First Semester Report
On February 14, 2006, the UK Artists’ Resale Right (ARR) came into operation, after a year-long media campaign on behalf of UK art market professionals opposing its introduction, and a media campaign led by the Design and Artists Copyright Society (DACS) on behalf of UK artists supporting its introduction. What are the highlights of the fast six months or so of ARR operating in the UK?
Readers will recall (AM293) the UK governments legal obligation to enact into UK legislation the requirements of an EU law (Directive 200I/84/EC) requiring all EU Member States to give their artists an automatic legal right to receive a payment when their works are resold. ARR will apply to works protected by copyright law (works that have been made by independent creative skill and labour – have not been stolen from another artist), and will last for the same length as copyright (the lifetime of the artist plus 70 years after the end of the year of the artist’s death). The amount of the royalty payable is a percentage of the sale price based upon a fixed sliding scale of consecutive portions of that price:
Portion of the safe price – Percentage amount
From €1,000 to €50,000 – 4%
From €50,000.01 to €200,000 – 3%
From €200,000 to €350,000 – 1%
From €350,000.01 to €500,000 – 0.5%
Exceeding €500,000 – 0.25%
However, the total amount of royalty payable on any one sale shall not exceed €12,500; sales of less than €1,000 and those made within three years of the artist’s studio sale or gift are outside the scheme, as are sales between buyers and sellers who are not art market professionals. Sales of works of dead artists come within the scheme from January 1, 2010. The ARR royalty must be paid by the art market professional (usually the seller or their agent) directly to an artists’ collecting society, which in turn will pay the artist (artists cannot claim their ARR royalties directly).
Accordingly, living artists (and, from January 1, 2010, the estates of artists who died less than 70 years earlier) need to contact a collecting society to which they should transfer management of their ARR. The ARR of artists who do not register with any collecting society are automatically managed by ‘the collecting society which manages copyright on behalf of artists’ – the only such society in the UK is DACS. This means that UK art market professionals who have not been contacted by any collecting society mandated by any living EEA artist whose works they have sold on or after February 14, 2006 (note: the ARR applies to all European Economic Area (EEA) artists whose works are sold in the UK, not just UK artists) should send the ARR royalty payment directly to DACS. And only DACS, because no other UK Collecting Society also ‘manages copyright on behalf of artists’ generally in the UK. This has recently been confirmed by the government department responsible for overseeing UK’s ARR, the UK Patent Office, which recently stated: ‘Any number of collecting societies may set up to collect resale right provided they have mandates from those they represent but only those societies which manage copyright in general on behalf of artists could be deemed to be mandated and entitled to collect on behalf of non-mandating artists. Currently DACS is the only organisation we are aware of which meets these criteria. DACS may therefore collect on behalf of all artists who have not mandated another collecting society.’
Two other collecting societies have been established in recent months to offer to living UK artists management of their ARB. So artists have a choice of three organisations to mandate management of their ARR. DACS is a 20-year old not-for-profit artists copyright collecting society (register online at www.dacs.org.uk/arr or request a registration form to be posted by phoning 0845 410 3410 or email email@example.com). The Artists’ Collecting Society (ACS) was recently established at the request of artists represented by the Society of London Art Dealers and the British Art Market Federation, ‘with the aim of supporting the art trade’ (020 7908 1604 or email firstname.lastname@example.org). Artists’ Rights Administration Ltd (ARRL) appears to be a commercial company established by an art dealer specialising in Russian art (no contact details to date).
The two not-for-profit collecting societies charge mandating artists a commission fee to cover their administrative costs: at the time of writing ACS charges 15% of the royally payment collected; DACS’ policy is to match the lowest of its competitors’ charges (on the ‘never knowingly undersold’ principle) and therefore currently charges 15%; the commercial collecting society, ARRL, currently charges 20%.
DACS has been the first of the three UK collecting societies to receive and pay out royalties, which it began to do in July 2006, following months of preparatory work, software modelling and so on, and establishing good working relationships with art dealers, galleries and auction houses; and achieving specific mandates from living UK artists. DACS pays its artists every 30 days. DACS has established an international network, through its sister copyright collecting societies throughout the world, to collect ARR royalties for UK artists from overseas, and for the administration of which DACS mates no charge to UKartisis.
It is understood, at the time of writing, that ACS and ARRL each have mandates from a handful of artists, but neither has invoiced nor received royalties, and therefore has not paid out. ACS proposes to pay artists twice yearly, and ARRL’s policy is not yet known. Neither body collects ARR payments for UK artists from overseas.
Collecting societies throughout the developed world have been operating for a century or so to manage intellectual properly rights of creative and performing artists and their publishers, on the basis that it would be impractical or uneconomic for the artists themselves to monitor and manage. It is very unusual for there to exist in one country more than one organisation managing the same intellectual properly rights collectively, because this duplicates the resources devoted to managing the artists’ mandates and inevitably increases overall costs (to artists generally). UK artists themselves will ultimately decide which ARR collecting societies will succeed, and which will disappear, because their economic survival entirely depends on the artists’ mandates.
Although it is far too early to tell, professional art market sales in the UK since February 14, 2006 do not appear to have been damaged by sellers and/or buyers opting to trade in, say, Geneva, New York City, or other non-ARR countries, as was strongly predicted would happen by UK art market professionals opposed to the introduction of ARR.
Compared with the Republic of lreland, the UK appears to have taken well to the introduction of ARR. The Irish government failed fully to implement ARR by the beginning of 2006, as was legally required by EU law, and instead adopted a much slower, two-stage approach: it issued a simple set of very basic ARR regulations – five months or so after the EU implementation deadline – ‘rather than wait for all the more complex matters to be addressed in their entirely’. Irish artist Robert Ballagh took legal proceedings against the Irish government for this failure, and an Irish court recently awarded him compensation of €5,000. “The award was based upon Ballagh’s successful estimated loss of around €3,000 in ARR payments, and the judge added €2,000 for potentially further lost sales. The case was supported by the Irish Visual Artists’ Rights Organisation (IVARO), which was established in 2005 along lines similar to DACS. IVARO is pressing the Irish government for full implementation of ARR along lines similar to those now operating in the UK.
© Henry Lydiate 2006