Photographers Could Get Royalties on Auction Sales Under Proposed Federal Bill

Few things are as frustrating to photographers as selling a print for a few thousand dollars–or less–then watching collectors reap huge profits by re-selling those same prints at auction years later for tens of thousands of dollars–or even more.

Two US Senators and a US Congressional representative have introduced a bill to cut visual artists in on that action with a 5 percent royalty on the price of visual works re-sold at auction. If it becomes law, the bill would apply only to works sold by auction houses–not by private individuals or dealers–and only when the auction price of a work exceeds $5,000, according to a report on the Art Law blog of Frankfurt, Kurnit, Klein & Selz (FKK&S), a New York law firm.

The auction royalty would be capped in 2014 at $35,000 for each sale. The cap would be subject to an inflation adjustment every year after that, according to the FKK&S report.  Auction houses would be obligated to collect the so-called auction royalty, and subject to civil claims from artists if they fail to collect and pay the royalty.

The bill, called the American Royalties Too Act (ART Act), was introduced last month in the Senate by Tammy Baldwin (D-WI) and Ed Markey (D-MA), and in the House by Congressman Jerrold Nadler (D-NY).

“American artists are being treated unfairly,” said Nadler in a prepared statement. “The benefits derived from the appreciation in the price of a visual artists’ work typically accrues to collectors, auction houses, and galleries, not to the artist.”

He noted that visual artists in 70 other countries are compensated when their works are re-sold at auction.

Unable to collect royalties from the re-sale of existing prints that have increased significantly in value, US photographers sometimes respond by issuing new limited editions of their prints–in different sizes or using different printing processes from earlier editions.

That practice angers collectors. For instance, William Eggleston created limited-edition digital inkjet pigment prints of some of his most iconic images, and earned $5.9 million by selling them at a Christie’s auction in March, 2012. He was promptly sued by financier Jonathan Sobel, a long-time collector of Eggleston’s vintage dye-transfer prints. Sobel alleged that the new prints devalued Sobel’s dye transfer prints and amounted to a breach of contract on Eggleston’s part.

Sobel eventually lost the legal fight, although he had the sympathy of dealers and gallerists who worry that photographers could harm their reputations and the market for photographic prints if they anger collectors by issuing new editions.

The ART Act, if it becomes law, could help reduce incentive to issue new editions by giving photographers another way to profit from the dramatic rise in the value of their work.

But success of the bill is by no means assured.

Nadler introduced a similar bill in 2011 that died in committee. The US Copyright Office, which was opposed at the time to instituting resale royalties for visual artists, has since changed its position on the matter, according to the FKK&S report. But collectors and auction houses are certain to object to paying royalties to artists. And the ART Act seeks to change a long-entrenched principle of copyright law called the First Sale doctrine, which  allows buyers of copyrighted works to do with them as they please, with no obligation to the artists who made them.

Related:
Collector Sues Eggleston Over New Prints of Limited Edition Works

Q&A: Art Collector Jonathan Sobel Explains His Beef with William Eggleston

What Does Limited Edition Really Mean? (subscription required)

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