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Arts & Communication Blockchain and royalties in China’s art market

This process was initiated with the adoption of Directive In such a scenario, the dealer, tactically shifting roles
2001/84/EC in 2001, which aimed to ensure that authors from buyer to seller, evades the royalty payment on both
of graphic and plastic works of art shared in the economic transactions. Conversely, less informed or less strategic
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success of their original works. The Directive mandated dealers might end up paying the royalty twice, buying
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member states to implement harmonized resale royalty in a country where it is the buyer’s responsibility and
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legislation by 2006, with full implementation required selling where it falls on the seller. This issue highlights the
by January 1, 2012. The Directive’s implementation ongoing need for transparency and cooperation among
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allowed member states some flexibility, such as setting market players to ensure the effective implementation of
the threshold resale price and deciding whether to adopt droit de suite. 32
compulsory or optional collective management of the The EU’s approach to droit de suite, especially its focus
royalty. The Directive also capped the maximum royalty on economic justice for artists, sets a precedent for other
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at EUR 12,500, regardless of the resale price. 28 regions. It demonstrates the complexities and potential
Artists are entitled to royalties calculated as a percentage impacts of implementing such a system on a large scale,
of the sale price of their works, with this percentage varying offering valuable insights for countries still grappling with
based on the value of the sale. Specifically, the sale price the adoption of similar legislation.
is segmented into five brackets, each subject to a different
royalty rate, ranging from 4% for the lowest bracket to 2.3.3. Australia
0.25% for the highest. However, it is important to note The Berne convention has acknowledged droit de suite
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that the total royalty amount is capped at EUR 12,500, since the 1970s, although its adoption remains elective for
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regardless of the sale price. This tiered system is designed member countries. This global trend toward recognizing
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to ensure that artists receive a fair share of the proceeds ARRs has gradually gained momentum. Before Australia’s
from the resale of their works while also considering the adoption of these rights and its commitment to reciprocal
financial dynamics of the art market. enforcement, Australian artists were at a disadvantage,
The European Commission periodically reviews missing out on royalties from international sales in
the impact of the resale royalty regime. According to a countries that had already embraced this principle. 33
2011 study, most artists and their estates approved of The journey toward establishing a resale royalty scheme
the arrangement, citing increased visibility and financial in Australia was marked by various investigations and
advantages. The survey also highlighted that the EU’s recommendations over several decades. Key milestones
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market share in the works of living artists grew between included the 1989 report by the Australian Copyright
2002 and 2010, demonstrating a favorable impact of the Council, which first proposed the concept of art resale
Directive on living EU artists. However, the adoption and royalty in the national context. Subsequent reports, such
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implementation of the resale right varied across the EU. By as the 1998 Our Culture: Our Future Report on Australian
2011, countries, such as Austria, Ireland, the Netherlands, Indigenous Cultural and Intellectual Property, reinforced
and the UK, which initially did not apply the resale right in the argument for implementing resale royalties in Australia
their national laws, along with Malta (a later entrant to the and brought attention to the disadvantageous position of
EU), had decided to delay applying the right to deceased indigenous artists in the market. In addition, the resale
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artists’ estates until 2012. This decision highlighted the royalty was included in a 1999 report by the Copyright Law
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diverse approaches within the EU toward implementing Review Committee in a more comprehensive analysis of
the Directive’s provisions. Each member state had the copyright in Australia. 36
discretion to set their own minimum thresholds and royalty The pivotal moment in Australia’s journey toward a
rates, leading to a varied landscape in the application of resale royalty scheme occurred in 2009 with the enactment
droit de suite across the region. of the Resale Royalty Right for Visual Artists Act, which
In the EU, the harmonization of droit de suite, or artist became effective on June 9, 2010. This legislation
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resale royalties, while a significant stride in protecting mandates a 5% royalty on commercial resales of original
artists’ financial rights, still confronts notable challenges, artworks priced over AUD 1000, applicable during the
such as the “cascade effect.” This phenomenon occurs when artist’s lifetime and for 70 years posthumously. The
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art dealers navigate the varied resale laws across different scheme requires sellers to report qualifying resales within
jurisdictions to circumvent paying royalties altogether. 90 days, ensuring that artists or their estates receive due
For instance, a dealer might buy an artwork in a country royalties. Notably, the scheme is prospective, meaning
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where the royalty is charged to the seller and later sell it royalties are only applicable to sales occurring after the
in a country where the royalty is the buyer’s responsibility. Act’s implementation.

Volume 3 Issue 1 (2025) 4 doi: 10.36922/ac.2875