UK-IPO Reports on Artist's Resale Royalties

The UK Intellectual Property Office (UK-IPO) has published the report it commissioned into the impact on Artist’s Resale Rights on the UK art market. This report examines in detail both the costs and benefits of the right for both the UK art market and its artists.

The right was introduced in 2006, as the result of a European Directive. At the time there were concerns the new right would increase costs for the art industry. The report indicates that the right has not had a significant impact on the art trade but there may be some difficulties with the way the system is running. Among the major findings:

• About £2.5 million of Artist Resale Rights is being collected annually, of which around £1.5 million accrues to British artists.
• Most of these payments are quite small, and the median payment to artists based on auction house data is £256. Auction house data indicate that during the period since its introduction, 80% of all ARR payments should have gone to the top 100 artists.
• The cost of administering ARR entailed a set-up cost in the region of £1 million and recurrent administration costs of £50,000 per year.
• There is no evidence that ARR has diverted business away from the UK, where the size of the art market has grown as fast, if not faster, than the art market in jurisdictions where ARR is not currently payable.
• There is no evidence that ARR has reduced prices, as prices have appreciated substantially for art eligible for ARR, and faster than in markets where ARR is not currently payable.
• The extension of ARR in 2012 would on current figures increase the size of ARR payments about fourfold. Art market professionals expressed the view in the strongest terms that the extension will significantly damage the UK market by diverting trade elsewhere.
• While the administrative burden of ARR does not seem to have been excessive for most businesses, there have been a number of problems associated with difficulties in establishing the nationality of artists and the requirement to calculate ARR liabilities in euros. A significant minority of art market professionals, including the major auction houses, deem the administration of ARR to be intrusive and burdensome.