Droit De Suite
Supporting Droit du Suite is an example of how I think artists, as a group, are often delusional about how the marketplace works. The basic idea of Droit de Suite is that an artist should get a share of any increase in value that occurs after the sale of an artwork.
Sometimes, someone buys an artwork, and then later sells it for a higher price than they bought it. Without Droit de Suite, the profit of the sale goes to the person who bought the work and subsequently sold it. If an artist sells an artwork for, say, $500, and then the buyer eventually sells it for, say, $50,000, the buyer nets a profit of $49,500, and the artist’s share of this profit is… zero.
Proponents of Droit de Suite say that’s not fair. The artist did all the work, the buyer did nothing but hold the work for a while, and yet the artist gets nothing but the original $500 and the buyer gets $49,500. Not fair, not fair!
So what Droit de Suite does is this: whenever an artwork is sold, the original artist gets a cut of the sale price (for example, in France, between 1% and 3% of the sale price goes to the artist).
So here are the problems I see with Droit de Suite:
- In some implementations, the cut that the artist gets is based on the selling price, not the profit. So every time the artwork changes hands, the artist gets paid. Again.
- Even in those cases where the artist only gets a share if there’s a profit, prices are not adjusted for inflation. So if I bought a work for $1000 in 1970, and sell it for $2500 today, under Droit De Suite, the artist might get 3% of the sale, or $75. This might seem fair, but in fact, after adjusting for inflation, the value of the work has actually declined – $1000 in 1970 dollars is about equivalent to $5300 in 2007 dollars. So, in reality, there’s been no profit at all. I’ve lost money on the sale, and the artist gets 3% anyway. Raw deal for me, eh? (in some places, proposed rules DO adjust for inflation, but that’s not the norm)
- Prices are not adjusted for opportunity cost. To really be fair, the profit should not only be adjusted to take into account losses due to inflation, but also the opportunity cost of having invested in the art. In other words, if I buy treasury notes, I can expect a riskless rate of return of something like 4% after allowing for inflation. The idea of Droit de Suite is to allow the artist to participate in gains due to increased market demand for his/her work, not to allow the artist a cut of the time value of money. So the profit should be adjusted to take this into account, but isn’t.
- Let’s suppose that you’re going to buy a three handled moss covered family credenza. But the sales contract stipulates that, if you ever sell the credenza, the woodworker who made it will get 4% of the sale. If you have half a clue, you factor this future loss of profit from a sale into the price you’re willing to pay. The same will be true with paintings, sculpture, photographs – any art work. In the end, Droit de Suite doesn’t put more money in the pocket of an artist, it just changes the time the money arrives and increases the risk. A lower selling price today may or may not be worth a shot at a royalty later. Remember, not every work of art is resold.
Are those the only economic arguments against Droit de Suite? No. The list is nearly endless.
But here’s the part that I think is most telling. Droit de Suite insists that the artist get some of the positive advantage from the increase in the value of the work after he/she sells it. If this is fair, then I think the artist has a responsibility to share in the loss if the work declines in value.
Why should the artist get to participate in the wins, but not be obligated to participate in the losses?