Memorandum submitted by the Design and
Artists Copyright Society (DACS)
DACS welcomes the opportunity to contribute
to this inquiry. Our expertise and interest lies in the area of
artists' rights, which we believe go right to heart of two of
four questions posed by the Committee:
Ways the Department can further support and encourage
living artists?
What is the likely impact of the Artist's Resale
Right and its operation?
1. BACKGROUND
It is generally acknowledged that creativity,
in all its forms, improves our lives individually and enriches
our society as a whole. Today, the presence of visual art in our
day-to-day lives has increased significantly. Visual art now spans
a huge range of activity, from painting to photography to installation
and an increasing number of visual creators have developed new
working practices across these disciplines. From the high profile
Young British Artists movement of the 1990s, the phenomenally
successful launch of Tate Modern in 2000 and the impact of major
collectors such as Charles Saatchi, it would seem that art has
achieved a new popularity. This trend has been reflected economically,
with the creative industries accounting for 8% of the UK's gross
domestic product in 2002[46]a
significant percentage.
The impact on the individual artist is more
complex. There are some examples of stellar success, both in terms
of profile and wealth - consider for example Tracey Emin, David
Hockney, David Bailey. However, many artists find it hard to survive
in an increasingly changing and highly competitive environment.
Almost 50% of all artists and visual creators fail to earn a living
from their art[47]a
percentage that rises significantly amongst certain groups, such
as painters and sculptors. Those practitioners who depend upon
commissioned work, such as illustrators, have experienced a slump
in demand in recent years. Photographers face new threats to their
professional practice through the power of global image suppliers
such as Getty and Corbis. In 2003, the Arts Council of England
recognised these trends and prioritised the need to focus on assisting
individuals[48]in
a marked shift away from awarding grant funding to arts institutions,
in order "to stimulate the economy for artists".
Against this background, the intellectual property
rights to which creators are legally entitled have never had such
an important part to play in the life of an artist. By generating
revenue, rights provide a means of survival, encouraging creative
endeavour and innovation and empowering artists to control how
their work is disseminated and communicated so that our society
continues to respect the value of creativity and support the role
of the creator.
2. DESIGN AND
ARTISTS COPYRIGHT
SOCIETY
DACS has been established for 21 years and has
realised some significant achievements for artists and visual
creators over this time. Today, DACS represents 52,000 artists
and their heirs, comprising 36,000 fine artists in addition to
16,000 photographers, illustrators, craftspeople, cartoonists,
architects, animators and designers, including some of the biggest
names in contemporary visual arts as well as many emerging and
unknown artists.
The Copyright Designs and Patents Act 1988 (as
amended) provides the legal framework of our activities. We provide
a range of licensing services for copyright consumers seeking
to use a work of art. Rights can be licensed individually (single
right, one artist) or collectively (several rights, many artists)
depending on the intended use. We have strong relationships with
many different consumers of copyright including those involved
in the art market in the UK, such as Sotheby's and Christies.
DACS is the only organisation representing artists'
rights on a not-for-profit basis in the UK. We are well established,
and belong to a network of visual copyright societies in 30 countries.
DACS is a membership-based organisation[49]distributing
75% of all licensing revenue back to visual creators. In 2004,
we generated over £3.5 million in licensing revenue for artists.
We charge commission to cover our administration costs at a rate
of 25%. Our commission rates are reviewed annually by our board
of directors (which includes several artist members) and are published
widely.
3. SUPPORT AND
ENCOURAGEMENT FOR
LIVING ARTISTS
In simple terms, copyright provides an income
stream for artists. Moreover, by licensing their copyright and
making their work publicly available, artists can also benefit
from wider awareness and appreciation of their work than they
might otherwise achieve through their studio activity and exhibitions.
However, the field of copyright has become a
good deal more complex since DACS was first established and this
presents some daunting issues for artists. The impact of the digital
environment on creative output continues to be profound and far-reaching,
most especially for visual creators whose work can be copied and
disseminated with relative ease, and in some cases, pirated or
passed off as original. Furthermore, artists, in common with other
creators, are under increasing pressure to license their rights
cheaply, or even to give them away for free.
The weak bargaining position of the artist is
further exacerbated by the relative lack of education or training
on the subject of intellectual property. DACS bears witness to
this daily, when artists contact us to seek advice over a copyright
problem which could often have been prevented with more awareness.
The emergence in recent years of the professional practice module
on arts courses within the further and higher education sectors
provides a welcome opportunity to address this, but is yet to
be standardised, with some institutions teaching copyright education
whilst others omit the subject completely.
DACS has attempted to address this through the
publication of 29 copyright factsheets which are freely available
via our website. In addition, we are shortly due to launch a free
copyright advice service for our members. However, the situation
could be further improved through the provision of education resource
materials for course tutors to encourage them to educate their
students on the subject of copyright so that all budding artists
become aware of the value of their rights and the important part
they can play in their career.
An exciting new opportunity to provide support
and encouragement for artists is provided by the forthcoming implementation
in the UK of the Artist's Resale Right (also known as droit
de suite) which is due to take place on 1 January, 2006. This
right (which is in fact a related right, rather than a copyright)
has the potential to provide a valuable source of income for artists—essential
if artists are to continue to produce new work. The Artist's Resale
Right entitles artists to a percentage share of the price every
time their work is resold by a gallery, dealer or auction house
and thus gives them a share in its commercial success and increasing
value. This law places artists on a level playing field with writers
and composers who have for a long time received royalties from
on-going sales of their work.
4. WHAT IS
THE LIKELY
IMPACT OF
ARTIST'S
RESALE RIGHT
AND ITS
OPERATION?
The Artist's Resale Right[50]Directive
is part of the European Commission's harmonisation programme that
aims to align the copyright laws of Member States in order to
provide equality for artists and to prevent distortions of the
market place within the European Economic Area.
The Artist's Resale Right has its origins in
France when a new droit de suite law was passed in 1920.
Following the death of the great French painter, Jean François
Millet, the value of his paintings rose dramatically with a painting
changing hands for 1 million francs which he had previously sold
during his lifetime for 1,200 francs, whilst his family was left
destitute. The French law of droit de suite that followed
was an attempt to redress this inequity by providing artists with
an on-going stake in the commercial value of work. Furthermore,
the French law extended this right to the heirs of an artist who
may be left without means of support after the death of a spouse
and/or parent whilst art collectors and dealers made vast profits.
Whilst these principles are still at the core
of the harmonised legislation, the new Directive also includes
for the first time a specific attempt to encourage young, newly
emerging and less well-known artists by providing a higher royalty
rate for artists whose works are worth less (and accordingly,
a lower rate for artists whose works are worth more). Furthermore,
the Directive makes it clear the right is inalienable and cannot
be waived by the artist in recognition of the fact that the artist
might otherwise be pressured to give up his right. It is important
to note that the Directive balances this provision and minimises
the economic impact on the art market by capping the amount of
royalty an artist may receive from one resale to
12,500 (£9,000).
The Directive was harmonised in 2001 and must
be implemented by all Member States by 1 January, 2006. The Department
of Trade and Industry is about to launch a public consultation
inviting views as to how best the Directive is implemented.
4.1 Options within the legislation
The Directive contains several derogations which
furnish individual Member States with options regarding their
chosen approach to implementation. Some of these options are available
to all Member States, including those that already have a form
of droit de suite legislation within their law, whilst
others are restricted to those Member States introducing the Artist's
Resale Right for the first time (UK, Eire, Netherlands, Austria).
Since all the derogations have the potential to influence the
level of financial return artists will receive from the royalty,
great care needs to be given to their individual consideration.
For the purpose of this submission, we have
limited our comments to those options which we consider to be
relevant to the scope of this inquiry.
— Minimum resale value of the work
to which the right applies (Article 3).
This threshold is currently set at a level of
3,000. Member States can choose to lower this.
For this new legislation to support and encourage
as many artists as possible, the threshold needs be lower. The
figures contained within the Government's impact study[51]show
that if the threshold was lowered to
1,000, 92% more UK artists would benefit than if
the threshold remained at
3,000.
It is widely acknowledged, even by art market
professionals themselves, that a lower threshold would not damage
the market by driving sales abroad, since the costs of exporting
an art work overseas will always outweigh the royalty. For example,
a work worth
1,000 (approximately £600) would generate a
royalty for the artist of £25, far less than the cost of
packing, shipping and insuring the work.
Furthermore, the higher threshold potentially
disenfranchises certain groups of visual creators whose work does
not usually command such high prices as fine art, such as photographers,
print makers and craftsmakers.
At
1,000, the threshold in the UK would still be considerably
higher than in Germany, where it is
50 and in France, where it is
15.
— Rates of royalty paid (Article 4).
The highest royalty rate is 4% at the lowest
value range £1,800-£30,000 (
3,000-
50,000). Member States can elect to increase the
royalty rate at this level only, to 5%.
The royalties that the majority of artists will
earn will be very modest. This option provides an opportunity
to increase the income for artists whose work has not yet gained
huge commercial recognition without material impact on the art
market. For an artwork selling at £1,800 (
3,000) a 5% rate would generate a royalty of £90
(
150) - compared to £72 (
120) at the 4% royalty rate.
— Collective management of royalties
(Article 6)
Member States may determine how the royalty
is collected and can opt to make the collective management of
the right compulsory.
In simple terms, rights are generally administered
individually or collectively. Individual rights management is
useful for single uses of a few works which may require the artist
to be consulted extensively, such as the use of an artistic work
within an advertising campaign. Collective schemes are useful
when the rights of many artists may be involved which makes individual
consultation impracticable, such as the photocopying of artistic
works from pages of books and magazines. In such circumstances,
an organisation like DACS will administer the scheme on behalf
of a constituency (in our case, artist) and negotiate appropriate
terms on its behalf. DACS has extensive experience of both types
of administration.
The main advantage of collective management
is that is produces economies of scale and a much reduced administrative
burden for all concerned by eliminating the need to deal with
royalties and artists individually. In the example of the Artist's
Resale Right the art market professional would be able to remit
all the royalties due to all artists to DACS. The task of distributing
these royalty payments would then fall to us, rather than to the
individual auction house or art gallery.
Collective management can be subject to criticism
on the subject of pricing. Since a collective scheme is usually
agreed in exchange for a lump sum payment, artists can be denied
the right to individually set the price for the use of their rights.
On the other side, consumers of collective licences can feel concerned
about their ability to control the pricing in a commercial negotiation.
The Artist's Resale Right Directive eliminates such problems for
both parties by dictating the royalty rates. Therefore, the collective
management of the Artist's Resale Right poses no pricing disadvantage
to either the artist or the art market professional.
In the UK, the administration of rights is usually
dealt with under a voluntary regime. However, there are a number
of examples where statutory provisions have been made[52]on
the basis that these deliver some of the advantages described
above.
It is the view of DACS that the compulsory collective
management of the Artist's Resale Right is appropriate since it
delivers advantages without compromising either the artist or
the art market professional. Most importantly, by making a collective
approach compulsory, the risk of non-compliance with the legislation
will be significantly reduced.
4.2 Programme for implementation
The Directive provides those Member States introducing
the Right for the first time the option of delaying its application
to the beneficiaries of deceased artists until 2010, with a further
possibility of extending this delay to 2012.
The Artist's Resale Right follows copyright
law in that it applies for the life of the artist plus 70 years
after his or her death. In the spirit of its origins to support
the heirs of deceased artists, the Right should be fully introduced
in 2006, in order to benefit as many artists and their beneficiaries
as possible.
5. IMPACT OF
THE ARTIST'S
RESALE RIGHT
ON THE
UK ART MARKET
It is well known that the UK art market campaigned
against the introduction of the Artist's Resale Right on the basis
that it would damage their business. We believe that such claims
are unfounded.
Will the Artist's Resale Right result in loss
of sales?
It is claimed by the art market that the Artist's
Resale Right will drive sales of art works abroad to countries
where the right doesn't yet apply (USA, Switzerland). However,
it is our view that art will always be sold where it's likely
to obtain the best price. A recent illustration of this occurred
in December 2004, when an American art collector decided to sell
his collection of modern art through an auction house in Cologne.
Though he could have chosen any country in the world to host this
important sale - including his own native USA, where resale right
does not exist—he opted for Germany, where resale royalty
legislation has operated since 1961. The collection achieved high
prices, including a world record price for a work by Kurt Schwitters.
Another important fact that undermines the notion
of sales losses are the other associatied costs which will be
more influential when deciding where to buy or sell an art work.
The cost of exporting works of art overseas is invariably higher
than the artist's royalty. For example, Damien Hirst's formaldehyde
shark was recently sold for £7million by Charles Saatchi,
who originally paid £50,000 for the sculpture in 1991. If
this resale occurred after the legislation is in place, Damien
Hirst would earn the maximum royalty of £9,000. We obtained
two estimates for packing, insuring and shipping the work to New
York, both of which were higher than the cost of the royalty.
Other associated costs which have an impact
include:
— Rates of commission charged to sellers
and buyers by art market professionals; major auction houses typically
charge up to 20%.
— VAT on imports of art works is higher
than the artist's royalty, currently 5% in the UK.
— Rates of foreign currency exchange
are likely to be a bigger consideration than the royalty.
How has the amount of royalty that an artist can
earn been limited to avoid damaging the art market?
The royalty only affects certain sales:
— The royalty will only apply to original
works of art protected by copyright, which is about 40% of UK
sales.
— The amount of royalty an artist can
earn has been capped at
12,500 (£9,000).
— The royalty will only affect works
being re-sold by art market professionals; it won't affect first
sales, or sales between private individuals.
— Private sales to public museums will
be exempt from the royalty.
— Works purchased by art galleries
directly from the artist may be exempt from the royalty if the
work is resold for not more than
10,000 and within three years.
Has the Artist's Resale Right had a negative impact
on markets in other countries?
The British art market can take comfort from
other countries which already have the Right:
— France was the first country to introduce
a royalty for artists in 1920 and continues to have the second
strongest art market in Europe.
— After Germany introduced the artist's
royalty in 1961 some art market professionals established offices
in Ireland in order to avoid the royalty. However, this practice
was abandoned after only a few years and the German art market
continues to be strong today.
— The artist's royalty was introduced
in Sweden in 1996, despite huge protests from the local art market
which argued that their business would be permanently damaged.
In fact, the Swedish market in modern art has grown in strength
since 1996. Furthermore, works which generate a royalty for artists
are identified in sales catalogues and have come to represent
something like a quality mark for buyers.
Can the royalty be administered successfully on
a not-for-profit basis?
— In other countries the royalty has
been successfully administered for many years by artists' societies
operating on a not-for-profit basis.
— DACS has 21 years experience of successfully
collecting and distributing copyright revenues of all kinds to
artists, all on a not-for-profit basis.
— We have a good relationship with
the British art market and will be building on this in order to
create a system of collection which will work for them and deliver
the intended benefit to the artist.
6. CONCLUSION
It is our belief, supported by our direct experience,
that the rights of artists can make the difference between their
ability to survive and to thrive. A sophisticated society that
values creativity and wishes to encourage its expression should
respect the rights of the creator. The Artist's Resale Right will
offer UK artists the same economic opportunities as their equivalents
on the Continent. There is no doubt that the Right will result
in a new overhead which will need to be absorbed by art market
but the impact of this has been carefully controlled within the
framework of the legislation so as not to cause material damage.
The Artist's Resale Right will put artists on a level playing
field with songwriters and authors who have for a long time received
royalties from sales of their work, a reality which has not harmed
their respective music and publishing industries. Though at times
controversial, the Artist's Resale Right legislation is coming
to the UK and the question that needs to be answered by all stakeholders
is not whether it should be implemented, but how.
The income that artists will receive from this
new Right, though modest, will help to support artists and stimulate
fresh creativity. Our buoyant British art market, which is the
strongest in Europe, has nothing to fear.
February 2005
46 Creative Industries Economic Estimates Statistical
Bulletin August 2004, DCMS. Back
47
The Artists Information Company, summary of 1990 census. Back
48
Ambitions for the Arts 2003-06 www.artscouncil.org.uk Back
49
See also DACS Members' Charter (appendices). Back
50
European Directive 2001/84/EC. Back
51
Study of the Potential Impact of Droit de Suite on the
United Kingdom Art Market 2006/2012 by Gerard Leeuwenburgh. Back
52
Off-air Recording Scheme CDPA s35 1988, Cable and Satellite Directive
93/83/EEC. Back
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