Tuesday, March 25, 2014

NYT - Auction Houses Taking No Chances on American Royalties Too Act - posted by Florida Fine Art Blog

Sotheby’s has hired the Podesta Group, run by the Democratic super-lobbyist Tony Podesta, 
to help defeat a bill. Credit Luke Sharrett/The New York Times 

Lobbyists Set to Fight Royalty Bill for Artists
Auction Houses Taking No Chances on American Royalties Too Act

New York Times

Lawyers for Sotheby’s auction house paid an unusual visit to a few lawmakers on Capitol Hill this month and brought along some high-powered lobbying muscle. They had come to complain about a new bill that even some supporters acknowledge faces a difficult road in this divided Congress: a proposal to give visual artists — or their estates — a cut of the profits when their work is resold at public auction.
Despite the long odds, Sotheby’s and Christie’s have spent about $1 million in the last couple of years to hire well-known legal and lobbying talent in Washington such as Paul D. Clement, a solicitor general under President George W. Bush, and the Podesta Group, run by the Democratic super-lobbyist Tony Podesta, whose brother, John D. Podesta, recently joined the Obama administration as a top aide.
“We’re taking it seriously, even though we don’t think it’s going to pass,” said Jane A. Levine, Sotheby’s director of worldwide compliance.
Lobbying for resale royalties by organizations that license and monitor artist copyrights is what helped resuscitate the long-dormant issue a few years ago. Federal lobbying reports show that in the two years leading up to the introduction of the 2011 bill, the Visual Artists Rights Coalition and the Artists Rights Society spent $280,000 on lobbyists like Bruce Lehman, former commissioner of the United States Patent and Trademark Office, and John Weinfurter, a former congressional staff member.
“In the past, visual artists have not been able to get their nose under the tent,” Mr. Lehman said of the political process. The two lobbyists are continuing to push for the latest version of the bill, introduced last month in the House by Mr. Nadler and in the Senate by two Democrats, Edward J. Markey of Massachusetts, and Tammy Baldwin of Wisconsin, who took over Mr. Kohl’s seat. (The coalition spent $176,000 on lobbyists in 2012 and 2013.)
Mr. Weinfurter said he is optimistic about the bill. Representative Louise M. Slaughter, a New York Democrat and a chairwoman of the Congressional Arts Caucus, has signed on as a sponsor and he is meeting Monday, Mr. Weinfurter said, with a Senate Republican who he hopes will join her. “We intend to do a full-court press,” he said.
As the art market has become a high-priced playground for billionaires and hedge-fund moguls, interest in resale royalties has grown. A few celebrity artists have shared in the tremendous growth in wealth, but most — even those whose work may now command millions of dollars — don’t benefit if prices increase after the initial sale.
To alter that, Mr. Nadler introduced what he has called the American Royalties Too Act. “To me, the bill is a question of fundamental fairness,” Mr. Nadler said.
Sellers, museums and auction houses have generally opposed resale royalties, which they view as an added tax that raises the cost of doing business and, in the long run, would dampen prices. California was the only state that had a resale royalty law, but a state court struck it down as unconstitutional in 2012, ruling that the statute was interfering in an issue under federal jurisdiction. The case is now being reviewed by the United States Court of Appeals for the Ninth Circuit.
Despite the jaw-dropping prices for some works of art, Christie’s and Sotheby’s have had trouble widening their profit margins in recent years, partly because of incentives they’ve given to big-ticket sellers to win their business. The auction houses worry that the proposed royalty bill would encourage more sellers to abandon public auctions for private deals.

Please read the whole New York Times Article here

In my opinion this is a bad bill.  Even if the intentions were good, the way the bill is written, the resale market of art will just shift to the private dealer away from the large auction houses.  If intellectual property rights is really at issue, opening this can of worms may do more harm than good.  An artist is paid when they sell an artwork. Any royalties should come from the future publishing rights since the artist retains the image rights even long after the artwork is sold.  To require a royalty payment to the artist each time an artwork is sold in the future would almost completely put an end to the secondary market of lesser known or unknown artwork if the law was applied equally.  To not apply the law equally and single out auction houses and high end blue chip artwork would be unjust and certainly unconstitutional.  Here's to hoping the bill goes nowhere.  GL


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