Chapter 37. The Case of Resale Royalties
A resale royalty going to a Canadian artist every time his or her artwork is resold? What a great idea. It aligns royalty payment protocols in visual art with those for other creative professionals in the culture industry, such as composers and writers. The system exists elsewhere in the world Australia, California, France, the UK so why not Canada? Canadian artist Les Graff, the painter of this oil-on-board painting, would Im sure welcome a royalty cheque every time his 1977 Summer Hill was sold.
Current pre-budget proposals under consideration by the federal government state that every time an artwork valued over $1,000 is sold, a 5% royalty would be collected and distributed by a government-approved agency. In the case of a deceased artist, his or her estate would presumably receive the payments.
This could work like a pension scheme for some artists. As they mature and their reputation grows, the value of their work would increase and thus the amount of that 5% royalty payment would increase, helping them pay for their retirement. Furthermore, the amount of work produced by an elderly artist would naturally decline as he or she aged, and this scarcity of new pieces would prompt market demand and value to rise, as would the 5% royalty payment. Sounds like a win-win situation.
Now, where does this 5% royalty come from? Well, according to proposed pre-budget initiatives, from the seller and the dealer. Dealers, auction houses and private sellers, among others, would be required to contribute every time a painting by a Canadian artist was sold. To help offset the royalty payment, the price of the artwork would, presumably, be increased by 5% to justify at least in the mind of the purchaser the additional administrative cost associated with the collection and management of the royalty.
However, Ritchies Auctioneers (not affiliated with Sothebys Canada or Ritchies Inc.) has recently stepped up to the plate and announced that their Project Contemporalis, Contemporary Art at Auction, will pay resale commissions to Canadian artists. Their website proudly states, The resale commission will be derived from Ritchies own in-house commissions and will affect neither buyer nor seller. They have not yet announced the amount of the resale commission, but lets hope its 5% or greater.
No question, there are still challenges. For example, what about private sellers? How would private sales be monitored and the royalty collected? Would it be an honour system, or would artworks need to be registered with their owners and then acquisitions and dispositions from individual collections recorded? And what about reproductions? If they replaced originals, the numbers of works would increase to such an extent that any royalty scheme would become unmanageable.
Still, the argument could be made that if PST can be charged every time an item is sold and resold, then why cant we consider the royalty payment in a similar way, with the benefit going to the artist and not the government?
Next: The Case of Resale Royalties - Part 2