Artists and the Art Market--A Shifting Dynamic?

Date01 December 2021
AuthorGray, Amanda
  1. INTRODUCTION

    The role of art in society has changed and, correspondingly, that of the artist. With societal shifts from religious/historic to secular, artists are commentators, often individually responding to the world we live in. They are often the canaries down the mine, predicting and reacting to the issues within our culture and society; and as part of this evolution art can be anything. With this, there has been a shift from a view of the artist as artisan/craftsman/master to the artist as individual, and at the very limited highest level, artists have attained rock star status. By extension, how art is bought and sold has also had to adapt.

    The eco-system of the art market, that is how art changes hands, and the businesses around it, continue to evolve. Some patterns of trade have not changed--works are commissioned (albeit nowadays it is less likely to be for a triptych of the Annunciation), works are exhibited and bought, artworks are auctioned and sold on. There are however relatively new concepts that have also emerged--artwork perceived as solely an investment, either to be held on to or flipped--where an individual or an entity reads the moment, buys a particular artist's work, to sell it on at considerable profit in short order.

    At one level, observers may say, it has been forever thus in trade and why should art be any different? However, there are a number of peculiarities within the art world and the sale of art that feed into the discussion:

    * The role of the artist: The artist in creating and selling the work retains no uplift or benefit from the further onward sale of their artwork (aside from a modest ARR royalty (1) in qualifying circumstances). The tangible artwork and the artist part ways legally (with a nod to the remaining intangible rights) and financially. The artwork sets forth on its own journey in the art world and market--it may be held in storage and not see the light of day for many years, it may be sold on, and it could be exhibited in a public museum, travel on a super yacht or be held in private ownership. Though in England and Wales a legal personality does not exist for an artwork, the fluctuations of the financial market, fashion, culture and appetite for the artist's work can all have an impact on its fate (sometimes with consequences for the reputation and business of the artist.)

    * The split between the tangible and intangible: The artist retains intangible protective rights in that work, some of which they can also legally relinquish, but are generally retained. The intangible rights in the work, the shadow of the physical work, are therefore severed from the physical work and to a degree can be controlled by the creator.

    * The position of the artist and art in society: Should the art market treat art differently because of the status of art in society? Should the artist have an ongoing interest in the physical work or control in something that no longer belongs to them? Does the stage the artist is at in their career impact how they should be treated in the art market? Is there a wider imperative to protect artists at the beginning of their career from exploitation? Can the tangible and intangible rights in a work be sensibly severed--or does it render intangible rights in practice defunct? Therefore, are intellectual property rights and royalties enough?

    Developments in the contemporary art market and practices have highlighted the tensions in: i) the intangible and tangible treatment of artworks; and ii) the fine balance between artist and intermediary--whether gallerist, dealer, agent or owner. In the last few years we have seen a rise in artists, and the galleries representing them, pushing back on the quick sale, the 'flip', by way of non-resale clauses (the enforceability of which has been explored in a number of articles (2)). The first notable auction was Christie's 2020 Say it Loud (I'm Black and I'm Proud) auction which made non-resale clauses and the fact that the sale was artist-led a selling point. The non-resale clause has been seen to take many forms--the artist or their gallery retaining right of refusal to buy back their work, an agreement from the purchaser not to sell the work on (usually at auction) for a given period of time. Thus, opportunists wanting to flip such an artwork might give pause for thought before proceeding; the validity and enforceability of such non-resale agreements are of course dependent on the circumstances and formation of the contract.

    Further, the lockdown imposed by the recent pandemic saw innovative approaches by artists to reach new audiences, an additional change in the market that could be seen as reclamation of some control by the artist. At all levels, artists sold their works direct to collectors thereby bypassing the traditional forms of trade through representative dealers and gallerists (though this continued in parallel and has returned as an acquisition model as we emerge from the pandemic).

    We explore here how the artist has striven to take back some control of their market. In particular we look at:

    * the protections that are already in place and their deficiencies whether in law, practical mechanisms and also market custom; and

    * how artists are currently taking additional control through alternative means and the potential legal implications thereof.

  2. PROTECTIONS ALREADY IN PLACE FOR ARTISTS

    There are a number of protections already in place for artists to control, or attempt to control, their artworks once sold, the market in which they are sold and their legacy--however, all are dependent on the jurisdiction and context in question. These range from national and international legal rights to local art market customs. We provide an overview below of just some of these, namely: artist's resale royalties, intellectual property rights, moral rights and controls afforded to artists and their estates over the authentication of works.

    The Artist's Resale Right

    In the UK, the Artist's Resale Right ('ARR') entitles authors (creators) of a work in which copyright subsists to receive a royalty each time one of their works is resold subsequent to the first transfer of ownership by the author. (3) The ARR originates from French law (namely the droit de suite) and has now been adapted into EU and UK law. (4) This section focuses on the UK perspective. (5)

    The resale must be made by someone who is "acting in the course of a business of dealing in works of art", for example an auction house or an art dealer, and the sale price must not be less than 1,000 [euro]. The royalty applies throughout the creator's lifetime and for 70 years after their death. (6) The ARR is exercisable by qualifying individuals or bodies, (7) i.e. nationals of an EEA State (or those countries listed at Schedule 2 (8)) at the contract date, and their successors. (9)

    Views on ARR

    The UK art market itself has been largely divided in its approach to the ARR. Views in favour of ARR include that its purpose was to address the issue that artists have no benefit or tie to the often considerable profits made on resales of their works in the art market. Some (mainly artists, their estates and the collection societies) argue that ARR benefits all artists and the art market at large. (10)

    However, many concerns have arisen as to whether the ARR regime meets its original intention and whether it benefits all artists or just those who already have an established market. Views against ARR include:

    * Competition: The UK was reluctant to adopt ARR when it was first proposed because of concerns over the damage it could cause to the competitiveness of the UK art market when compared to other non-EU countries where artist resale royalties or similar do not exist, such as in Asia and the US (except California).

    * Inequality: The Antiques Trade Gazette reported:

    the art trade has largely been against ARR and continues to argue it is an unjust tax that disadvantages the UK and European art markets, over those in the US and Asia, and that it predominantly benefits wealthy artists' estates. (11) It has also previously been argued that the resale royalty right:

    fails to benefit the individuals it means to--starving artists and their starving heirs--and instead benefits the few rich artists who dominate the secondary art market and the administrative agencies and bureaucracies that oversee the distribution of royalties. (12) Indeed, the ARR is more likely to apply in the context of higher end sales--those involving auction houses and galleries, advertising, a social media presence, and so on, which generates a higher likelihood of ARR being paid given the increased publicity of those types of sales. Ivan Macquisten has further commented that ARR:

    is intended to help struggling artists but it ends up pouring more money into the hands of the most successful few. (13) * Incompatibility with IP law: Alexander Bussey has also previously argued that the resale royalty right:

    conflicts with basic common law notions of copyright and property and is incompatible with standard theories of intellectual property law [and that it is] an alien concept to Anglo-American common law, and it contradicts several well-established doctrines. (14) * Collection process: Some have argued that the process of paying the ARR royalty is unequally applied across the EEA States (e.g. different entry levels and different levels of diligence with which collecting societies pursue collection). In the UK, the Regulations stipulate that the artist cannot collect the ARR royalty--which itself means that the artists have less control over the collection of their royalties. That right may be exercised only through a collecting society on the artist's behalf. The two agencies in the UK that administer the collecting of the ARR fee are the Design and Artists Copyright Society ('DACS') and the Artists' Collecting Society ('ACS'). In practice, DACS and ACS write on a quarterly basis to...

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