Resale Royalty Scheme for visual artists to be established in New Zealand

14 April 2023

Those with interest in an Artist Resale Royalty Scheme have until 27 April 2023 to have their say on the Resale Right for Visual Artists Bill (the Bill) with submissions currently open

The Resale Right for Visual Artists Bill was introduced in Parliament on 29 March 2023. Under the Artist Resale Royalty Scheme (the Scheme) set up by the Bill, creators of original visual artworks will receive a 5% royalty payment each time one of their works is resold through an art market professional.

It was announced in August 2022 that government would soon pass legislation to establish an Artist Resale Royalty Scheme in order to comply with its obligations under the Free Trade Agreement signed with the United Kingdom. The government is aiming to establish the Artist Resale Royalty Scheme by December 2024.

What is a resale royalty?

Visual artworks such as paintings, drawings, photographs, sculptures, ceramics and carvings are protected by copyright in New Zealand. However, once a piece of artwork has been sold, it is not an infringement of copyright to resell it. Copyright only protects against copying.

Some artists are better placed than others to generate revenue through copyright. For example, provided they retain copyright in their work, a musician will earn royalties every time their songs are played on the radio or streamed online. They can also sell tickets to concerts. Likewise, a writer will be paid every time a new copy of one of their books is sold. Their artwork can easily be replicated. That is not always the case for sculptors and other visual artists. Their artworks are often one-off pieces. Copies, if authorised, will be of little value.

Whilst it is common for artwork to increase in value over time, visual artists only get one opportunity to generate revenue from their creation; when they first sell it.

A well-known example is the 1966 painting Dr. Finger’s Waiting Room by the late Alice Neel. Dr Finger was Alice Neel’s own doctor. It is not known whether he got the painting in exchange for treating Neel, or whether he paid for it. Alice Neel had dedicated her life to her art but remained poor until she died in 1984. The painting was sold two years ago by the Finger family for US$3,030,000. The proceeds from the sale went to the Finger family, not to Alice Neel’s estate.

How will the Scheme work?

Under the Resale Right for Visual Artists Bill, an eligible artist will be paid a royalty of 5% of the resale value on the qualifying resale of original visual artwork. Under the Scheme:

  1. An eligible artist is a resident or citizen of New Zealand or of a reciprocating country.
  2. An original visual artwork is a unique painting, drawing, photograph, sculpture, ceramic, carving, etc. or one of a limited number of them created by or under the authority of an eligible artist.
  3. A qualifying resale is a resale to which:
    1. at least one party is an art market professional or a publicly funded art gallery or museum; and
    2. New Zealand has a connection in that the reseller is resident, incorporated, registered, or carrying on business in New Zealand and the resale relates to that part of the person’s dealings in visual artworks that occur (in part or otherwise) within New Zealand.
  4. The resale value must be no less than the amount specified by upcoming regulations, which must be within the range of NZ$500 to NZ$5,000 (excl. GST). This is to ensure the Scheme will be administratively viable.
  5. The duration of the resale right will be the same as the duration of copyright in the artwork, which is currently the life of the artist plus 50 years after their death. This will soon be extended to 70 years to reflect commitments made by New Zealand in the Free Trade Agreement signed with the United Kingdom and that have been negotiated with the European Union (which is expected to be signed later this year).
  6. The resale right is inalienable. This means an artist has a right to resale royalties irrespective of whether they own copyright in the artwork. In particular, the resale right cannot be waived or transferred to a third party, including an artist’s employer or the party who commissioned the work.
How will the Scheme be implemented?

A single, non-governmental, not-for-profit collection agency will be established to implement the Scheme, including the collection and distribution of resale royalties on behalf of artists.

The Bill does not prescribe how the collection agency will operate however it sets out principles to guide the collection agency’s operation. The agency must:

  1. Operate in a way that is transparent, accountable, and respectful;
  2. Act in the best interests of the artists and their estates whose royalties it collects;
  3. Acknowledge and respect the role of Māori as tangata whenua and provide culturally appropriate support to Māori artists; and
  4. Be inclusive of, and recognise the different needs of, all peoples in New Zealand.

The seller and the buyer, or their respective agents, will be liable to pay the resale royalty to the collection agency.

The Scheme will be self-sustaining financially by deducting an administration fee from the royalties.

What’s next?

Australia has had a similar scheme since June 2010 for resales of AU$1,000 or more. The Australian Copyright Agency estimates that as of 30 September 2022 the scheme had generated royalties totalling more than AU$12 million for more than 2,450 artists from more than 27,800 resales. This places the average resale royalty at AU$432. Whilst the secondary art market in New Zealand is smaller, the Resale Right for Visual Artists Bill should go some way to help supporting the career of visual artists.

Public submissions are now being called for on the Resale Right for Visual Artists Bill. They can be made here until 27 April 2023.

If you would like further details on the proposed changes, or assistance in making submissions, please get in touch with the authors or your usual Bell Gully adviser.

Disclaimer: This publication is necessarily brief and general in nature. You should seek professional advice before taking any action in relation to the matters dealt with in this publication.