The New Zealand Government is establishing an Artist Resale Royalty Scheme (the ‘Scheme’) that will allow creators of visual arts to be recognised and rewarded when their work is resold on the secondary art market.
The Scheme will be established as part of the recent European Union and United Kingdom free trade agreements. It is intended that the Scheme will:
- help visual artists to benefit from the resale of their original works, especially when their works appreciate over time
- align New Zealand with common practice internationally and enable New Zealand artists to benefit when their artwork is resold in countries that operate reciprocal schemes
- support more sustainable careers for visual artists through continuing royalty payments, similar to other creative professionals.
The Scheme is expected to take effect by late 2024 and will entitle visual artists to a royalty each time original work is sold through the resale market.
What is a resale royalty right?
An artist’s resale royalty right, also known as a ‘droit de suite’, entitles visual artists to receive a royalty payment each time an original artwork is resold. Artists’ resale royalty rights are common internationally and generally only apply to work sold through art market intermediaries such as dealers and auctioneers. They do not generally apply to artwork sold privately.
Artwork is usually first sold or gifted by artists or their agents. At this point, the work can be worth relatively little. As it is resold over time, the artwork can increase in value, usually in parallel with the artist’s growing body of work and reputation. However, for the most part, visual artists are involved in the creation of one-off original pieces of artwork and the time of the original transaction is often the only real opportunity a visual artist has to benefit financially from their creation.
This is not the same for many other creative professions that derive economic benefit through copyright. Other artists – such as musicians, authors, and playwrights, whose works are commonly reproduced and adapted – are able to rely much more on royalties because the artwork is not typically a one-off piece.
A resale royalty right can be seen as a means of addressing this limited access to the economic benefit from the creation of an artwork.
How the Scheme will work
The Scheme will take effect once standalone legislation has been written and passed through Parliament. Under the Scheme:
- artists will receive a 5% royalty payment each time their work is sold and resold on the secondary market
- the duration will be linked to the duration of copyright, which expires 50 years from the artist’s death, but this is expected to be extended following the implementation of the free trade agreements
- the right will apply to transactions that involve an art market professional or transactions to and from public institutions
- the right is inalienable, meaning it cannot be waived or transferred, except on death
- the Scheme will be self-sustaining financially by deducting an administration fee from the royalties
- the Scheme will be available to citizens and residents of New Zealand or residents of a reciprocating country.
Once the Scheme has been passed, a not-for-profit organisation will need to be established to handle compliance and administration.
Creative industry reaction
The proposed Scheme has been well received by the creative industry and comes after many years of discussions and lobbying.
The Government hopes that the Scheme will provide important economic and symbolic benefits for visual artists by ensuring that the original artists are able to benefit from an increase in value, creating fairness between the original artists and art market professionals. This will be especially significant where the value of the art appreciates over time and as resale becomes more frequent.
It is hoped that the prospect of continuing royalty payments also supports more sustainable careers in the creative sector. Providing economic incentives to be involved with original creative works will likely increase the visibility of New Zealand’s creative profile nationally and internationally.
This article was first published in Managing IP. AJ Park is Managing IP’s international correspondent for New Zealand.