In Copyright Law, 200 Is a Magic Number

An occasional recurring theme in this blog is how copyright law is a poor fit for the digital age because, while technology enables distribution and consumption of content to happen automatically, instantaneously, and at virtually no cost, decisions about legality under copyright law can’t be similarly automated.  The best/worst example of this is fair use.  Only a court can decide whether a copy is noninfringing under fair use.  Even leaving aside notions of legal due process, it’s not possible to create a “fair use deciding machine.”

In general, copyright law contains hardly any concrete, machine-decidable criteria.  Yet one of the precious few came to light over the past few months regarding a type of creative work that is often overlooked in discussions of copyright law: visual artworks.  Unlike most copyrighted works, works of visual art are routinely sold and then resold potentially many times, usually at higher prices each time.

A bill was introduced in Congress last week that would enable visual artists to collect royalties on their works every time they are resold.  One of the sponsors of the bill is Rep. Jerrold Nadler, who represents a chunk of New York City, one of the world’s largest concentrations of visual artists.

Of course, the types of copyrighted works that we usually talk about here — books, movies, TV shows, and music — aren’t subject to resale royalties; they are covered under first sale (Section 109 of the Copyright Act), which says that the buyer of any of these works is free to do whatever she likes with them, with no involvement from the original seller.  But visual artworks are different.  According to Section 101 of the copyright law, they are either unique objects (e.g. paintings) or reproduced in limited edition (e.g. photographs).  The magic number of copies that distinguishes a visual artwork from anything else?  200 or less.  The copies must be signed and numbered by the creator.

Under the proposed ART (Artist Royalties, Too) Act, five percent of the proceeds from a sale of a visual artwork would go to the artist, whether it’s the second, third, or hundredth sale of the work.  The law would apply to artworks that sell for more than $5,000 at auction houses that do at least $1 million in business per year.  It would require private collecting societies to collect and distribute the royalties on a regular basis, as SoundExchange does for digital music broadcasting.  This proposed law would follow in the footsteps of similar laws in many countries, including the UK, EU, Australia, Brazil, India, Mexico, and several others.  It would also emulate  “residual” and “rental” royalties for actors, playwrights, music composers, and others, which result from contracts with studios, theaters, orchestras, and so on.

The U.S. Copyright Office analyzed the art resale issue recently and published a report last December that summarized its findings.  The Office concluded that resale royalties would probably not harm the overall art market in the United States, and that a law like the ART Act isn’t a bad idea but is only one of several ways to institute resale royalties.

The Office had previously looked into resale royalties over 20 years ago.  Its newer research found that, based on evidence from other countries that have resale royalties, imposing them in the US would neither result in the flight of art dealers and auction houses from the country nor impose unduly onerous burdens for administration and enforcement of royalty payments.

Yet the Copyright Office’s report doesn’t overflow with unqualified enthusiasm for statutory royalties on sales.  One of the legislative alternatives it suggests is the idea of a “performance royalty” from public display of artworks.  If a collector wants to buy a work at auction and display it privately in her home, that’s different from a museum that charges people admission to see it.  Although this would mirror performance royalties for music, it would seem to favor wealthy individuals at the expense of public exposure to art.

The ART Act — which is actually a revision of legislation that Rep. Nadler introduced in 2011 — has drawn much attention within the art community, though little outside it.  Artists are generally in favor of it, of course.  But various others have criticized aspects of the bill, such as that it only applies to auction houses (thereby pushing more sales to private dealers, where transactions take place in secret instead of out in the open), that it only benefits the tiny percentage of already-successful artists instead of struggling newcomers, and that it unfairly privileges visual artists over other creators of both copyrighted works and physical objects (think Leica cameras or antique Cartier watches).

As an outsider to the art world, I have no opinion.  Instead it’s that 200 number that fascinates me.  That number may partially explain why the Alfred Eisenstaedt photograph of the conductor Leonard Bernstein that hangs in my wife’s office, signed and numbered 14 out of 250, is considerably less valuable than another Eisenstaedt available on eBay that’s signed and numbered 41 out of 50.

It begs the question of what happens when more and more visual artists use media that can be reproduced digitally without loss of quality.  Would an artist be better off limiting her output to 200 copies and getting the 5% on resale, or would she be better off making as many copies as possible and selling them for whatever the market will bear?  The answer is unknowable without years of real-world testing.  Given the choice, some artists may opt for the former route, which seems to go against the primary objective of copyright law: to maximize the availability of creative works to the public through incentives to creators.

Copyright minimalists question the relevance of copyright in an era when digital technologies make it possible to reproduce creative works at very little cost and perfect fidelity; they call on the media industry to stop trying to “profit from scarcity” and instead “profit from abundance.”  Here’s a situation where copyrighted works are the scarcest of all.

Nowadays no one would confuse one of Vermeer’s 35 (or possibly 36) masterpieces with a poster or hand-made reproduction of one.  People will be willing to travel to the Rijksmuseum, National Gallery, Met, etc., to see them for the foreseeable future.  Yet there will be some time in the non-near future when the scarcity of most copyrighted works is artificially imposed.  At that point, the sale (not resale) value of creative works will go toward zero, even if they are reproduced, signed, and sequentially numbered by super-micro-resolution 3D printers that sell at Staples for the equivalent of $200 today.

Perhaps the best indication of the future comes from Christo and Jeanne-Claude, the well-known husband-and-wife outdoor artists.  Christo and Jeanne-Claude designed the 2005 installation called The Gates in New York’s Central Park (which happens to be in Jerry Nadler’s congressional district).  Reproducing — let alone selling — this massive work is inconceivable.  Instead, Christo and Jeanne-Claude hand-signed thousands of copies of books, lithographs, postcards, and other easily-reproduced artifacts containing photos and drawings of the artwork, and sold them to help pay the eight-figure cost of the project.  To that just add an individualized auto-pen for automating the signatures, and you may have the future of visual art in a world without scarcity.

So, the question that Congress ought to consider when evaluating art resale legislation is how to create a legal environment in which the Christos and Jeanne-Claudes of tomorrow will even bother anymore.  That’s not a rhetorical question, either.

8 comments

  1. […] this age of media abundance, copyright and digital media authority Bill Rosenblatt wonders whether the resale royalty is a wise way for artists and the art world to cope with […]

  2. ozpainter · ·

    Bill
    The number 200 is interesting, do you know if it is the same in other countries? Do you think 200 is the number needed for a ‘murder’ of crows ? 🙂

    Re the proposed art resale royalty in the US, I gather that while the right can be only collected by collection societies and would not be extinguishable, it would, be transferable. And this makes the following rather strange scenario quite likely:

    A artist in order to get a better first sale price for his/her artwork , agrees to transfer the resale right to the first purchaser of that artwork and therefore when that same artwork eventually goes to resale, the reseller would also be, the resale right-holder!
    I guess that this could mean that in this scenario the reseller would be required to pay the royalty to themselves?, minus the collection fee deducted by the collection society…? strange ,no?

    BTW I am a professional Australian artist , ARR is bad news for artists, least those who are alive.

  3. Hi Ozpainter,

    Regarding the number 200 in US copyright law, I could not find any equivalents in the UK or Canadian copyright laws. (I’ve asked an Oz copyright authority about this and will amend this reply later if she tells me anything interesting.) You are correct in that the royalty can only be collected by collecting societies. It would be transferable along with the copyright itself, though I would suspect that it only lasts as long as the term of copyright (e.g. life of the creator plus 50 or 70 years).

    I suspect that your scenario could well come up – an artist bargains for a higher price in exchange for transfer of copyright to the buyer. However, I wonder how this would work in “droit d’auteur” states like France where the creator retains moral rights in his work. Perhaps others would care to comment here?

  4. John Walker · ·

    Bill

    In Australia the right is not transferable or extinguishable. But it can be waived and the use of the government appointed collection agency is not compulsory;if the artist chooses so, the royalty can be paid directly to that artist.

  5. John Walker · ·

    Bill Hi do you think that the US law has much chance? regards john walker http://johnrwalker.com.au/

  6. I’d say the odds are against it, at least in its current form. If Republicans take over both houses of Congress after the elections this November, then it’s likely to die because this falls under the heading of government regulatory intervention into private businesses (i.e., auction houses), which Republicans are against.

  7. John Walker · ·

    thank you

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