Indigenous Law Bulletin
The resale royalty right: what does it mean for Indigenous artists?
by Lan Pham
The introduction of the Resale Royalty Right for Visual Artists Act 2009 (Cth) in Australia provides the opportunity for artists to receive continued financial recompense in their artwork. The new law commenced 9 June 2010 and sets the rules for how and when payment for resales of artwork will be made to artists. Given that Indigenous artists have a large stake of the secondary art market, the law is predicted to have long-term benefits for Aboriginal and Torres Strait Islander artists. The debate about the operation of the scheme centres on the administrative aspects and whether the application of the royalty only to resales after commencement of the law will result in any true value being delivered to artists. This article will consider various implications of the resale royalty scheme for Indigenous artists.
Although the resale royalty right has been operating in European countries for some time, the Australian resale royalty has only been introduced this year. Enactment of a resale royalty fulfils Australia’s obligations under the international treaty on copyright, which is the underlying basis of the resale royalty right. The Berne Convention for the Protection of Literary and Artistic Works 1979 asserts that ‘creators shall enjoy the inalienable right to an interest in any sale of the work subsequent to the first transfer ... of the work’. Pursuant to this Convention, fifty countries already have a resale royalty scheme in place, including all members of the European Union, as a result of a 2001 EU Directive on implementing a resale right. The issuing of the Directive in 2001 increased pressure on other countries to also adopt a royalty scheme for artists.
The Indigenous art industry is estimated to be worth $200 million a year. In the ten years leading up to 2003, the Australian auction sales market grew from $19.4 million to $91.8 million. This was in part due to the dramatic rise in demand for Indigenous art: in 2003 the value of Indigenous art in auction sales was $9.5 million. However, in spite of the substantial growth of the Indigenous art industry over the last three decades, Indigenous artists have not enjoyed a proportionate share of this growth and receive only a quarter of the returns. Clifford Possum’s Warlugong is an often cited example: Warlugong was originally bought for less than $1200, but in 2007 it took the auction record for the highest sum paid for an Indigenous artwork at $2.4 million. Yet Clifford Possum received no financial benefit at all from the resale of his artwork. Such cases highlighted the need to develop a system that would allow artists to receive some financial remuneration for the significant profit on resales of their artwork.
In 2002, the Myer Report on Contemporary Visual Arts and Craft Inquiry noted that the case for introducing a resale royalty scheme for Indigenous artists to improve their welfare was strong. In mid-2004, the Federal Government received responses to a paper entitled Artists Resale Royalty Scheme for Visual Artists-Framework and Parameters. Of the 34 submissions received, 24 were in favour of the scheme in some form, including those from the National Association for the Visual Arts (NAVA), Viscopy, the Australian Copyright Council, and other key stakeholders such as gallery owners and artists.
In 2007, in its pre-election policy statement, the Federal Government committed to introducing the resale royalty. In 2008, the Hon Peter Garrett, Minister for the Environment, Heritage and the Arts, introduced the Resale Royalty Right for Visual Artists Bill, stating that ‘introducing the [resale] right will significantly increase the transparency of the art market, which, of course, is particularly important for Indigenous artists, who have sadly continued to be exploited by some unscrupulous dealers’.
It is useful to provide an overview of the scheme, both for the benefit of artists who might be unaware of the changes and also for the purpose of critical discussion. The resale royalty creates a right to a contingent income from an uncapped, flat rate of five per cent of the sale price on resales of artworks over $1000. Artworks covered are those created by the artist or under the artist’s supervision.
The royalty applies to commercial resales of artworks sold by way of the secondary art market. This means that the resale royalty will not apply to the first changes of ownership after the scheme comes into effect, even if that is a resale. The scheme operates prospectively, so a royalty will only be payable on the second transfer of ownership after the legislation comes into effect and all subsequent sales. The resale royalty right applies to works by living artists and continues for a period of 70 years after the artist's death. The resale royalty right remains with the artist and cannot be licensed, assigned or waived. This means that even if copyright in the work does not belong to the artist, the royalty right remains with the artist and can be transferred on death to the artist’s heir.
In order to be eligible, artists must register their details with the Copyright Agency Limited (CAL), the administrator of the scheme. Resales of artworks must be reported to CAL by the seller within 90 days so CAL can publish notices of the resale and retrieve payment from the purchasers of artwork and forward it to the artist.
Resale royalties are linked to the right of Australian artists to a fair income. In 2003, a report entitled Don't give up your day job noted that 50 per cent of artists earn less than $7300 from their art in a year. The application of a resale royalty in Australia will address the inequity between artists and other creators. For example, copyright laws grant financial benefits to musicians and writers because they are able to generate royalties, receiving license payments every time their work is used or reproduced. Yet for visual artists, the sale price generally constitutes the full amount of compensation for their work. Furthermore, auction houses charge up to 25 per cent commission and a buyer’s premium of up to 15 per cent, while commercial galleries can charge up to 25 per cent commission. For Indigenous artists, this poor income is compounded by living in impoverished remote communities with limited options for supplementing their income. The resale royalty ensures that artists will share in the financial rewards of their own work and will contribute to the improved welfare of Indigenous artists.
The resale royalty will aid the protection of Indigenous artists' moral rights. Moral rights were introduced into Australia in 2000. They give all creators the right to protect the integrity of their work, the right to have their work attributed to them and the right not to have someone else's work falsely attributed to them. As the resale royalty scheme obligates galleries and auction houses to keep detailed records of Indigenous artworks for submission to CAL, the provenance and attribution of artworks will be better identified and published. In this way the moral rights of Indigenous artists will be more easily enforced under a resale royalty scheme, helping avoid exploitation.
For many artists, non-Indigenous and Indigenous, their creative work is often more than just a way to make a living. Indigenous artists use creative expression as a way to communicate their culture and history, connect to their identity and preserve their heritage. Artists should be encouraged to promote and protect their culture in line with the UN Declaration on the Rights of Indigenous Peoples 2007. Article 31 stipulates that ‘Indigenous peoples have the right to maintain, control, protect and develop their cultural heritage, traditional knowledge and traditional cultural expressions’. By promoting the rights of Indigenous artists with a resale royalty right, they will also be given the recognition they deserve for their invaluable contribution to wider Australian culture.
In spite of the potential for recognising Indigenous artists’ contribution to Australian culture, the resale royalty is a right for individuals only and does not recognise collective authorship. Indigenous art often contains traditional knowledge that has been passed down through the generations, belongs to a clan or group and has collective origins. Where an artwork is embodied with collective heritage and knowledge, and this can be identified, the authorship should be able to be asserted by a representative of the community so that the community as a whole can benefit from the resale royalty.
There has been concern that the administrative aspect of the resale royalty will place a burden on galleries, art centres and artists, which might not have the necessary resources, including financial and electronic resources, to carry out their obligations. However, Minister Garrett argues that:
[gallery owners] have a primary responsibility to make certain that they properly record and identify the work that they sell … they have to do that for taxation purposes, and there’s absolutely no reason at all why they cannot put in place effective mechanisms to enable this scheme to be rolled out.
It is yet to be seen whether the scheme will in fact pose a significant burden.
Another potentially negative implication may be that, because of the administrative requirement to register, Indigenous artists with limited access to a means of registering may not receive the royalty. For example, artists living in remote locations or with limited financial resources may not have ready access to services, such as the internet or post. Furthermore, some Aboriginal artists may not be able to afford or access legal services for drafting a written will to pass on the royalty right. The Arts Law Centre of Australia has a service called Artists in the Black, which has undertaken an Indigenous Artists Will Project. Projects like this are needed to ensure that Indigenous artists’ artwork, copyright and resale rights are properly dealt with after their death. Administrative constraints, however, do not outweigh the positive outcomes that the resale royalty holds for Indigenous artists.
While Indigenous artists have a large stake of the secondary market, up to 80 per cent of Indigenous art does not enter the secondary art market. This is mainly manufactured art targeted at tourists, which, in contrast to ‘fine art’, does not enter the resale market. A limiting effect of the requirement that an artwork must be sold via the secondary art market is that lesser known artists who do not currently sell their works through galleries or auction houses are ineligible for the royalty. Nonetheless, this could compel galleries to look towards new artists in the future for works that do not yet generate the royalty.
The contrasts of the Australian resale royalty scheme to those operating overseas have significant implications for Indigenous artists. The most notable difference between the Australian resale royalty scheme and royalty schemes overseas, is that it operates prospectively. Viscopy’s analysis of a decade of auction sales in Australia showed that for 94 per cent of artworks, the period between resales is more than a decade. The slow rate of resales is particularly prevalent in the Indigenous art market, where an estimated 60 per cent of Indigenous art is bought by self-managed superannuation funds. These funds are unlikely to resell artworks in the short term, thus not attracting the resale royalty for some time. This means that for many Indigenous artists in particular, it may be a while before they receive a royalty, if at all in their lifetime. In contrast to the Australian scheme, adoption of a retrospective scheme, like those operating in France, Italy and Brazil, would entitle artists whose works have already been sold to collectors to the right. However, the legal rationale against a retrospective scheme is that it would be unconstitutional because it would affect the present value of property.
Furthermore, there has been concern that in the absence of a sliding scale and with a minimum threshold amount, Indigenous artists whose works sell for small sums will not receive substantial benefit. The Access Economics Report predicted that the estates of Brett Whitely, Sidney Nolan and Alfred Williams will be the biggest beneficiaries. This is supported by the trend in France, where there is also a flat rate and no sliding scale, and more established artists or artists’ estates generally benefit, such as Picasso and Matisse. In Australia, the flat rate alone was widely supported as it simplifies the scheme and avoids the complicated calculations necessary if a sliding scale were used. However, while the flat rate with no threshold model was seen as allowing more Indigenous artists to benefit, it was not implemented.
Another issue of contention is the lack of an upper limit on works attracting the royalty. International auction house Sothebys has suggested that because the Australian scheme does not have an upper limit akin to the €12 500 of the UK scheme, sales of highly valued artworks will be transacted in markets where there is no royalty scheme, such as Hong Kong. To remedy this, CAL is currently seeking to extend the resale royalty right to artworks sold overseas via a reciprocity scheme under the Berne Convention, so that resales made overseas incur the royalty.
Like the French scheme, the Australian resale royalty right is granted for a period of seventy years after an artist’s death. Like conventional copyright law, this is an issue of concern for Indigenous artists, for whom the cultural significance of a work is perpetual. However, the Australian scheme does provide the potential for the artist’s heirs and estates to receive royalties, in contrast to countries like the UK where the scheme only covers living artists.
The establishment of a resale royalty scheme in Australia gives artists the right to receive a share in the financial profit from resales of their artworks and rewards their creativity in the same way as other creators. For Indigenous artists, it allows for improved welfare and an ongoing income and encourages the expression and preservation of culture. The operation of the resale royalty scheme, in particular through the system of registration, may compel people to buy art more ethically and will in turn enhance the protection of Indigenous artists’ moral rights. Although it may be some time before many artists receive royalties, continual support of the scheme is required to sustain the growth of an industry that contributes to the national economy and to the cultural fabric of our country.
Lan Pham graduated from Sydney University with a Bachelor of Arts, majoring in Film Studies and History. Lan is Professional Assistant to Terri Janke. The author would like to thank Terri Janke for her assistance.
 Berne Convention for the Protection of Literary and Artistic Works, Paris, opened for signature 9 September 1886 (entered into force 24 July 1971), art 14ter.
 Australian Copyright Council, Artist’s resale royalty, 25 February 2009, <http://www.copyright.org.au/policy-research/resale_royalty> .
 Council Directive 2001/84/EC 27 September 2001 on the Resale Right for the Benefit of the Author of an Original Work of Art  OJ L 272/32, art 4.
 Ibid, art 7.
 Contemporary Visual Arts and Craft Inquiry, Commonwealth of Australia, Myer Report of the Contemporary Visual Arts and Craft inquiry (2002), 151.
 Department of Communications, Information Technology and the Arts, Commonwealth of Australia, Proposed Resale Royalty Arrangement discussion paper (2004), 9.
 Ibid 9.
 Contemporary Visual Arts and Craft Inquiry, above n 5, 151.
 Stuart Rintoul, ‘Clifford Possum artwork sells for record price’, AAP news.com.au (online). 22 October 2010.
 Contemporary Visual Arts and Craft Inquiry, above n 5, 177.
 Department of Communications, Information Technology and the Arts, Proposed Resale Royalty Arrangement discussion paper (2004), <http://www.arts.gov.au/__data/assets/pdf_file/0009/12024/Proposed_Resale_Royalty_Arrangement_Discussion_Paper.pdf>
 You can view these submissions at the Department of the Prime Minister and Cabinet website, <http://www.arts.gov.au/public_consultation/earlier-consultations/resale_royalty_discussion_paper> .
 Peter Garrett, speech: ‘New Directions for the Arts (2007)’,<http://www.petergarrett.com.au/443.aspx>, 14 September 2007.
 Commonwealth, Parliamentary Debates, House of Representatives, 27 November 2008, 11646 (Peter Garret MP, Minister for the Environment, Heritage and the Arts).
 Resale Royalty right for Visual Artists 2009 (Cth), s 11(2). This applies to resales after 9 June 2010. It includes GST but excludes any buyer’s premium and other taxes.
 Resale Royalty right for Visual Artists Act 2009 (Cth), Pt 2(7). This includes paintings, collages, drawings, prints, sculptures, ceramics, glassware and photographs.
 Resale Royalty right for Visual Artists 2009 (Cth), s 8(3). The scheme excludes private sales between individuals or organisations not in the business of dealing art. Sales must be made through intermediaries involved in the business of dealing in artworks.
 Resale Royalty right for Visual Artists Act 2009 (Cth), s 11.
 Resale Royalty right for Visual Artists Act 2009 (Cth), s 32.
 Resale Royalty right for Visual Artists Act 2009 (Cth), s 33.
 See generally Copyright Agency Limited, Artists’ resale royalty scheme: What it means for the Indigenous Art Centres (17 May 2010) <http://www.caldirect.com.au> . Note that Copyright Agency Limited requests that art centres inform artists of the scheme and help CAL to identify and locate artists for whom royalties are to be paid.
 Aboriginal Art Online, Resale Royalty Right for Visual Artists (31 August 2010), <http://www.aboriginalartonline.com> .
 David Throsby and Virginia Hollister, Australia Council for the Arts, Don’t give up your day job: An economic study of professional artists in Australia (2003) 45.
 Australian Copyright Council, above n 2, 1.
 Alison Davis, Arts Law Centre of Australia, ‘Artist resale royalties’, ART+law (online) September 2000 <http://www.artslaw.com.au> .
 Australian Copyright Council, above n 2, 1.
 Copyright Amendment (Moral Rights) Act 2000 (Cth).
 Copyright Agency Limited, Artists Resale Royalty Scheme, Information for buyers and sellers of artworks, viewed (30 September 2010) <http://www.resaleroyalty.org.au> . Note that records must include the artist’s name, title of the work, price and date of purchase.
 United Nations Declaration on the Rights of Indigenous Peoples adopted 13 September 2007, GA Res 61/295, <http://www.un.org/esa/socdev/unpfii/en/drip.html> . See also Australian Human Rights Commission, ‘United we stand – Support for United Nations Indigenous Rights Declaration a watershed moment for Australia’ (Media Release, 3 April 2009) (online) <http://www.hreoc.gov.au> . Note that Australia formally endorsed the Declaration on 3 April 2009.
 Ibid, art 31.
 Terri Janke, Beyond guarding ground: a vision for a national indigenous cultural authority (Terri Janke and Co., 2009), 31.
 Ashleigh Wilson, ‘Painted into a corner by payments scheme’, The Australian (12 June 2010).
 Ashleigh Wilson, ‘Regrets over resale royalties’, The Australian (9 June 2010).
 Arts Law Centre of Australia online, Artists in the Black, <http://www.artslaw.com.au/indigenous/WillForIndigenousArtists.asp> .
 Lawyers Weekly, ‘Artists in the Black’ on Law Update, Lawyers Weekly (14 August 2009) <http://www.lawyersweekly.com.au/blogs/features/archive/2009/08/14/artists-in-the-black.aspx> .
 Department of Communications, Information Technology and the Arts, above n 6, 14.
 Australian Copyright Council, above n 2, 2. Viscopy is a not-forprofit organisation providing copyright licensing services
 Arttrust, Investing in art with your SMSF, <http://www.arttrust.com.au/content/investing-art-your-smsf> .
 Department of Communications, Information Technology and the Arts, above n 6, 42.
 Standing Committee on climate change, water, environment and the arts, The Parliament of the Commonwealth of Australia, Resale royalty right for visual artists bill 2008 Report, (2009), 6.
 A sliding scale is where the royalty is calculated using varying percentages according to the sale price.
 Access Economics, Evaluating the impact of an Australian resale royalty on eligible artists, (2004). Note that this report was compiled for Viscopy Ltd.
 Peter Anderson, (1 March 2008) Resale royalties and new directions for the arts, Australia Council for the Arts <http://www.australiacouncil.gov.au/research/arts_marketing/sales/resale_royalties_and_new_direction_for_the_arts> .
 Department of Communications, Information Technology and the Arts, above n 6, 25.
 Michaela Boland, ‘CAL wins control of resale royalty scheme’, The Australian, (8 April 2010).
 Contemporary Visual Arts and Craft Inquiry, above n 5, 158.
 Aboriginal Art Online, above n 22, 1.