A lesson from London: oppose droit de suite in New York at all costs!

A few months ago, Edward Winkleman used the Robins-Zwirner lawsuit as a case example in support of introducing droit de suite, or artist resale rights ("ARR"), in New York on the basis that such legislation would put an end to the secret handshake culture that dominates the art market and avoid the blacklist response by some artists to the flipping of their work. While I agree in principle with the need for a more open and transparent market (how else does one accurately calculate the market price of a work?), collectors enter into confidentiality agreements for reasons other than the fear of reprisals by the artist and in any case, droit de suite is not the answer.

Droit de suite is about redistributing resale profits from collectors to artists much more than it is about market disclosure and the costs are far too great for it to be championed as the remedy for an opaque market. An independent study on the impact ARR had on the British art market in the first two years since its implementation highlighted how detrimental ARR is to the competitiveness of a market and serves only to shift sales of qualifying artists' works to jurisdictions that have not enacted ARR. This means that ARR ultimately does not even benefit the relatively "successful" artists whose works sell for more than the minimum qualifying threshold under any given ARR regime (€1000 in EU Member States). The study also showed how the scheme not only fails to benefit younger, emerging artists- the intended beneficiaries of ARR- but even works against their interests as galleries become less willing to take on the commercial risk of promoting the work of unknown artists "as a result of the complications of processing ARR payments and the impact of royalty payments on low margin sales."

Finally, if artists like Rauschenberg are so keen to participate in the upside when a collector profits from a resale should they not also contribute to a portion of the losses when a work depreciates in value? Of course not you say, and so would I, but then nor can collectors, whether speculative or not,  justifiably be expected to bear the entire risk associated with buying art only to later be penalised for making a profit. Especially since the most significant economic gain made by the artist is not from any applicable droit de suite (under Directive 2001/84/EC, royalties are calculated on a sliding scale from 0.25-4% depending on the resale price and capped at a ceiling of €12,500) but rather from the much higher prices the artist can command for primary sales of works created at or around the time of the resale of the earlier work.