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I sold this small bronze torso for NZD395 back in 2007.
A copy sold for $500 in 2010.

This small bronze torso made in 2022 sells for over NZD3500

A 5% royalty

27/08/2022

The government has recently announced that a 5% royalty will be paid to artists from the resale of artworks on the secondary market. This has been welcomed with great enthusiasm by the industry at large. Artist Resale Royalty Scheme Details Announced | The Big Idea

Do people ever think?

This scheme is a bad idea, no, a very bad idea.

It will only make a very few rich artists a little bit richer and will have almost zero benefit to most artists. Just widening the gap.

This ill-conceived idea has come about from a situation where early works that sold for a few hundred bucks are later fetching thousands or even millions without any share of that bounty paid to the artist. This is perceived as unfair. It is nothing but.

First of all, this is an extremely rare scenario where the artist has become famous. The only factor influencing the market price of an artwork is the reputation (fame) of the artist. The famous artist can live handsomely from any new productions, and there is no reasonable, ethical, commercial reason for retrospective rewards on long sold pieces.

Would you find it fair to pay the architect and builder who designed and build your house some 20 years ago some 5% from the 2 million you just made from passing it at auction? ( Under the terms of this scheme, if the architect had since died, you would have to pay these 5% to its descendants… Fair enough for you?) It’s only market forces (offer and demands and inflation) that has made your house appreciate. The architect was paid a fair professional fee and should not benefit from market fluctuation, on which they had no control or influence.  What about the electrician, the plumber, the carpet layer? according to this crooked logic, they should get their share too.

The reality of the art market is that the overwhelming majority of artworks will never appreciate in value, quite the opposite. If the artist remains an illustrious unknown, the most likely scenario by far, your precious unique original is not worth the canvas it has been painted on all these years ago. You can perhaps recover a few dollars from selling the frame to a second-hand shop. That is the absolute reality, the brutal truth that no art dealer will ever tell their clients. Luckily, most people do not buy art as an investment, just out of love.

Along the same logic, should we ask artists to compensate art buyers for 5% of their loss at the time of resale? Would that be fair?

The vast majority of artworks sold at auctions go for a small fraction of the original gallery price, even less if adjusted for inflation. Having to pay 5% of that back to the artist will be an unpleasant sting to the seller and major nuisance to everyone involved without any significant benefit for the artists, except for that extremely small number of artists who, having become famous, don’t need these 5%. This scheme is trying to fix a problem that does not exist.

Besides, there is already a legal provision for visual artists to be paid royalties on the sale of reproductions of their work, famous or not. If some art is being used on postcards, books, posters, prints, T-shirt, coffee mugs etc… the artist, as holder of the copyright, will or can be paid a royalty every time such a reproduction is sold. This is exactly the same situation for other creatives such as musicians or writers who are paid a royalty every time their composition is played in public, or a copy of the book is sold. Again, this 5% idea is trying to fix a problem that do not exist.

It will put a 5% brake on the secondary market and since the value of an artist is only measured on public sales, it will restrict by 5% the possibility of recognition, thus having the opposite effect of what was intended.

And as always, the devil is in the details. This only applies to public sales, not on private transactions. There will be a threshold below which there is no royalties, restricting the scheme to a minute proportion of artworks. There will be an organisation responsible for managing all this, it will have to be self-funded and will charge some administration fee and, of course, the state will claim its 15% GST at every step of the process. These 5% will be taxable income.

The road to hell is paved with good intentions.

Who are the nutcase bureaucrats who have dreamed up such an irrational scheme? To what goals? Who is going to benefit from this nonsense? Do these busybodies’ government officials feel a need to justify their fat salaries by coming up with reforms and improvements, no matter how useless? Is this a political move to gain votes from the art sector? Are we doing this in New Zealand because it is done overseas? If the brits are doing it, it must be a good idea, right?

And why 5%? why not 2% or 45%? On what scale are we measuring that number? or are we pulling it out of a hat? 

From my personal viewpoint, as an artist, I see no personal benefit at all in this scheme. Through persistent hard work, my reputation has grown over the last 15 years, and I can now ask more money for my work than I did in my early career. This is only fair; an apprentice does not earn as much as an experienced practitioner. At first, I voluntarily asked little money for my production, with the objective of building a client base.  In the unlikely scenario where I become famous, by accident of luck, dead or alive, the owners of my works may sell it with a good capital gain. What would be fair, just, and reasonable, is that they are taxed on that capital gain, like any other kind of income. From the bottom of my grave, I’ll be happy to know that my posthumous luck is benefiting the community.

If you wish to react: Olivieroduhamel@gmail.com

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