In 2018, global art sales reached $67.4 billion. Auction houses were responsible for over $29 billion of those sales, and an untraceable dollar amount is attributable to artworks sold through galleries doing business in the secondary market.
The auction and secondary market differ from the primary market, as the objects switching hands move from owner or dealer, to buyer. The artist does not partake in any stage of the transaction.
Thanks to the adoption of Artist Resale Royalty Rights, however, auction and secondary market sales benefit artists in 70 countries world world. This is much the same concept as screenwriters and musicians receiving a portion of royalties from subsequent sales of their work.
However, in the United States, no such federal laws exist to protect visual artist. States, for their part, have tried to adopt such laws only to be denied by federal courts. In 2018, for example, the Ninth Circuit court ruled that US Copyright law trumped California’s law requiring the payment of royalties to artists. Making a distinction between compensation to visual artists vs. any other artist all the more bizarre, Congress launched a new attempt to grant music artists royalties for radio play in November 2019 – the Fair Play Fair Pay Act.
The list of countries with artist resale rights include Algeria, Bolivia, Chad, Congo, Ecuador, Georgia, India, Iraq, Kazakstan, Paraguay, Senegal, United Kingdom, Uzbekistan, Venezuela, the entire EU, and many more. In these countries if a buyer purchases a painting for $900 from the artist and then flips the work at auction for, say, $85,000, the artist will receive anywhere from 5 – 15% of the hammer price – depending on the laws in that country. These numbers are, in fact, the exact prices from a case that emerged in 1973 around Robert Rauschenberg’s painting, Thaw. The argument against artist resale rights then, as well as today, is that “the resale right weakens the market.” (Merryman, et al. Law, Ethics, and the Visual Arts, 606 (5th ed., 2007)
Auction houses, galleries, and art collectors are aware of these laws. The profits they lose selling works in non-US markets drives their business back to New York City. No wonder the US has the largest art market in the world! Annual revenues continue to climb, auction records are broken every season, and more and more artists keep flooding into small Bushwick studios with leaky pipes, driving these sales and waiting for their piece of the pie.