Under the hammer

A plan to guarantee royalties on auctioned works, even after the death of the artist, stirs a lively debate in China, Kelly Chung Dawson reports.

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A controversial clause in the draft of a new copyright law currently under consideration in China would ensure royalty payments for artists whose work is resold at auction. Potentially, it would also guarantee financial security for the families of deceased artists.

Although "droit de suite", commonly known as the artists' resale right, has been enacted in more than 60 countries, it has faced opposition in the United States and now China, for its potential to stifle the art market. Artists, auction houses and dealers have come out on both sides of the legislation, sparking a debate that is particularly heated in a country whose art auction market is now the biggest in the world.

The clause, which would give artists or their heirs a payment of between 1 percent and 5 percent of any public resale, is included in a draft of a recently submitted copyright bill that will soon be evaluated by China's State Council. If sanctioned, it faces review and possible revision by the National People's Congress Standing Committee before enactment. The law would apply to the resale of fine art, photographs, and musical and literary manuscripts; it doesn't specifically apply to reproduction rights or the licensing of intellectual property, separate from the original physical work.

At first glance, it's difficult to argue with the fairness of compensating artists whose early work can appreciate tremendously in value over the course of a successful career. The legislation aims to prevent the "exploitation" of creators who profit far less than the buyers and sellers who circulate their work. In 1962, Andy Warhol sold his Lemon Marilyn for $250; in 2007, the same piece sold for $15 million.

But detractors have noted that droit de suite most often benefits artists who are already well off. Warhol, for example, was hardly a "starving artist" in the later years of his life. In France, 70 percent of all resale payments are claimed by heirs of the nation's most famous artists: Matisse, Braque and a few others.

Although details regarding the length of time heirs would receive resale profits haven't been disclosed, China's current copyright law, enacted in 1991, offers protection for 50 years following an artist's death. (France extends resale benefits to an artist's heirs for 70 years after the artist has died.)

Adopting droit de suite would make a statement about China's desire to be viewed as an advanced cultural market on par with those of Europe. (In the US, only California has enacted a version of the legal principle.)

Rampant proliferation of forgeries in the Chinese art market provides another argument for the law, which would force auction houses to trace each work to its creator to guarantee authenticity. Auction houses already have a responsibility to ensure proof of origin, but the proposed law would provide further protection.

However, if droit de suite were to discourage buyers and sellers from going public with their sales, the lack of a "paper trail" with which auction houses and dealers now establish provenance could cause a work to be undervalued.

Among the law's detractors are the auction houses and dealers that would be most affected financially. Although work by Western contemporary artists can sometimes sell for up to $30 million, sales for work by contemporary Chinese artists currently plateau around $5 million. Those prices would likely increase by at least 10 percent to ensure profits for sellers; once auction or dealer commissions are factored in, a near 50-percent markup would still only guarantee a minor profit. Both buyers and sellers would be affected, with the end result likely being diminished sales, critics say.

For artists whose work is still in the lower price range, droit de suite would still provide essential protection. Proponents of the law have suggested that an artwork's latent value is only realized after resale, making the resale principle necessary for preventing exploitation. Intermediaries inevitably make more money than the creators, giving artists less incentive to continue creating.

But critics of the law argue that artists who support it are short-sighted. They say higher fees (with the potential to incur additional ones if another sale occurs, as is often the case) and potentially diminished value as a result of a failure to establish provenance would only discourage buyers in an already precarious economy.

If the value of a work were to depreciate, would the dealers get money back? "It has to go both ways" has been a common refrain in the ongoing debate.

One prominent art dealer even said of the law's potential to stunt growth: "It's un-Chinese."

Others have suggested that the clause would be more appropriate when the Chinese art market has had time to mature. Another alternative: Artists could include droit de suite provisions in individual sale contracts, leaving it up the buyer to walk away or make a deal.

Contact the writer at kdawson@chinadailyusa.com.