Artist Resale Right Does Not Seem To Affect Art Market, Economic Study At WIPO Says

A few days after a Leonardo da Vinci painting shattered the record for the most expensive artwork ever sold at Christie’s auction house in New York, the question of resale right for visual artists was discussed at the World Intellectual Property Organization. According to researchers, the establishment of a resale right in a particular country, which benefits the artist when her work is resold at a much higher value, is likely to have no negative effects on the country’s art market. The United States and China, the two largest global art markets, have not implemented the resale right yet.

During the 35^th session of the World Intellectual Property Organization Standing Committee on Copyright and Related Rights (SCCR), a study [pdf] on the economic implications of the artist’s resale right was presented by co-author Joëlle Farchy, professor at the University of Paris-I, Panthéon-Sorbonne.

The resale right is a particular type of copyright that applies to artists working in the graphic and plastic arts, such as painters and sculptors. It is a right to remuneration which is calculated on the basis of a percentage of the resale of the work.

According to Farchy, the art market involves purchasers, sellers, and intermediaries (galleries and auction houses). The art market is highly concentrated, she said, with three artists accounting for 22 percent of the value of the auction market for contemporary art, in 2014.

There is a very strong correlation between the wealth of a country and the number of major collectors in that country, she said, adding that the “explosion in the number of millionaires worldwide” has led to the arrival of a new category of collectors who are likely to bid up to very large amounts, she said. It is estimated that worldwide as many as a thousand collectors are able to invest US$5 million in an art work, she added.

The art market is “extremely speculative in nature,” said Farchy, with “an absolutely phenomenal increase in record sale prices.” In the 1980s, a work that sold for US$10 million was a work considered to be in the upper level of prices. In 2000, that level jumped to US$100 million, in 2015 to US$300 million, and is over US$400 million today, she said, referring to the sale by Christie’s on 15 November in New York of Leonardo da Vinci’s Salvator Mundi (Saviour of the World) for US$450 million.

The US and China are the largest art markets, followed by the United Kingdom and France, according to Farchy. About 80 percent of the total value of the art market is transacted in those four countries, she said. The UK and US markets are the world leaders in value terms, and the French market is a market of volume, where a large number of transactions are taking place but with prices which are substantially lower than in the US and in the UK. France’s overall market share is 5 percent of the total, she said.

The Chinese market is mostly a domestic market, Farchy explained, as in China, the auction market essentially involves the sale of Chinese artists, with mostly Chinese buyers. Chinese artists are however sold all over the world.

The resale right was first created in France in 1920, then was recognised in international texts for the first time in 1980, in the Berne Convention for the Protection of Literary and Artistic Works. The recognition of the right in the Berne Convention was a “very vague, broad type of recognition,” which left policy space for national legislation, she said. There are approximately 80 countries applying the resale right, but China and the US do not.

No Perceptible Ill Effect on Art Market

Economists have looked at the consequences of the resale right on the art market, Farchy said, in particular at the delocalisation of the art market. The most significant of the empirical studies have been carried out on the case of the UK.

The UK introduced the resale right in 2006, following the 2001 European Union Directive (2001/84/EC [pdf]) on the resale right for the benefit of the author of an original work of art, she said. According to the report, in 2012, the benefits of the resale right were extended to include the heirs of artists.

No perceptible negative impact was noted after the introduction of the resale right, she said, and a presumed rise in delocalisation of sales was left unproven, she added. A number of reasons can influence the weight and the presence of a country on the art market, but applying the resale right or not is not the most important argument when it comes to a seller choosing where to sell his/her work, she said.

In Australia, the introduction of the resale right in 2006 was the source of additional remuneration, in particular for aboriginal artists, she said.

Beyond the debate on whether to establish a resale right in a given geographical area, the specific modalities of the implementation are particularly important. Questions such as whether to include heirs of the artists in the resale right, 70 years after the death of the artist, and the percentage applied to the resale prices are to be considered carefully, she said.

In the EU, she said, no matter the price of the sale, the resale right will never exceed €12,500 (US$ 14,600), because it is capped by the directive.

 

Image Credits: WIPO