Unlocking the Secrets of Artist Resale Rights: The Ultimate Guide for UK Art Galleries
Understanding Artist Resale Rights (ARR)
Artist Resale Rights, often abbreviated as ARR, are a crucial aspect of the art market that ensure artists receive a fair share of the profits when their works are resold. This right is enshrined in law and is designed to protect and support artists throughout their careers and even after their death.
In the UK, the ARR was introduced in 2006 and was extended in 2012 to include the estates of deceased artists, providing beneficiaries and heirs with ongoing benefits from the resale of the artist’s work. This right applies to all original works of art, including paintings, drawings, sculptures, and prints, as long as the resale price is £1,000 or more[2][5].
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How ARR Works
The process of ARR is relatively straightforward but involves several key stakeholders. Here’s a step-by-step breakdown:
Resale Transaction
When an artwork is resold through an auction house, gallery, or dealer, the ARR comes into play. The seller, buyer, and the intermediary (gallery or auction house) are all involved in this transaction.
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Royalty Calculation
The royalty rate is calculated on a sliding scale, ranging from 4% to 0.25%, depending on the resale price of the artwork. For example, if the artwork is sold for between £1,000 and £50,000, the royalty rate is 4%. This rate decreases as the sale price increases, with a minimum rate of 0.25% for sales over £500,000[1][2].
Payment and Distribution
The royalty is collected by the intermediary and then paid to the Design and Artists Copyright Society (DACS), a not-for-profit organization dedicated to managing artists’ rights. DACS then distributes these royalties to the artists or their beneficiaries.
Key Players in ARR
DACS
DACS is the primary organization responsible for collecting and distributing ARR royalties in the UK. Founded in 1984, DACS operates on a not-for-profit basis and supports artists, creators, and their beneficiaries by ensuring they receive fair pay for their work. DACS also provides information on visual art copyright, sets up licensing agreements, and campaigns for artists’ rights[2].
Art Market Professionals
Auction houses, galleries, and art dealers play a critical role in the ARR process. They are responsible for identifying works that are subject to ARR, calculating the royalty, and ensuring it is paid to DACS. These professionals must understand their responsibilities around ARR to comply with the law and support artists’ rights[2][5].
Benefits for Artists and Their Beneficiaries
The ARR provides several significant benefits to artists and their beneficiaries:
- Ongoing Income: Artists can receive royalties from the resale of their works, providing an ongoing income stream.
- Protection of Rights: ARR ensures that artists’ rights are protected and respected, even after the initial sale of their work.
- Fair Compensation: The royalty system ensures that artists receive fair compensation for their work, reflecting its increasing value over time.
As Margaret Heffernan, DACS Chair, emphasized, “ARR is a vital mechanism for ensuring that artists receive a fair share of the profits from the resale of their work, supporting their livelihoods and creative endeavors”[4].
Practical Considerations for UK Art Galleries
For UK art galleries, understanding and complying with ARR regulations is essential. Here are some practical considerations:
Commission Rates and ARR
Galleries need to factor in the ARR when setting commission rates. For instance, Hang-Up Gallery charges commissions ranging from 15% for sales under £15,000 to 10% for sales between £15,000 and £125,000, while also ensuring that the ARR is collected and paid to DACS[1].
Transparency and Communication
Galleries must maintain transparency with both buyers and sellers regarding the ARR. This includes informing sellers about the potential deduction of ARR from the sale price and ensuring that buyers understand the royalty component of the purchase.
Storage and Collection
Galleries are also responsible for the safekeeping of artworks. For example, Hang-Up Gallery requires sellers to collect their artworks within 15 working days of notification, with storage charges applicable if this deadline is not met[1].
Examples and Case Studies
To illustrate the impact of ARR, let’s consider a few examples:
Banksy’s Works
Hang-Up Gallery, a leading dealer in Banksy’s works, often handles sales that trigger ARR. For a Banksy artwork sold for £100,000, the gallery would collect a 4% royalty (£4,000) and pay it to DACS. This ensures that Banksy or his beneficiaries receive a fair share of the resale profit[1].
Historical Artworks
In the case of historical artworks, such as those by J.M.W. Turner, ARR can be particularly significant. For example, if a Turner watercolor is resold for £500,000, the royalty rate would be 0.25%, resulting in a £1,250 payment to DACS for distribution to the artist’s estate[3].
Table: ARR Royalty Rates
Here is a detailed table outlining the ARR royalty rates based on the resale price of the artwork:
| Resale Price Range | Royalty Rate |
|---|---|
| £1,000 – £50,000 | 4% |
| £50,001 – £200,000 | 3% |
| £200,001 – £350,000 | 1% |
| £350,001 – £500,000 | 0.5% |
| Over £500,000 | 0.25% |
List: Key Responsibilities for Art Market Professionals
Here is a detailed list of key responsibilities for art market professionals regarding ARR:
- Identify Eligible Works: Determine if the artwork is subject to ARR based on the artist and the resale price.
- Calculate Royalty: Calculate the royalty amount based on the sliding scale.
- Collect and Pay Royalty: Collect the royalty from the buyer and pay it to DACS.
- Maintain Transparency: Inform both buyers and sellers about the ARR and its implications.
- Comply with Regulations: Ensure all transactions comply with UK law and DACS guidelines.
- Provide Documentation: Keep records of all transactions and royalty payments for auditing purposes.
The Future of ARR in the Digital Age
As the art market evolves with the rise of digital art and NFTs (Non-Fungible Tokens), the concept of ARR is also adapting. Here are some considerations for the future:
Digital Art and NFTs
While traditional ARR applies to physical artworks, there is a growing need to address digital art and NFTs. As Kader Attia, artist and President of the CIAGP, noted, “The digital age presents new challenges and opportunities for protecting artists’ rights. We must work collectively to ensure that ARR principles are applied fairly in this new landscape”[4].
Blockchain Technology
Blockchain technology, which underpins NFTs, offers a transparent and secure way to track ownership and resale transactions. This could streamline the ARR process, ensuring that royalties are accurately calculated and paid.
Smart Contracts
Smart contracts can be integrated into NFT sales to automatically deduct and distribute ARR royalties, reducing the administrative burden on galleries and ensuring compliance.
Artist Resale Rights are a cornerstone of the art market, ensuring that artists receive fair compensation for their work even after the initial sale. For UK art galleries, understanding and complying with ARR regulations is crucial for maintaining transparency, supporting artists, and contributing to the ethical and sustainable growth of the art market.
As you navigate the complex world of art sales, remember that ARR is not just a legal requirement but a way to champion artists’ rights and protect their intellectual property. By staying informed and adapting to the evolving landscape of digital art and NFTs, galleries can continue to play a vital role in supporting the creative community.
In the words of Margaret Heffernan, “ARR is a powerful tool in the fight for artists’ rights. By working together, we can ensure that artists are fairly compensated for their work, now and in the future”[4].
