Will the “Artists’ Resale Right” Come to Canada and the US?

Well over half the world (more than 90 countries from Algeria to Venezuela, with all of the members of EU, Britain, Australia, Mexico and many African countries included) have an Artists’ Resale Right (ARR) in their copyright law, but not North America north of the Rio Grande—except for California. North of Mexico, the ARR does not exist except for a 1970s era California law that has been ruled unconstitutional because it infringes on the US federal government’s right to regulate copyright. But that may be changing, at least in Canada and possibly in the US.

The Artists Resale Right is a provision whereby visual artists (e.g. painters, sculptors) are paid a “royalty” each time one of their works is resold. Usually, a minimum or floor price is established before the ARR kicks in, and the sale has to be public, i.e. through a dealer or gallery. When authors sell a book, they get ongoing royalties from sales of the book as well as–in some countries (Canada is an example)–an income stream based on the number of times a work is borrowed from a library (the Public Lending Right). They do not, however, get any revenue from resales of their books, once read and thus “used”. But then a used book when resold tends to lose value. Visual art is often different. Like authors, songwriters and musicians also earn royalties, but this occurs when their work is played or performed. A popular work keeps on giving, except for visual artists unless they live in a country with an ARR regime.

Stories abound of artists who sold early works for a pittance, only to see them rise in value as they changed hands, with profits going exclusively to owners or galleries but not the artist. As recounted by the Center for Art Law in the US, in 1973 prominent art collector Robert Scull sold a Robert Rauschenberg artwork, “Thaw”, at auction for $85,000, at almost ninety five times more than his original purchase price. Scull had purchased the work from dealer Leo Castelli about fifteen years earlier for only $900. Rauschenberg confronted Scull, accusing him of unfairly profiting from the artist’s work. That notorious confrontation provided impetus for the introduction of an ARR in the US at the time, but it failed to gain traction in Congress, despite legislation being introduced in the late 1970s and again in the mid-1980s. The opposition of the art dealers lobby was a prime factor in blocking the initiative.

In Canada, as I recounted in an earlier blog post on the Artist Resale Rights issue, the noted Inuit artist Ashevak Kenojuak sold her famous print, Enchanted Owl, for just $24 in 1960. That’s all that she or her estate ever received for the original work, even though original prints have subsequently sold for over $200,000 (although she may have earned royalties on further reproductions of the work in the form of low-cost prints). The institution of an Artist Resale Right would help redress that situation. Just as in the US, the Art Dealers Association of Canada is opposed, arguing that an ARR would create a bureaucratic nightmare, particularly for small galleries. However, I would contend that if it has been possible to establish a royalty system for the playing of licensed music even in small establishments, in malls, elevators and elsewhere, it should not be beyond the wit of mankind to be able to collect royalties on sales of physical art. The music royalty system works because of the existence of copyright collectives whose prime function is to collect royalties and distribute them, taking a percentage for themselves to cover operating expenses. In Canada, the collective CARFAC (Canadian Artists Representation) and its Quebec counterpart RAAV (Regroupement des artistes en arts visuels du Québec) are ready and willing to step in to fill the role of collection and administration.

The dealers have a number of arguments up their sleeves to oppose the institution of an ARR. They argue that an ARR will increase costs to purchasers and thus depress art sales. The resale fee, like the dealer’s commission, is either paid by the seller or shared between the seller and the dealer. In either case, such an arrangement normally results in increased prices that are recovered in the end from the purchaser. The increase in prices resulting from the addition of a five percent royalty, according to this line of argument, will hurt emerging artists selling their works for the first time (because their work will be more difficult to sell) while the ARR will primarily reward established and wealthier artists. Or so the argument goes. This argument that resale right royalties will go mainly to well established artists who are already wealthy was picked up by cultural columnist Kate Taylor in a recent report in the Globe and Mail.

If dealers are so concerned to keep prices low, they could of course reduce their own commissions, but there is no reason for them to do so. In fact, increasing the value of art is what the business is all about. It is hard to take seriously the argument that the addition of a small royalty–some royalties, like those in France are capped, so that works selling for millions of Euros still bring only a relatively modest return to the artist—will undermine the market. In fact, many aficionados and collectors might welcome the knowledge that some small part of the price will actually flow back to the artist or their estate. While it may be true that most art does not have much of a resale value, keeping a low threshold for triggering the royalty will help address this. It has been suggested that the cut off in Canada be $1000, which, admittedly, will bring a return of only $50 to the artist—but it will establish the principle. Setting the threshold higher would eliminate micro-transactions but would then capture a smaller portion of resales. It’s a bit of a balancing act.

Countering the dealers’ economic arguments is the moral argument of fair return to the creator of the work. A resale right provides a form of ongoing return to visual artists (who retain the copyright to their works even if the physical copy is sold) similar in principle to the royalties to authors, songwriters and musicians. And there is also a cultural equity factor to consider. In Canada, much of the sculptural work sold in galleries is of native origin, especially Inuit. A regular revenue stream, even a modest one, would be welcome in northern communities and would provide a way of helping even out the disparities and profit-taking enjoyed by southern collectors and galleries. The same principle applies to African art, which in part explains why a large number of African countries have adopted an ARR. By applying it in their countries, their artists get the reciprocal benefit of collecting resale royalties when their works are sold in galleries in Europe. It helps a bit in levelling the playing field.

The ARR may even feature in the upcoming UK-Canada Trade Agreement, which is being negotiated to replace the trade regime previously existing between Britain and Canada when the UK was part of the EU. British artists are keen to expand the reciprocal nature of their resale regime; Canadian artists would welcome a commitment by Canada to establish an ARR which would give them access to the same privileges in Britain (as well as resale royalties when their works are sold in Canada).

If Canada moves in this direction, and the Trudeau government has given strong signals that it will do so[i] although exactly when is still not clear, then US artists will have one more reason to resurrect the issue in the United States. If Europe can do it, if Britain, Australia and Canada can do it, if over 90 countries can recognize the work of their artists by building in this economic incentive to help support the arts, then why not the United States? US exceptionalism is one thing; fairness to artists is another. If the ARR comes to Canada—and it already exists in Mexico—then the only “Amigo” in North America not playing the game may eventually decide to come on board.

© Hugh Stephens, 2022. All Rights Reserved.

---

[i] The December 2021 Mandate Letter for the Minister for Innovation, Science and Industry, who holds lead legal responsibility for amending the Copyright Act, included the following instruction; “Work with the Minister of Canadian Heritage to amend the Copyright Act to further protect artists, creators and copyright holders, including to allow resale rights for artists.”