Next steps for the art resale right?

The first amendment moved during clause-by-clause consideration of Bill C-11 was an NDP amendment to introduce resale rights (See March 12 minutes for exact wording). This is a policy that the Liberal party has supported in the past. The chair ruled the amendment inadmissible as it was a new concept that is beyond the scope of Bill C-11.

Before proponents of the resale right take that as a failure, the process needs to be looked at more closely. This is also a good time to more publicly discuss the policy being proposed. Multiple bills on the same topic are not admissible within the same session of parliament. When the chair ruled the amendment inadmissible, he was effectively also ruling that tabling that policy as a private members bill would be admissible within this session.

Would an art resale right be good policy?

I understand the desire of visual artists for this type of policy. Unlike other forms of creativity which make money based on royalties, the business side of visual arts such as sculpture and painting operates very differently. It is the originals or very limited copies (where copies applicable at all) which have value, and it is in the sale of the art to a buyer where money is made. When such unique art is later resold it makes sense as a matter of policy that the artist would receive some percentage of the resale value, just as other creators might make royalties or residuals for ongoing wider distribution, communication or performances of other types of creativity.

Is the Copyright Act the best place for this policy? This is where I believe the issue gets trickier.

I believe if studied properly we would determine that the private copying regime for music takes money out of the pockets of musicians. While it may bring in tens of dollars from Canadians, its fundamentally confusing nature leads Canadians to carry out activities that reduce revenues to musicians by hundreds of dollars. Canadians don't believe that they should have to pay for private activities, and presume that the levy pays for very different things.

On the other hand, I have observed wide support for government funding programs based on activities not regulated by copyright. An example is the public lending of books by libraries which has a Public Lending Right funding program.

There has been an artist resale right in other countries for quite some time, and for some they are controversial. Given this existing experience, I would like to see peer reviewed studies on the question of whether this policy helps or hinders the actual artists. I realize collective societies will benefit, but the interests of collectives are not always aligned with the interests of the copyright holders which they collect money for. Collective management of rights is only one business model among many for some creators, and impositions of collective societies can wipe out potentially more beneficial competing choices.

One of the other problems relates to one of the general failings of copyright policy which has been made worse in recent decades with the over-use of the confusing term "intellectual property". This is the treatment of very different scenarios as if they have more in common than they do. Patents on pharmaceuticals are very different than patents on business methods, patents have little in common with copyright and each has less in common with trademark law, copyright on literary works are very different than sculpture, and even though both are literary works there is little in common between a fiction novel and a computer operating system.

While having a resale right for a sculpture or painting might be found by a peer reviewed study to be beneficial, the same policy would cause a lot of problems for other creativity such as software. Collective societies in general, regardless of the specific right under discussion, would wipe out the wide variety of business model options that currently exist for software. This is also not a software issue, as there are many other works under copyright where compulsory collective societies would be a failure.

I worry that no matter how clear the language we put in the Copyright Act is, that adding a resale right will lead some to propose that it be applied to all creativity covered by copyright. The self-called "Creators Rights Coalition" and others representing a small subset of copyright holders have already proposed extending the private copying regime to all creativity covered by copyright, something that would cause considerable harm to a large number of creators. This belief that all creativity should be treated the same is very harmful to creators, but is unfortunately common for those who have not given adequate thought to the complexity of copyright, creativity and the full spectrum of business models.

One way to avoid all the concerns is to not put the resale right policy in the Copyright Act itself. We could create a tax on the resale of visual art which is earmarked to be distributed to the specific artist by an accountable and transparent government agency. This would have some of the features of the existing Public Lending Right policy which I believe would make a good replacement of the existing private copying regime. The largest difference is that we know exactly whose paintings are being resold, so there should be no uncertainty in knowing who to distribute the revenue to. This is not the case for private copying given any attempt to track or regulate these private activities causes far too much harm to the rights of Canadians.

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You need to justify the rationale

I'm not convinced that When such unique art is later resold it makes sense as a matter of policy that the artist would receive some percentage of the resale value, just as other creators might make royalties or residuals for ongoing wider distribution, communication or performances of other types of creativity.

The difference is that a visual artist receives one lump sum for sale of the (unique) single copy of the work, whereas the royalty model means getting a small royalty from the (first) sale of each copy of the work. In both cases, the rightsholder gets their cut when the copy is first sold, it's just that for visual works there is only one copy.

The problem with adding any extra costs into the resale of anything is that you decrease the value to the initial purchaser. when I first buy the piece, I know that if I later resell it, I'll lose some percentage, so I'm willing to pay less in the first place. Artists lose out up front for some potential benefits downstream. A bad deal for artists *and* buyers.

The "copy" in "copyright" means "manuscript"

My reading of your comment is that you are focused on the word "copy". Permission, which may involve charging royalties or other conditions, exist for other activities such as public performance/communication, to adapt into a cinematographic work, and many other activities not related to "copies" at all.

I wish we would all stop thinking that copyright was about mechanical copies, as that was never how the word was intended to be used. That is the nonsense that got some people into believing that private copying should be regulated by copyright at all (whether copyright permission or any form of levy). Just because there is a copy made doesn't mean it should be regulated by copyright, and just because it doesn't involve making a copy doesn't mean it shouldn't be regulated by copyright.

ManuscriptRight/CreatorsRight should become a series of *public* activities which require permission of the rightsholder. When we think in those terms it makes sense to discuss resale in the same way we already discuss rental. Your second paragraph appears to be a critique of a majority of activities already regulated by the existing act, including rental, public exhibition/performance/communication.

Your last paragraph concerns me as well, which is why I want a proper facts-based study on the question of whether such a right, and having such a right administrated in specific ways, would harm or help the relevant copyright holders. I do not think it is valid to assume that if a collective society is collecting money for some copyright regulated activity that this will automatically increase material rewards for creators. We can already think of existing examples, the private copying regime being the one I used, where the regime is reducing revenues for creators.

P.S. It is not the sale of the copy that is regulated by copyright, but the making of the copy. Even at that level I think there is confusion about what copyright regulates. It is only recently with the new "making available" right that activities related to the sale of those copies are beginning to be regulated by copyright. There was already secondary liability related to distribution of infringing copies.

Well aware of that :-)

I'm surprised that you got that idea from my comment. I tend to believe that copyright would function much better if "reproduction" were taken out of the Act altogether. When it was put in, it was a decent indication of "intent to publish or distribute" but that's no longer true. I'm also a firm believer that the Copyright Act really has no business regulating activities that take place entirely in the home of Canadians.

I thought I was talking entirely about business models - hence my focus on the sale of copies rather than the making of them. In general, I think of the Copyright Act as restricting what you can do with some subset of your property (the subset that are tangible copies of copyrighted works). I am a big believer in (tangible) property rights, so I want this list to be as small as possible (and as a side note, the fact that the Act now includes exceptions (1) to the exceptions (2) to the exceptions (3) to the idea that you can basically do what you like with your property is a very bad thing).

So yes, I do consider many of the other activities covered by the Act to be problematic. I don't see rental as fundamentally different to lending, for example, and the "public" part of the exhibition and performance rights are notoriously vague. I don't see huge problem with scrapping the public performance right, for example - movie studios could just charge enough for the sale of those first copies to movie theatres (or lease them rather than selling them, with appropriate conditions). Do they really need the money from people "performing" DVDs in church halls ?

(1) except where TPMs are used to prevent the exercise of fair dealing rights
(2) except fair dealing activities
(3) except activities regulated by the Copyright Act

Curious.... the bundle of rights becomes only one right?

Sorry for any misinterpretation of your other comment..

Now onto possibly misinterpreting this one :-)

If you take "copy" out of the CreatorsRights Act, and you don't want public activities after the sale of the original to be regulated, what is left?

If you mean making public distribution of copies for those creative works where there is a business model for that specific activity, you have effectively wiped out the business case for a lot of creativity.

That works fine for things like software where distribution to new people of the rules embedded in the software is how software gains value for new people, but doesn't work for visual arts, performances (live plays, music, etc, etc), and so-on where that is not a business model that works at all.

Copyright is a bundle of rights (series of regulated activities) for an important reason which I hope we won't forget.

I fear this is another one of those instances where the blunt instrument of Copyright is being exposed. The identical Copyright rules regulate different forms of creativity using different business models entirely different.

This is why I objected to all the "same copyright" rhetoric used by professional photographers, as there is no such thing as the "same copyright". Photography, as with other recordings, are totally different than other creative works and have different features (often no "author" at all for automated recordings, then there is amateur, with a tiny few being creations by artists).

When we can get a book to write itself like we can set up equipment to automatically record audio/video/photographs, then the issues with recordings would apply to literature. Given most politicians think books can read themselves out loud or self destruct, I bet they believe the technology is already here :-)

What "Resale right"

I don't see any reason to support artists being able to collect any compensation for something they sold and no longer have any right to.

If I understand this correctly, some artists want to be able to sell me, say, a painting, and if I later on resell the painting, expect to collect a portion of what I sold it for.

I have invested MY money in a painting that becomes MINE. The artist doesn't pay anything to me for having MY money tied up in MY painting (nor do I expect him to), and yet expects to gain something when or if I resell MY painting?

That's like Ford expecting to get a cut of my tradein value on my car when I go for a new model.

No Thanks.

I can't buy the painting for a small royalty - I have to pay full price. Why should the person who sold it to me get anything more than the price he negotiated at the time?

No way. Ever.

The comparisons to buying other tangible property doesn't apply.

When you buy a copyrighted work you are not buying the copyright, only the work in tangible form. The comparison to the car simply doesn't apply, and this non-applicability is not unique to the art resale right.

For instance, if you buy a CD or DVD what you own is the tangible medium it is stored on and the ability to do various things not regulated by copyright (Limits and exceptions to copyright, something we need more of to re-balance as digital technology brings into our homes activities previously only possible commercially).

When you buy that CD/DVD/etc you do not have the right to do a variety of public things such as communicate by telecommunications, perform in public (IE: show to a large group of people like a theater/etc), and so-on. Most of the copyright is a further regulation of things which can be purchased in a tangible form, and most of these things have nothing at all to do with "making copies". The copyright holder might have given you additional permissions as part of the purchase, but copyright law says that it is their permission to give and not yours to assume.

If the only argument against the artist resale right turns out to be an argument against copyright itself, the argument won't really go anywhere. Thinking that any aspect of copyright somehow transfers to someone else when an instance of a work is purchased is the same type of confusion about copyright that leads people on the copyright maximalist side of the debate to abuse the word "theft" to refer to an activity that does not in any way affect possession of the thing which they own (the copyright).




If the argument is that this new right and/or payment would reduce the value of the art for buyers and thus reduce what they might be willing to pay for art (or their willingness to buy art), then that is a critical issue to explore. Paying the money at first purchase is better than paying the money later, if what people are willing to pay ends up reducing by the value of the resale right.

This is one of the many problems with technological measures applied to content: it reduces the value of the copyrighted work for the audience (content that works with fewer devices less valuable than content that works with all devices). Far from being an "opportunity" as some lawyers building business models on infringement claimed, these measures act as a deterrent to purchase/licensing/etc -- all without there being any evidence of reducing infringement. It is my strong believe that misapplied and misunderstood technological measures reduces income to creators more than copyright infringement itself does.




There are visual artists who have strongly opposed the art resale right, and we had references to that earlier in this blog: Comments from Australian and Canadian artists on the controversial art resale right. This is also something to evaluate: whether a majority of the artists who are said to be beneficiaries actually want the right, or are as opposed to it as some art buyers might be. Are those opposed in the artist and art buying community a small minority, or represent half or even a majority? I don't know, and hope the government clarifies this question before proceeding.




Before we can get to the specifics of the impact (benefit or harm) of such a right, we need to get past thinking that a resale right (especially if limited to public auctions) is somehow fundamentally different than communications to the public, performance in public, rental or other activities already regulated by our existing copyright act (and international copyright).

For those not familiar with copyright, remember that it is not only or even mostly about making "copies". Copyright is a series of activities which require permission from the copyright holder, with some further exceptions (some royalty-free such as fair dealings, and some that collect royalties such as neighboring rights for performers and makers of sound recordings -- payments for radio airplay/etc where relevant copyright holders can't demand permission).

Please see Section 3, Section 15, Section 18 rights as well as section 19 compulsory licenses.

As you look at the list of activities which form the bundle of rights we call copyright, note that few of them relate to making copies.

Dispelling a few myths about the Artist's Resale Right

The Artist’s Resale Right (ARR) is important because the full value of an artwork often isn’t realized on the first sale. For example, Inuit artist Joe Talirunili’s soapstone carving The Migration was sold for $278,500 at auction when the artist likely received between $400-$600 for it originally.

Yes, some artists receive payment when their work is sold the first time around, however, in many cases revenues artist receive from sales are below minimum wage. Half of visual artists in Canada earn less than $8000/year. It’s not just artists who aren’t any good who have trouble. Even Governor General Award winning artists have incomes that fall well below the national average – many have second jobs to support their practice.

And sometimes artists don’t receive any payment the first time around. Most Ontario museums have policies of only collecting on donation and the number of donation requests artists receive from charities can add up to 50% of their production for one year.

Artists such as George McLean who do well from their work are very, very rare. Number of artists to date who have refused to collect ARR payments in England: zero. If Mr. McLean does not wish to receive a royalty should his work resell, he is free to donate it to a charity or back to the seller. The vast majority of the feedback we have received from the arts community has been positive. A list of endorsements CARFAC has received for our proposal can be found on our website.

As for proving the impact for artists, there have been several studies. In Australia, more than $530,000 has been paid out from more than 3,200 resales for more than 350 artists from June 2010 until January 2012. Sixty percent of the artists are First Nations artists. The lowest royalty was $50 and the highest $40,000. Also, see question 7 from this UK study and page 9 of this EU study.

There has been no evidence that the ARR has an impact of the art market in the places it has been implemented. As for it being a cash grab for collectives, in the UK, DACS charges 15% for administration of the ARR – well below the 50% most art dealers in Canada charge artists.

CARFAC has done extensive research on how the Artist’s Resale Right works elsewhere and has put our recommendations into a proposal. If you take a look you will find answers for just about all the questions that have been raised.

Melissa Gruber
Advocacy and Communications Director
CARFAC National

Re: Dispelling a few myths...

(for some reason I can't post this as a reply)

I find this idea very troubling. Either you charged what the market would bear or you didn't. If you didn't, more fool you. If you did, then yes, you did get the full value of the artwork at the time of the sale. The fact that it later appreciates is irrelevant. If you think the value will go up later, sell it later instead.

Somebody buying and selling art as a business invests their money in the hope that the works will appreciate, but they have no guarantees. If you decrease the return (by adding this "resale right") without changing the risk, you may investing in art less attractive. Overall, you may help out the artists who do become well-known, but you harm the vast majority who don't.

How does your argument not also apply to houses ? They also generally appreciate in value and are recognised as a good investment vehicle. Is the builder being short-changed because my home appreciates in the time I own it, such that I can sell it for more than I bought it for ? I don't believe so.

Why no reply, and my common follow-on question.

You couldn't post as a reply because Melissa's comment wasn't yet published. As a new user her comments were put in moderation. I've since raised the access of her account so comments will be published automatically.

Great discussion everyone!

Chris,

I have to ask everyone who objects to the resale right being added to the Copyright Act: Would you object to a PLR-like funding scheme?

a) That a percentage of all sales at a public auction are collected as a tax of some sort.
b) Given whose artwork was sold is known, no fuzzy (and game-able) statistics are needed like is done for other schemes.
c) Money is distributed to the original author, regardless of any sale of the physical object and/or the copyright.

The Public Lending Right comes out of general tax revenue and uses statistics on library lending, both of which wouldn't be required here -- and the money would be targeted at the individuals whose paintings were sold.

I am really curious if Canada can accomplish the goals that CARFAC and others are thinking of, but without the controversy/backlash/etc and with more likelihood that something would be possible.

Note: It may be that a PLR-like scheme won't be possible under the current government any more than a new right in the Copyright Act. I don't think we need to only think about what any current government would do, given these aren't short-term policies. I also was very wrong about the Conservatives already: when they came to power in 2006 I thought that the non-owner TPMs on devices talk would be over because of their strong respect for property rights. That didn't turn out well at all :-)

Comparison to PLR

To be honest, I've always been pretty sceptical of the public lending right, too. I would indeed argue that there's little difference between me lending a book to a friend and a public library lending the same book to a patron. It's also pretty similar to somebody buying a book second-hand and selling it back to the bookstore after reading it. I don't see that the author, publisher, printer, book-binder, delivery driver, original bookstore, or any third party really have any business knowing what I do with the book once I've bought it. That's the privacy aspect - what I read is personal. Which books I choose to pass on to other people is also personal. It's a little bit different when it's a library doing the lending, but not so different that I don't find it a bit worrisome.

The second part is the reputation effect. I believe that authors would benefit from having their books lent out by libraries, even if there was no PLR money. It would be interesting to scrap the PLR but to allow authors to opt-out of public libraries and to see how many chose to do so (not advocating for this - I think libraries should be allowed to buy and lend out whatever they feel is best, but it is an interesting thought experiment).

As an aside, I'm all in favour of increased public spending on the arts, but I believe that grants and the like are the best way to allocate the money, rather than attaching it to marketplace transactions.

Public vs Private.

I believe copyright and public arts funding needs to be clearly about public activities.

There is a massive difference between watching a movie at home with a couple of friends, and projecting that identical movie onto a screen where strangers watch (for free) or where any payment is made. One is public, and one is private, and in this case I believe this public activity must be regulated by copyright.

I consider this similar to the private activity of a citizen lending a book to a friend compared to the public activity of a library lending to a patron. The private activity is none of anyone else's business. I don't believe this public activity should be regulated by copyright, but I do believe a public arts funding program that transfers money from general revenue to the author is appropriate.

I see activities at public auctions to be the same, where having a transfer of money from the buyer to the artist is appropriate. I favor a transparent and accountable government program over copyright (which is all too often corruptible by third parties), but believe this public activity should transfer some reward to the artist just as public performance of a movie would.

In all these situations there are people who will try to game the system in dishonest ways. Some even consider unauthorized public P2P filesharing to be people sharing with thousands of their closest friends, which is total bullshit as far as I'm concerned. These public activities should clearly be regulated, and I think people who try the "thousands of my closest friends" argument should be embarrassed (and publicly ridiculed, etc).

Re: Dispelling a few myths...

Artists can't just wait and sell their work later. It appreciates in value because they have built a reputation for themselves over time and they can't build a reputation if all their work sits in their studio. Nor could they afford to. Unfortunately, the market is often not a good indicator of the value of an artwork on the first sale.

Buying art isn't like buying stock. People buy art because they like it. You don't sit down with an artist and talk about how to maximize the profits from your portfolio of artwork. The real value of the artwork to the purchaser is in what it says, which doesn't change if the price goes up or down.

Again, art is different from houses. The value is in the image, not just the physical property.

Re: Dispelling a few myths...

I think you're trying to both conflate and distinguish price and value. You seem to be saying that because at some point in the future a particular artists work sells (price) for, say $10,000, that the "value" of that artwork was always $10,000. And so the person who originally bought it from the artist for, say, $1000 paid less than the value of the work. Is that fair ?

From http://dictionary.reference.com/browse/value?s=t :

val·ue   [val-yoo] Show IPA noun, verb, -ued, -u·ing.
noun
1.
relative worth, merit, or importance: the value of a college education; the value of a queen in chess.
2.
monetary or material worth, as in commerce or trade: This piece of land has greatly increased in value.
3.
the worth of something in terms of the amount of other things for which it can be exchanged or in terms of some medium of exchange.
4.
equivalent worth or return in money, material, services, etc.: to give value for value received.
5.
estimated or assigned worth; valuation: a painting with a current value of $500,000.

To distinguish those various definitions, I'd tend to call the first "value" and the rest "price", but I'd also note that the first isn't subject to any real measurement. As soon as you attach a dollar figure to it, you're talking about one of the other definitions, and those will always change over time.

As you note, selling artwork builds the artists reputation, which increases the value (price) of the works already sold. That doesn't mean, as you seem to imply, that they were always worth that much and effectively first sold at a discount. It means that the original purchaser, as well as giving cash to the artist, also helped them by improving their reputation, enabling them to earn more for later works. That makes it even less rational to make it less attractive to invest in buying artwork by reducing the amount the original purchaser can potentially make by selling it later.

Put another way, if an artist thinks that they're created a work that should one day be worth $10,000, they do indeed have a choice - hang on to it until somebody is actually willing to buy it for $10,000, or sell it today for less than that, knowing that the sale will also build their reputation. That gain in reputation has value, and it's part of the valuation of the sale. They might, for example, agree to a lower price if the purchaser is a gallery rather than a private buyer (in fact you use exactly this example - the reputation benefit from having a work displayed in a museum is apparently great enough that it's worth giving the artwork away).

I think people buy art for a variety of reasons, including purely financial. Certainly art dealers do indeed buy art in order to profit from it. In this case, we're talking about somebody other than the artist selling a work. At that point, it really is all about the money, because the owner has decided to sell it.