Let’s start with a story.  A struggling artist, let’s call him “Vincent”, is a fantastic painter.  Unfortunately, the rest of the world does not yet see the merit of his works.  For years and years, he is only able to sell one painting.  The rest he gives away in exchange for food and rent.   Many years later, the art world appreciates the quality of Vincent’s painting, and his paintings increase in value exponentially.  Their delighted owners can sell them for tens of thousands of dollars.

In the art world, often an artist may sell his or her work for a fraction of the eventual value of the work. The financial fruits of creativity are then enjoyed by later owners, not the artist who created the work.

In 2009, the Australian Government enacted new legislation that aimed to allow visual artists, such as Vincent, to share in the later sale value of their artworks.  This resale royalty right and statutory scheme was introduced by the Resale Royalty Right for Visual Artists Act 2009 (Cth) (see our earlier post here).  The Government recognised that the case for a resale royalty scheme was particularly strong for Indigenous artists.

On 5 June 2013, the Federal Arts Minister announced a Review of the Resale Act which will look at whether the resale royalty scheme has achieved its objectives.

How does the Resale Royalty Scheme currently work?

The Resale Royalty scheme would work for Vincent like this:

  • Vincent paints a new work and sells it to Joe Smith for $1.
  • Years later, Vincent wins the Archibald Prize and his works become highly sought after.
  • Joe Smith realizes that the painting that is accumulating dust in his garage is probably worth a lot of money and decides to sell it.
  • Joe Smith sells his painting commercially for $100,000.
  • Vincent receives $5,000, being 5% of the amount that his painting was resold for (less the administration costs of the collecting society).

Of course, we should note that the Resale Royalty Scheme doesn’t apply to everything.  It applies to the commercial re-sale of works that are acquired after the scheme commenced (9 June 2010). The right exists for up to 70 years after the death of the artist, meaning that the heirs of the artist can also benefit.  The right is inalienable and cannot be transferred.  It doesn’t apply to the first sale of a work, or the first sale of a work after the scheme commenced.

It also only applies to visual artists, not creators of other works such as authors or composers.  This was because the Government thought that visual artists did not have the same range of opportunities to earn money through licensing reproductions, public performances or broadcasting of their works as these other creators.

The resale royalty right exists separately to copyright – it is what is known as a “related right”.

And does the Resale Royalty Scheme actually work?

Well that is what the Government has set out to find out, in its review of the Resale Royalty Right for Visual Artists Act 2009.  The Discussion Paper and Terms of Reference are available here.

The Discussion Paper sets out some statistics of how the Scheme has operated so far:

  • There have been more than 6,800 resales.
  • $1,567,042 in royalties has been generated.
  • 51% of the royalties have been paid to Indigenous artists.

The Review will ask a number of questions and assess whether the scheme is meeting is objectives, including:

  • What are the benefits and disadvantages for artists?
  • How efficient and effective is the scheme in achieving its original objectives?
  • What is the impact of the scheme on the art market?

Submissions to the Review close on 12 July 2013.  For more information on how to make a submission, please see the Review website here.