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Nationwide royalty on artwork sales introduced in Congress

A bill would require large auction houses to pay 7% on sales over $10,000 of works by living artists or dead artists whose works are not yet in the public domain. Half the proceeds would go into an art acquisition fund for nonprofit museums.

December 16, 2011|Mike Boehm, Los Angeles Times
  • A man looks at 'L'Aubade' by Pablo Picasso on display at Sotheby's during a preview of their Impressionist and Modern Art sale in New York, October 28, 2011.
A man looks at 'L'Aubade' by Pablo Picasso on display at… (Brendan McDermid / Reuters )

A bill introduced Thursday in both houses of Congress would force large art auction houses to pay a 7% royalty on sales of artworks costing more than $10,000. It would apply only to works by living artists, and dead ones whose works haven't yet entered the public domain, which occurs 70 years after the creator's death.

Artists and their heirs wouldn't be the only ones getting paid. The bill, which amends existing copyright law to provide for America's first nationwide royalty on sales of visual art, calls for funneling half the proceeds to a new federally supervised fund that would help nonprofit museums buy artworks by living, U.S.-based artists.

Royalties on a $1-million auction sale would be $70,000; on a $20,000 sale they would be $1,400. In addition to original, unduplicated works, a royalty would apply to numbered and signed limited editions of up to 200 copies of an image, photograph or sculpture.

Only auction houses with annual sales of $25 million or more would have to pay the royalty; it would not apply to Ebay or other auction sites that operate only online. Executives at the top auction houses, Sotheby's, Christie's, Phillips de Pury and Bonhams & Butterfields, could not be reached Thursday for comment.

The sponsors, Sen. Herb Kohl (D-Wis.) and Rep. Jerrold Nadler (D-N.Y.), said the Equity for Visual Artists Act of 2011 would help put painters, sculptors and photographers on a more equal footing with authors, playwrights, composers and musicians who already benefit from major income streams thanks to copyright law. Currently, visual artists get paid just once, when they sell a work to its first owner. Subsequent earnings come from reproduction rights paid by publishers, filmmakers and others who want to present the work's image in print, online, or onscreen -- which Kohl said is "only a tiny amount."

The big money in art is from resales that often happen years after the initial transaction in which the artist was paid. The artist's subsequent output and rising reputation can add to an earlier work's value, but in the United States, the markup goes solely to the current owner, with a share going to the dealer or auction house that handles the transaction when it's sold and the increased value is realized.

It has long been different in Europe, where laws commonly recognized a "droit du seigneur" – the right of a creator to take a cut whenever a work is resold.

The bill exempts private sellers, art dealers and galleries from having to pay a royalty. Bruce Lehman, who played a key role in drafting it as counsel for the Visual Artists Rights Coalition, a group of artists and two major American organizations that represent artists in copyright matters, said that focusing only on the big auction houses will capture most of the resale market while simplifying enforcement and avoiding what would otherwise be a likely outcry from the far more numerous ranks of art dealers.

Sales handled by dealers aren't done openly like public auctions, and monitoring dealer sales would be difficult and probably expensive, said Robert Panzer, executive director of VAGA, which along with the Artists Rights Society is one of the two main New York-based organizations that represent member artists in copyright matters.

The bill specifies that "collecting societies" such as VAGA and the Artists Rights Society can keep up to 18% of the royalties paid to cover the cost of collecting and distributing the money to their members. Lehman said the 18% comes from what musical performing rights societies such as ASCAP and BMI, which represent songwriters and composers, typically incur while administering their members' copyrights.

Panzer said backers of the federal bill wanted to avoid the problems that have beset a widely flouted, hard-to-enforce California law that's the only one in the nation providing for artist royalties.

Since the late 1970s, the California Resale Royalty Act supposedly has covered sales of works by living U.S.-based artists and those who've been dead less than 20 years. It applies to sales that take place in California, as well as out-of-state sales in which the seller lives in California. Some auctioneers, dealers and individual collectors pay the 5% royalty, but many do not. Christie's and Sotheby's, targeted in recent lawsuits brought by artists to enforce the state law, have said they are confident they will win because California has no constitutional authority to enforce copyright law, which is solely a federal prerogative.

"What happens in California has been kind of a joke," Panzer said.

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