Artists Resale Royalties: on bullshit, part three

Australia’s Artists Resale Royalty (ARR ) scheme has so far cost taxpayers $2.2 million in direct support. And over many years the publicly funded lobbyists for this scheme, headed up by the National Association for the Visual Arts  Ltd, have additionally spent a lot of public money on lobbying for their scheme. ARR is a very political project. It is imposed by law on a lot of small ‘sole trader’ businesses; it imposes quasi-compulsory collective management on artists and also imposes a restraint of trade on an art market where profit margins are generally quite thin. ARR is not an ‘art project’.  

The fact that these publicly funded arts organisations have, for years, been free to use public money, intended for art projects, to conduct a very partisan political campaign really rankles.

The lobbyists for compulsory ARR are involved in a ‘last ditch’ lobbying campaign for their compulsory ARR scheme to “continue”.  As always there is a lot of fudge and misleading by omission to their advocacy. In particular they continue to claim that the majority of royalty payments, to date, have gone to indigenous artists: in this case to date is a very very large lump of fudge.

In the first years of the scheme’s operation, most of the royalty payments raised were on resales of indigenous art. However because resales of indigenous art make up only about 10-15% of total art resales by value, it is inevitable that in time more and more of the royalty payments will come from the resales of non-indigenous art. And it is also inevitable that the distribution of royalty payments by value must, eventually, map to the universal truth that when it comes to the resale of art: artworks by the top 20 artists most favoured by the market get most of the money and the next 80 or so of bestselling artists get most of the remainder.

The agency charged with administering the scheme, the Copyright Agency Limited (CAL), recently released some updated figures and information about the operations of the ARR. I also note that this detailed information was not made available at the time of the ARR review process. The following analysis is based on the figures provided within that report.

Generally speaking, analysis of the top 21 payments confirms that this scheme is already starting to follow the usual market pattern: a handful of sales of a handful of top 20 artists  constitute most of the total value of art resales and therefore most of the total value of collected Art Resale Royalties.  This is despite the fact that the scheme apparently only currently affects about 10% of resales (according to CAL’s report). Obviously as the scheme starts to affect more and more of the majority of  art resales, the skewing of the distribution to a handful of artists such as Whitely, Nolan, Williams etc will inevitably become more pronounced. It would only take the scheme to collect another 10 to 20 high-end sales in the next year, for it to push the distribution to the handful of artists most favored by the market towards 30% or more.

The breakup of the top 21 resale royalty payments is :

In the upper brackets of royalty payments, there have been:
–  10 payments between $10,001 and $20,000
–  10 payments between $20,001 and $50,000 and
–  1 of $55,000.

The 3 biggest known payments were $55,000, $50,000 and $42,000, totaling $147,000.
These payments went to 3 well-off and dead non-indigenous male artists (one was alive at the time of payment).

There have been a further 8 payments of between $20,001 and $50,000; only 1 of these was to a indigenous artist (or estate).

If we take the average of these 8 top payments to be $25,000, then the total value of these 8 payments is $200,000.

If the payments between $10,001 and $20,000 had, for arguments sake, an average value of $13,000 each, then total value of these 10 payments is $130,000.

In short, the top 21 payments had a total value of around $480,000: that is about 20% of all the royalty monies collected. These 21 payments  account for just 0.3% of the 7,800 payments reported in CAL’s info sheet and yet this handful of payments already accounts for about 20% of all the monies collected.

Only one of the payments between $20,001 and $50,000 was to an indigenous artist or their estate. The biggest single payment ($55,000) was to a dead non-indigenous male artist’s estate.

The likely total value of these top 11 payments is approx $350,000 and about 90% of this total has gone to non-indigenous artists. CAL states that of the “top 20” payments, 7 have been to indigenous artists. Given that only 1 of these was in the top 11 payments, the remainder – 6- must be in the $10,001 to $20,000 bracket.  The total value of this bracket is likely to have been around $130,000. Therefore while the indigenous artists  may have got the majority of this money, it is only the majority of the lowest value slice of these top 21 payments.

Given enough time Australia’s ARR or Droit de suite scheme must come to resemble the scheme in its country of origin, France. In France these days the estates of a handful of famous dead artists – Picasso, Matisse and the like – receive about 80% of all the resale royalty monies collected. The publicly funded lobbyists for compulsory ARR have, over many years, spent quite a lot of the limited budget for publicly funded art projects on their bullshit scheme. It is time that it is finished.

About john Walker

John R Walker Is a professionally practising artist who has exhibited regularly, nationally and internationally, for more than 30 years. His work is held in the collection of the National Gallery of Australia, most state and regional gallery collections and in private and corporate collections in Australia, Britain and the USA. John R Walker is represented by Utopia Art Sydney. For more information visit johnrwalker.com.au
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10 Responses to Artists Resale Royalties: on bullshit, part three

  1. This is the single best article I have read about the Artist Resale Royalty Scheme. The Scheme is putting undue pressure on an industry that can’t withstand it. I have seen too many galleries close of late. There are now too few galleries to represent new up-and-coming artists. This scheme is a regressive tax. It is cutting already too-thin margins to pay off rich, dead, white artists’ estates. It has to go now.

  2. paul frijters says:

    yes, another great article on this scheme, John! Let’s hope this form of hidden unemployment amongst art bureaucrats is indeed brought to a stop.

  3. conrad says:

    Out of curiosity, I was wondering how this is enforced if the artwork is taken overseas? In particular, with artwork that is expensive, presumably there is a big enough market that the expense of transporting it is more or less negligible, so what stops people simply selling/buying it in another country that doesn’t respect the Australian rules and then transporting it back (or indeed, to wherever they want)?

    • john Walker says:

      The issue of leakage of sales to non ARR countries is a real one for the EC. The EC is currently the only place with ‘wall to wall’ “functioning schemes” ( Australias scheme has not been recognised by the EC

      • john Walker says:

        sorry got ‘cut off’.

        The issue of leakage of sales to non ARR countries is a real one for the EC. The EC is currently the only place with ‘wall to wall’ “functioning schemes” ( Australias scheme has not been recognised by the EC). Many of the buyers of EC/UK art these days, are not EU residents – hence the artwork will provably be eventually shipped to US or China , so moving the place of resale from London to New York is quite a possibility.
        Hence the background to the push to “continue” our ARR is that the US is currently ‘considering’ introducing ARR, if Australia which has a very close relationship with the US was to axe our ARR , then the chances of the US introducing ARR become even more remote than they already are.

  4. Nicholas Gruen says:

    Why am I not surprised that CAL is involved?

    • john Walker says:

      Agreed. The odd thing about ARR is that, ARR a anti-progressive tax if there ever was one , has been an article of faith for the Luvies for so long.

  5. If only it were a tax, at least then it wouldn’t apply to loss-making works!

    • john Walker says:

      Agree! And if it was a tax it would be collected by the ATO, not by a bunch of unrepresentative, self-appointed collection societies. Also, if it was a tax and allowed for costs, it would cost more than it raises. In fact, ARR as it is in the European Commission is an hypothecated tax; something that is anathema to Treasury. Therefore in Australia, it is a hidden, unworkable mess as well as a bad idea.

    • john Walker says:

      Amanda
      Jeremy Philips is a UK IP lawyer and a eminent IP academic.

      Jeremy recently posted some thoughts on, and a link to, one of our recent Troppo articles on the ARR scheme, titled Artists’ resale royalties: a piece of pie, or not even that?

      In concluding his piece Jeremy posed the following questions about Australias ARR scheme:

      Readers may wish consider whether the Australian ARR scheme is
      (i) right in principle and right in practice, (ii) right in principle but wrong in practice,
      (iv) wrong in principle and wrong in practice or, improbably but not impossibly, wrong in principle but right in practice.
      Do let us know!

      What do you think?

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