Death of Resale Royalties Act Valley, California

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Death of Resale Royalties Act Valley, California

[/cs_text][cs_text]News broke recently that the Resale Royalties Act of 1976 has been struck down in its entirety by the United States District Court for the Central District of California. Despite lawyers and commentators poring over the minutiae, this news should come as no surprise in light of the fact that it contravenes the first sale doctrine of Federal Copyright law.

What were Chuck Close, Laddie Dill et al thinking?  Pissing into the wind (and paying lawyers for the pleasure of it) is no fun, even for contrarian self-flagellators (?!)  So what was their angle? There must have been an angle… Right?

Was it just a good old fashioned Artist’s protest?  Picketing for Artist’s rights? Or were they hoping to build momentum for a federally instituted Jerrold Nadler backed Federal Act perhaps?

But even if they were to achieve that, and a Royalties Act was instituted federally, it will still NOT ACCOMPLISH what they and 99% of Artist’s (including me) want… For all the reasons I’ve been at pains to explain on the #7/11 Project page.

Legislation cannot work!  Only a market based solution that works with the Latency Problem, not against it can solve the problem for the benefit of Artists, Buyers and Arts culture generally.

Despite this defeat, word is that the plaintiffs will be taking it back to the ninth circuit, and possibly the Supreme Court… What a waste of time. How about throwing some money at a real solution?

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The rest of the world v’s New York

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It’s been a few months since my last post for the #7/11 Project, partly because I’ve been devoting a lot of time to ‘From 0’ and new Artwork, and partly because it has been fairly quiet on the subject of Artist’s Royalties in the international media.

However there are a couple of movements to report on locally, with the second offering a platform from which to reason support for the #7/11 Project as an alternative to the broadly ineffectual / detrimental Resale Royalties Legislation…

So first up, Auckland based Bowerbank Ninow have introduced their own voluntary royalties scheme (RR Legislation does not exist in New Zealand) returning 2.5% to creators of works sold in their new gallery.  According to the galleries owners Simon and Charles, this was an ethically motivated decision (but one which has surely doubled well as a useful marketing tool… And why not indeed!?). Markets thrive on innovation, and its good to see Bowerbank Ninow mixing things up in Auckland. You can listen to their interview with Radio National here.

Secondly, across the Tasman (where RR Legislation does exist), the news is not as vital by half… ‘The market is failing Australian Artists’, according to this article in The Conversation.  The article is wide ranging in its its assessment of the reasons why, but one factor that is singled out for its Art market failings is, yep, you guessed it… Resale Royalties Legislation.

This will come as no surprise to detractors of Resale Royalties Legislation.  Indeed, anyone keeping track of my posts on the subject will understand why I count myself among that number. For even though I strongly believe that Artist’s should share in the value of their work’s appreciation, Resale Royalties Legislation is simply not the way to do it, and until market friendly solutions (like the #7/11 Project) emerge, we can expect more news of international imbalances, and atrophication of regional markets that are subject to RRL, at the expense of markets without…

Cue old blue eyes…

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Politicians, Lawyers and Artists discuss a red herring

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A debate took place on Wednesday evening at ‘Artists Space’ in New York between lawyers, politicians and artists about the virtues of Resale Royalties Legislation, and the Siegelaub/Projansky inspired contractual alternative.

Reading articles from around the web, it sounds as if the debate served mainly as an introduction to Royalties Legislation, with talks given on details  of the proposed Legislation, as well as a discussion about Hans Haacke’s favoured contractual alternative.

The title of this post is worded the way it is because I strongly believe that the Legislative and contractual approaches are a ’red herring’ and cannot solve the ‘Latency Problem’ on their own.  The best opportunities for an effective solution exist in the lateral domain of the free-market.

“I think we definitely achieved a lot in laying the groundwork for future discussions,” one of the Wednesday evening’s experts, Lauren van Haafften-Schick was quoted as saying after the event.

Let’s hope that any further discussions engage with the mechanics of ‘The Latency Problem’, and consider the broader, more lateral possibilities.

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The Curious Case of California

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The wheels of the US court of appeals have been turning again this past week, with the result being that supporters of Resale Royalties law in California have suffered a minor setback.

The long and short of it all is that the appeals court judges ruled that trying to enforce California’s Legislation on sales made out of state is unconstitutional, even if the Artist resides in California at the time of sale.  However, for what its worth, the law will still apply to sales made in state (for the time being at least).

Possibly the most interesting thing interesting about this news is the fact that the issue of resale royalty payments for Artists is being scrutinised in the US judiciary at a time when the ART Act is being put before congress for a third time.  With the pressure building, the question surely must become, ‘How much longer will the US hold out on the ART Act?’

US adoption of Resale Royalties Legislation will of course have ramifications for the rest of the world, but are they the right sort of ramifications?

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Resale Royalties Controversy

Gerhard Richter

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Gerhard Richter (photograph GeorgHH)

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Gerhard Richter has spoken out about what he has described as the “hopelessly excessive” amounts of money being paid for his works at auction, and that, “We artists get next to nothing from such an auction. Except for a small morsel, all the profit goes to the seller”.

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Meanwhile, Depot Artspace’s ‘Pre-loved, Re-loved’ exhibition in Auckland is promoting the re-submission of a Resale Royalties Bill for New Zealand.  And, rather disappointingly one of New Zealand’s most famous Landscape painters Grahame Sydney has decided to speak out on the subject by saying that supporters of Resale Royalties Legislation were ‘ “Greedy. Immensely greedy” and that, ”Artists have been persuaded by armies of sycophantic supporters that they are special. They are not. I don’t buy it.”

Perhaps Sydney also thinks we should abandon copyright law, and that such a privilege anoints a ‘special class’ of musicians, writers and film makers? 

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‘Bitchcoin’… A potential Latency Problem solver?

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An Artist Mints Her Own Take on Bitcoin’ was the headline of an interesting article I read this week.

What does Bitchcoin do?  Well, its complicated, and I’ll leave you to consider the nuts and bolts by reading the article and by visiting the Bitchcoin website here – www.bitchcoin.biz.  But, what I would like to comment on here is how it relates to the Latency Problem.

From that perspective, the value of Meyohas’s ‘Bitchcoin’, like Christopher Temt and Eugen Kment’s Money Art concept, is the way in which it forces us to rethink Art’s relationship with money, and the way in which it shows us that transacting Art doesn’t have to adhere to outmoded paradigms, or rely on well-meaning but ineffectual state intervention.

With regard to how Artist’s should think about transacting their ‘product’,  Meyohas and I are singing from the same hymn sheet, “As soon as an artist sells a piece, they are relinquishing their financial claim on that work,” she says in this Artnews article, which is to say more or less the same thing as “[…]once a one-off Artwork is sold, it has become somebody else’s property. […] So selling it, or should I say selling 100% of it, means that the Artist  disenfranchises themselves of a share in the Latent Value of the Artwork.”  (from Part 8 of the introduction to the #7/11 Project)

But could Meyohas proposition be considered a potential Latency Problem solver? Well, not quite… Bitchcoin is, when you think about it, a very brilliant conceptual Artwork based on much the same principals as Tom Saunders EADC futures contract, by asking Buyers to take a bet on her now, before the Latent Value Emergence process has had a chance to work itself through.

What’s missing is a mechanism to facilitate the Latent Value Emergence process – and that must be the key to unlocking the Latency Problem.

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Resale Royalties Legislation cannot solve the Latency Problem

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An article in a UK newspaper caught my attention the other day. 

Written by a tax barrister, the title of the article is ‘How to make the Wealthy pay Tax’, and it focuses on the recent allegations relating to HSBC and the Swiss bank helping client’s ‘dodge taxes and hide millions’.

http://www.theguardian.com/commentisfree/2015/feb/12/coalition-radical-tax-avoidance-failed-uk

The nub of the article in relation to Resale Royalties is that money and markets always locate themselves in places where it is most advantageous to be. Seems obvious right? That’s because it is.

So if one country or jurisdiction does not adopt Resale Royalties Legislation, the Art Market will most likely want to relocate itself to that place.  Evidence of this can be seen in the recent atrophication of the UK Art Market, and the corresponding increase in US Art Market business.

Unless blanket adoption of the Legislation is enforced worldwide, and percentages are fixed to avoid states competing for Art market business, you’re going to end up with the Swiss Bank tax avoidance issue being reflected in the Art Market.

And, how likely is it that global adoption and fixed Resale Royalties percentages are enforced worldwide?  Probably about as likely as the Swiss Bank tax avoidance problem being fixed…

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No Resale Royalties Bill for the US… and Glaciers

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‘No Artist Resale Rights for US, for Now’ – Artnet.com

What interested me most about this article was not the headline, but something else – ‘resale-right.org’s’  campaign for global adoption of Resale Royalty Legislation via WIPO (World Intellectual Property Organisation).

A noble cause, but is it well directed?

Let’s say the Resale Right is incorporated into law in all WIPO signatory states – who decides the percentage returns? Are they fixed at 5% or is it up to each individual state to fix their own percentages? If they are not fixed, then a jurisdiction offering lower percentages or better ‘breaks’ would look more attractive to the Art Market than a state where the ‘tax’ is higher.  If they are fixed, then this would constitute a unique WIPO directive wouldn’t it? How would it work on the ground – practically, legally…? And what about the problem of non-payment that Resale Royalty countries are already experiencing?

But before we get too carried away with the details… lets zoom back out for a second, and look at the bigger picture by asking a question –

Will global adoption of a Resale Royalty right solve the Latency Problem?

The long answer is contained in Parts 1 to 10 on the #7/11 Project page. The short answer is ‘No’ because Resale Royalties Legislation does not facilitate the ‘Latent Value Emergence process’.  Rather, it ‘taxes’ the process. It encumbers sales. It is necessarily an appeasement of the sentiment that brought about its creation. Or, if you want to put it another way; it is a ‘sledgehammer to crack a walnut’.

So, whilst it’s tempting to say ‘Anything is better than nothing’ when it comes to Resale Royalties Legislation, I believe there is a better way that works for everybody… Even those that allegedly lobbied against the US Bill.

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Anyway, after a day in the mountains yesterday visiting a giant wall of turquoise blue ice I’m back in the studio today putting the finishing touches to the long and involved ‘Better Waters’ series of Artworks…

Glaciers aren’t the only things that move slowly.

If you are interested in the #7/11 Project please contact me, or if you’d like to share your thoughts and comments, please do so below.

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The Contract

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An interesting article about a group show in New York entitled ‘The Contract’ cropped up in my inbox today, and I thought it would be an ideal opportunity to write an addendum to Part 3 – Seth and Bob’s Contract.

Reference is made in the article to the practicability of enforcement issue, but it doesn’t go into a great deal of detail, so I’d like to make a comment or two on that –

a)  Last time I pursued the contractual angle, my understanding was that contracts were binding upon parties to the first sale, but could not be enforced against future buyers of the work (within the ‘Anglosphere’ at least, and without bastardising shipbuilding(?!) contract law).  So the integrity of the on-selling chain becomes a matter of goodwill between people who may never have met.

b)  Even if point (a) above can be negotiated, the cost of enforcement leaves a big question mark over ‘practicability’.  The cost of enforcement would be prohibitive for most Artists.  Imagine this scenario;  a US based Artist sells to ‘Buyer A’ who on-sells to ‘Buyer B’.  Buyer B then relocates to Brazil, where he reneges on the contract and on-sells to ‘Comprador C’…  How on this earth is US Artist going to enforce Seth and Bob’s contract…?  Unless they’ve got very deep pockets to pay all those lawyers, or the work is very high profile, they haven’t got a hope.  Even sales within the same jurisdiction as nominated in the contract are going to be tough to enforce, because of the cost and time and energy involved (‘the practicability’ of enforcement).

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Jean Francois Millet. ‘Self-portrait’, 1851-53

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The only way that the contractual system could make any progress is if there were a central administering organisation with a good deal of political and financial clout to represent Artists when the chain of on-selling is broken… Which starts to make globally co-ordinated Legislation backed by Unesco look preferable.

But… As mentioned in ‘Part 3’, talk about enforceability really should be considered secondary to an arguably more important question – How do we design a system that is attractive to both Artists and Buyers, rather than appearing as a tax on Art sales?  And how do we dynamise the Latent Value Emergence process, so that Artists (and their investor/collectors) receive an ongoing income now, rather than waiting around for the ‘if and when’ of a Buyer deciding to on-sell a piece of work…?

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Part 10 – Towards a New Art Economy

As discussed in Part 6, if an Artwork increases in value, it happens over time, and involves a sort of elongated conversation guided by industry professionals.  Sometimes, the course of that conversation can be artificially altered, depending upon the amount of exposure the Artist gets, but ultimately there should still be a convergence of opinion, which determines whether the value of the work goes up, or not.

So, how could a solution to the Latency Problem dynamise that conversation?  Firstly, by open it up to as many people as possible and making it web-based.  A natural consequence of this, is that the process is not only dynamised, but democratised.  On the one hand for example, industry professionals would offer their expert appraisal.  On the other we would have the general public giving us an aggregate of their opinion.

Next, how can we stimulate that conversation in a way that works with our economic system whilst preserving the Artist’s interest in the original Artwork?  If we can answer that question successfully then we may be getting close to solving the Latency Problem…

And that is where the core concept discussed in Parts 8 and 9 (shares in an Artwork) comes in, by enabling a new ‘pre-Primary market’ economy.

In contrast with previous solutions, the #7/11 Project makes use of an open, free market rather than trying to work against it.  By offering affordable stakes in an Artwork, the concept democratises audience participation in Fine Art culture.  And, each time a trade is made, the conversation around value (Latent Value Emergence process) is stimulated, with the Artist and co-owners receiving a share of the transaction amount if the work has increased in value:  the Latency Problem is facilitated.