Spanner in the works

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The proposal to extend the Droit de Suite amounts to a subsidy of successful artists by unsuccessful ones.

Van Gogh was completely unsuccessful in marketing his paintings during his lifetime. But some of them have recently sold for almost £100m. Wouldn’t it be better and fairer if a portion of this money, currently shared amongst Alan Bond’s creditors, Japanese insurance companies, and auction houses, went to help struggling creative artists?

The European Union thinks so and is proposing to extend the droit de suite – a royalty on the resale of works of art – to all member states. The British government has resisted on behalf of the British art industry, on the sensible if self-interested grounds that under such a system vendors will prefer to sell their collections in jurisdictions, such as cyberspace or the United States, which have no similar law. And not everyone is convinced of the force of the moral argument. Most of van Gogh’s pictures were sold by his sister-in-law, who got what she considered a fair price for them. Van Gogh’s relatives, unlike the painter himself, did not die in poverty.

But the real weakness of the droit de suite is that its advocates simply do not understand its likely effects. Why, an EU spokesman asks, should David Hockney be treated differently from the Spice Girls? Readers may think of several answers to that question: but, as far as their intellectual property is concerned, there is no difference. Both Hockney and the Spice Girls can charge for the original work – the painting or the recording – and can then charge again for copies of the painting or the recording.

The only commercial difference between them is that most of the value of the Hockney is in the original and most of the value of the work of the Spice Girls is in the copies. That puts Hockney in a stronger position – he faces less risk and need have less reliance on his ability to enforce his copyright. Painters, sculptors and architects are better placed than other creators of intellectual property because their artistic efforts are incorporated into physical objects. Certainly David Hockney does not seem to be doing badly.

The relevant analogy is not from David Hockney to the Spice Girls, but from David Hockney to other producers of goods which are resold in second hand markets, like the Ford Motor Company or issuers of shares in IPO’s. It is open to Ford and to investment banks (as it is open to David Hockney) to impose a droit de suite in the contracts they make – to require that a levy be paid to them on any subsequent resale.

But producers do not impose such a condition, and they are not lobbying the government to impose such a condition for them. They suspect that if there was a resale levy, it would reduce the price they could charge for the car or the shares in the first place. And they believe that demand for cars and shares is increased by stimulating the secondary market. They might have got it wrong. But I suspect that Ford and investment banks have more commercial nous and economic understanding than the artists.

One Ford motor car is very like another. But art is an activity where there is a huge difference between the returns to the successful and the unsuccessful. This is the difference between cars and pictures, and one which makes the droit de suite an even sillier idea.

In many other economic activities, you can make up for quality with quantity. If I hire a removal man, I prefer to have one who is strong and hard-working. But two weak and idle removal men can do the same job. This is bad news for good removal men, because it limits what they can earn to twice the wages of bad removal men. But this is not true of art. Nobody, except the proprietors of chain hotels, thinks you can compensate for the low quality of works of art by having lots of them. Sport, music, acting, all resemble art in this respect. The best performers have talents which are genuinely unique and irreplaceable. They earn sums that are completely out of line with those paid to the merely competent.

So these activities are very risky. Many people are attracted by the possibility of great prestige and large material reward. As a result, the distribution of earnings in these professions is extremely skewed. Some people do very well indeed while the large majority earn less than they could expect even in routine alternative occupations. Ford can take risks on the future success or failure of its products, but young artistic hopefuls find it more difficult. When they begin their careers, they would happily trade off some of the rewards of great fame for greater security and certainty of earnings.

In all these businesses, there are mechanisms to allow this. Sports players make contracts with clubs, teams invest in the development of youngsters, and hope to recoup their expenditure in the transfer market. Equity, the actor’s union, insists on a raft of restrictive practices whose effect is to tax theatres – and therefore the incomes of the successful – for the benefit of its “resting” members. So does the Musicians’ Union.

Promoters, managers and record companies seek out and develop promising newcomers to popular music. Most beginners fail while the few who make it to the top regret the deals they rationally made previously.

And so in the art business. It depends today, as it always has, on patrons. Some of them are dealers, some private individuals: all are people with money and an interest in art. They hope to derive pleasure and profit from identifying good work before it is recognised and in doing so fund struggling new artists at the expense of those who are ultimately successful. It is this activity which the proponents of the droit de suite hope to reverse and tax, to the disadvantage of those whom they claim to represent.

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