"We have been following developments with regard to the derogation concerning the resale royalty legislation in the UK. Australia has recently enacted an artist resale royalty legislation that differs in major ways from the scheme created by DACS in the UK. The scheme adopted in Australia is nothing like the scheme that was lobbied for by DACS’ sister organisation, Viscopy (Australia). The tender for the implementation of the Australian scheme was not awarded to Viscopy (the CEO of Viscopy is Joanna Cave, ex CEO of DACS). The sole official Australian agency appointed by the government for the implementation and collection of the resale royalty is the Copyright Agency Limited (CAL).
The Australian resale royalty scheme is not in any way a precedent for the adoption of a fully retrospective, compulsory scheme, as envisaged by DACS. The resale royalty differs so much from one country to another as to beg the question: harmonising with what? The UK is being forced to harmonise with a phantom construct. The EU directives are very vague on important detail and the Berne Convention expressly forbids formalities such as compulsory, collective management (rhe Berne Convention Article 5(2) expressly forbids any member country imposing registration on a rights holder as a condition of protecting his copyright. The enjoyment and the exercise of these rights shall not be subject to any formality). Any claim that there is a single, uniform model of artists resale royalty is extremely dishonest.
The scheme, as it exists in the UK, is already a violation of the fundamental concepts that it claims to honour. The current push to further extend it in the UK continues the violation of both copyright as an individual right of control of usage and of the Berne Convention’s requirement that there be no imposed formalities. The imposition of retrospectivity, under Australia’s constitution, raised fatal difficulties under two sections of the constitution; one of which deals with unjust enrichment and the other with what are effectively privatised, tax collections (such as hypothecated taxes).
The Australian Act is not retrospective; it does not apply to the first resale of artworks that were purchased prior to the introduction of the scheme (9 June 2010). The scheme is not compulsory for artists. There is a case-by-case freedom (Clauses 22 & 23) to refuse consent to collection and if an artist wishes to, they can make their own arrangements regarding collection. Neither usage of the right nor collective management is compulsory. The foundational ethos of Australia’s polity is democratic, community-minded, pragmatic and liberal. In Australia, retrospective violation of individual property rights and compulsory collective management need much stronger justification than payments of benefits to those artists most favoured by the market.
Speaking as a successful mid-career artist, retrospectivity, for me, is morally wrong. I have no right to and certainly don’t deserve a royalty on resales of the hundreds of artworks I have sold at good prices to buyers years ago; buyers who were innocent of the knowledge of a future royalty. These buyers gave me bread and wine for my journey. I am grateful for the help and support they gave me. If I had been forced to collect the royalty then I would, as a matter of conscience, have returned all of the money including the collection fee to the person it had been stolen from.
Resale Royalties are of doubtful net value to artists. In 2004, Viscopy commissioned Australia’s highly respected economic modelling agency, Access Economics, to model the likely impact of the fully retrospective, and very draconian scheme, that Viscopy was lobbying for. In this report, Access Economics warned that the claim of net benefit to artists was: “based upon extremely unrealistic assumptions, in particular the assumption that seller and buyer behaviour would be completely unaffected by the introduction of RRR [ARR]” and that, “Access Economics considers that the results of this analysis are both unhelpful and potentially misleading” (see Access Economics' report). Viscopy suppressed this report.
The harm caused by such schemes is in the form of what doesn’t happen, and therefore the harm is easily overlooked and underestimated. When an artist, such as myself, sells a painting for $10,000, I pay $4,000 to the costs of sales and marketing (through my representative agent) and retain $6,000 as income. In the case of $10,000 resale, I would receive $500 (according to the Australian scheme with its flat 5% rate). If buyer nervousness about the resale royalty, was to cause me to lose just one $10,000 first sale (on the primary market), I would need the royalty owed on $120,000 of future resales to recoup the lost income of that one primary market sale. These are very unattractive odds.
The only clear beneficiary of the DACS model of the resale royalty scheme is the management of this piece of transaction fee velocity. The correct term for schemes such as this, and their advocates, is ‘rent-seeking’. The largest single payment will always be to the costs of running the scheme. In the current financial situation, the last thing needed is the imposition of further transaction costs on any market.
The compulsory scheme advocated by DACS and Viscopy is a monopoly restriction of the terms of trade of artists. It is anti-market, anti-competitive and economically illiterate. It imposes significant opportunity costs upon artists as well as significant and unnecessary transaction costs upon the market in which artists make their living. For many artists, maximising first sale prices is a much better bet than gambling on payments when you are old or dead.
The only argument for extending the scheme to long-dead artists is to further increase payments to management. The proposed extension of the UK scheme is rent-seeking par excellence. The principles of a free, civil society are far more important than the secondary, instrumentalist goals of efficiency and convenience for managements.
We should not forgot to mention that the Australian legislation for an artists' resale right is sui generis; it was thought to be too tax-like to be incorporated as an amendment to the Commonwealth Copyright Act, hence recognising the profoundly different definitions and intentions of 'royalty' and 'tax', a point that has escaped the proponents of compulsory, collective management. It is significant again in that it does not conform to the harmonisation argument and being sui generis, does not compromise or set a precedent within the Copyright Act that encourages a diminuition of individual right of control".This blog welcomes comments from Australia, from Europe and indeed from elsewhere on these observations.