Australia: The New Resale Royalty For Artists

From 9 June 2010, Australia will have in place a Resale Royalty Scheme for Visual Artists (Scheme) pursuant to the provisions of the recently enacted Resale Royalty Right for Visual Artists Act 2009 (Cth) (Act).

Under the Scheme, artists will receive a royalty payment each time their artwork is commercially resold through the art market by an art market professional. The Scheme will serve to provide an additional income stream to visual artists, in contrast to the current state of play where an artist's income is derived from the one time only initial sale of his or her work. The royalty will allow artists to share in and financially benefit from the commercialisation of their works resold on the secondary art market.

The commencement of the Scheme and the ongoing future support and recognition it will provide to visual artists is of considerable significance to the art world: to the artists themselves, and to art market professionals, sellers and purchasers alike.

At present, comparable schemes administering resale royalties to visual artists operate in over 50 countries across the world. Each Member State of the European Union is included in this count.

Timeline of Key Events

Rationale

The rationale behind the right and Scheme includes:

• The creation of an ongoing economic interest in the work for the artist beyond the initial sale transaction.
• To go some way to rectifying the inequities between visual artists and other creators (such as songwriters, writers and composers) who can readily distribute their works in manner which is more favourable to generating copyright royalties.
• To go some way to changing the unfairness of the artist having no involvement nor receiving any benefit from the increased value of his/her work when its value increases over time and is resold for high prices. This is especially applicable to indigenous artists, who are often paid small sums for works which are onsold for hefty sums through the market.

The Right

• Is regarded as a copyright right as it is provided for in the Berne Convention (see article 14ter – "Droit de suite"). The Berne Convention is the main international copyright treaty to which Australia is a signatory.
• Will be unable to be waived and is absolutely inalienable. The artist will receive the royalty even if the copyright has been transferred to someone else.
• Applies to works resold during and for 70 years after the death of an artist.
• While it cannot be assigned or licensed, the entitlement to the royalty passes to the artist's estate when the artist dies.
• Applies where the artists or the beneficiary of the artist's estate is Australian or from a country with a reciprocal resale royalty scheme listed in the regulations to the Act.

The Royalty

• Applies to artworks created by the artist or produced under the authority of the artist.
• Is a capped flat rate of 5% of the sale price on a commercial resale for works resold for over $1000. The sale price includes GST but excludes any buyers premium and other taxes.
• Will apply to existing as well as new works resold from 9 June 2010.
• Will not apply to the first changes of ownership after commencement of the scheme, even if that change of ownership is a resale.
• Can be received by an entity (charity, charitable organisation or community body) with beneficial interest in the right if the artist passes the right to an organisation working for the benefit of the community.
• The seller is liable to pay the royalty. Buyers, sellers and art market professionals will be jointly and severally liable for making the royalty payment to CAL.

The Scheme

• Covers original works of visual art (graphic or plastic) including carvings, digital artworks, drawings, engravings, installations, fine art jewellery, paintings, prints and video artworks. Mass produced items are excluded.
• Applies to commercial resales involving an art market professional (auctioneer, owner or operator of a gallery or museum, art dealer or person otherwise involved in the business of dealing in artworks operating in that capacity (s 8(3), s 8(3)).
• Applies prospectively –to resales where the seller has acquired the work of art from 9 June 2010 – not only to works created after the scheme comes into effect.

CAL – Preparing for 9 June 2010

This month, after being announced the successful tenderer to administer the Scheme, CAL published useful facts sheets setting out the extent of its role and describing what the Scheme will mean for artists and art market professionals.

To comply with the Act, art market professionals have to provide certain information to CAL and, together with the buyer and seller, are obligated to ensure the royalties are paid to CAL to be on-paid to artists and their beneficiaries.

Artists will need to register with CAL to receive the royalty. CAL will retain a 10% administration fee of the royalties collected. CAL will publish notice of each commercial resale of an artwork on its website in accordance with section 22 of the Act.

CAL is also presently putting in place reciprocal arrangements with other countries which have a resale royalty scheme for visual artists in accordance with the requirements of the Act.

Conclusion

The Scheme is an important step forward for Australian artists and the Australian art market. When up and running, the Scheme will support one of the core objectives operating at the very heart of copyright – that of encouraging creative endeavour by providing incentive and reward to those who undertake it.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.