Saturday, July 19, 2014

Resale Royalty Update (UPDATED)

There was a flurry of coverage of the proposed resale royalty bill this week, centered around a hearing of the House IP Subcommittee on Tuesday.  The Art Newspaper's Julia Halperin says the bill is "gaining momentum in Congress."  More here from Artnet's Eileen Kinsella and here from AFC's Henry Kaye.  Nicholas O'Donnell has his usual helpful commentary here.  Despite all the noise, however, GovTrack still gives the bill just a 3% chance of being enacted.

I've been intending to write something more substantial about this issue (maybe if the chances of enactment rise to 5%, I will), but for now there's one point I'd like to make about the current version of the bill.  Though the "smart view" of the issue is that resale royalties are a terrible idea (for roughly the reasons expressed here), I think there are strong fairness-related reasons in support of the idea.  Christopher Rauschenberg had a Huffington Post piece this week where he talked about a work his father had sold to a collector for $900 which the collector later sold for $85,000.  Now imagine a similar example where the later sale was for $8 million.  That's the art world we find ourselves in today.  I think, in a case like that, most of us would have an intuition that that is deeply unfair to the artist and, all else being equal, if there were some way for her to share in that increase in value, that would be a good and just thing.  Now, that's not the end of the analysis -- all else might not be equal and there might be disadvantages to a resale royalty scheme that outweigh those fairness considerations, but I think it's at least worth acknowledging they exist.

But here's the problem with the current bill:  it caps the royalty at $35,000.  So in our example, where the collector sells the $900 work for $8 million or $18 million or God knows what, the artist gets ... $35,000.  I suppose you could say that's better than nothing, but I'm not sure it does very much to diminish the sense of deep unfairness that attaches to the transaction.  And, without that, the bill becomes a lot harder to defend against its critics.

UPDATE:  Sergio agrees:  "If the issue is 'fairness' and just desserts, then why set a ceiling?"