly obvious that the entire gallery and re-sale system is iniquitous in the extreme due to the absence of any mandatory artist royalty for the re-sale of their work. That is a matter of international copyright law, but it is particularly important in Melbourne because of the amount of indigenous art sold domestically. For cultural reasons, indigenous artists are far more exposed to being ripped off by the system, and the degree of off-ripping is disgraceful. There is a case for strong regulation, with indigenous art dealers subject to a licensing system, character checks and regular auditing.”

    Sigh.

    • Back in 2004,the collection society VISCOPY (at the time the peak lobbyist for a compulsory management right) made a submission to DCITA which contained a gem. After acknowledging that their scheme would transfer money away from young artists to old artists, VISCOPY then went to pronounce an “”unforeseen market efficiencies”” of the proposed scheme:

      “There are possible efficiency gains from a droit de suite [ARR] that are not mentioned in DCITA’s paper. It has been suggested, for example, that a droit de suite could act as an efficient screening device in artistic labour markets, by attracting artists confident of their future success and deterring the potentially less talented. It could also be that a droit de suite would provide further efficiency gains by encouraging existing artists to work harder to enhance their reputations.” ”

      VISCOPY submission, Section 5.5 Economic Efficiencies. A response to DCITA’s Proposed Resale Royalty Arrangement Discussion Paper, 2004.

      Nice.

  2. Pingback: ‘With friends like this’: Labor policies and the commercial, independent visual arts sector | Club Troppo

  3. Pingback: Artist resale royalties : a strange loop | Club Troppo

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