You Paid How Much for That Painting? And the Artist Got Nothing?

When an artist initially sells her painting, she receives the full price of that work (less a commission, should she have sold it through a gallery instead of directly). But what happens when the purchaser resells that work? The proceeds benefit only that purchaser (and his or her gallery or auction house). As Patricia Cohen writes in today's New York Times (full article, here),

As the art market has become a high-priced playground for billionaires and hedge-fund moguls, interest in resale royalties has grown. A few celebrity artists have shared in the tremendous growth in wealth, but most — even those whose work may now command millions of dollars — don’t benefit if prices increase after the initial sale. 

At least, that's the case in the United States. In France, and some 70 other countries, a portion of the proceeds of the second sale (and third and fourth and so on) would go back to the original artist. California passed a Resale Royalty Act in 1976, requiring the payment of a 5% royalty on sales over $1,000 to the original artist, but the law was declared unconstitutional in 2012 (and is now being reviewed at the appellate level). 

Major auction houses are willing to go to considerable lengths to block a proposed national "resale royalty" act (also known by its French term, "droit de suite") rights, notably by hiring some pricey lobbyists.  The bill, introduced by Rep. Jerrold Nadler (D-NY, 10th District) and, in the Senate, by Edward Markey (D-MA) and Tammy Baldwin (D-WI), would require a 5% royalty payment to the artist on resale, to a maximum of $35,000. Any sale occurring at auction (large house, like Sotheby's or Christie's, small house, or online) would be affected; private sales (including galleries and dealers, not just between individuals) would not.

Auction houses, of course, "worry that the proposed royalty bill would encourage more sellers to abandon public auctions for private deals."

Sotheby’s and Christie’s have also argued that royalties would benefit only the wealthiest artists and estates, because they are the ones most frequently sold in the secondary market. To that, Mr. Nadler responds: "This is not an anti-poverty bill. It’s a fairness and equity bill."

Droit de suite was originally opposed by the US Copyright Office, but a December 2013 analysis revised that opinion (complete analysis, including a thorough review of the history of resale royalties, and arguments for and against the concept, here). 

Droit de suite may not be a perfect solution to a problem that few of us will ever face, but it's better than no solution at all.