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

Beyond market transparency, the resale royalty systems traditionally private nature of art transactions, creating a
also demonstrate resilience in art market dynamics. barrier to the smooth operation of the market. 60
Empirical evidence suggests that even small royalty One of the critical concerns surrounding resale royalties
amounts received by artists are often reinvested into is their potential impact on primary market prices. There
their art practice, thereby fostering their professional is an apprehension that the introduction of a resale royalty
development. The institution of resale royalties extends could lead to reduced first-sale prices. Buyers might
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beyond financial gain; it also serves as a recognition of an demand lower prices to offset the potential obligation of
artist’s ongoing contribution to the art world. When artists paying royalties in the secondary market, which could
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receive royalties from subsequent sales of their works, it adversely affect all artists, not just those who benefit from
acts as a tangible validation of their enduring impact in the secondary sales.
art market, underlining the sustained relevance and value
of their creative expressions over time. This continuous The introduction of a resale royalty might also influence
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recognition provided by the resale right enables artists to the creative decisions of artists and the willingness of
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benefit continuously from their successful works. collectors to invest in emerging talents. Critics argue
that economic factors play a significant role in influencing
Despite concerns about possible negative effects
on art markets, empirical evidence suggests that the an artist’s creative choices and that a resale royalty could
implementation of resale rights does not adversely impact potentially alter these dynamics. Furthermore, there is a
artwork prices or market competitiveness. In the UK, concern that resale royalties could dampen the financial
for instance, the art market has experienced significant incentives for collectors to take risks on new artists,
growth and an increase in art prices since the introduction potentially hindering the development and exposure
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of the ARR. This growth suggests that the resale right of emerging talents. The resale royalty scheme could
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can coexist with a thriving art market, contributing to the potentially distort risk assessment and investment
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creative economy and cultural heritage. portfolio diversification within the art market. Dealers
and galleries might become more reluctant to purchase
In summary, the implementation of resale royalty works outright from artists or to invest in emerging artists,
systems across various jurisdictions has proven to given the additional financial obligations imposed by resale
offer a range of benefits, from providing financial royalties. This change in investment behavior could have
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support and global recognition to artists, enhancing far-reaching implications for the art market’s overall health
market transparency, promoting cultural diversity, and and diversity.
contributing to the growth and stability of the art market.
2.5. Summary
2.4.2. Challenges in implementation
The challenges discussed in the earlier sections highlight
The abovementioned systems are not without challenges. the complexities inherent in implementing resale royalty
A primary concern is the significant administrative burden systems. While these systems aim to provide equitable
and associated costs associated with implementing these financial returns to artists, especially in the secondary
systems. In Australia, the scheme’s administrative costs market, they intersect with broader market dynamics,
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approached AUD2 million in its early years, highlighting including pricing, investment behavior, and administrative
the resource-intensive nature of managing such systems. feasibility. Developing effective and fair resale royalty
Market resistance and legal complexities also pose schemes requires a nuanced understanding of these
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significant hurdles. In the US, the CRRA faced resistance dynamics and a careful balancing of interests among
from art dealers and legal complexities, leading to its artists, collectors, dealers, and other stakeholders in the art
partial unconstitutionality. This reflects broader market market ecosystem.
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resistance to such schemes and the challenges in aligning In summary, while the strengths of resale royalty systems
them with existing legal frameworks. in promoting artists’ rights and cultural preservation are
In addition, the variable global adoption and evident, successful implementation requires addressing
enforcement of these rights, as seen in China’s slow significant challenges. These include administrative and
incorporation of droit de suite, lead to inconsistencies financial burdens, concerns over privacy and market
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and gaps in protection for artists on an international scale. dynamics, impacts on primary market prices, and broader
Effective administration of a resale royalty scheme often implications for creativity and investment in the art world.
requires comprehensive data on transactions, leading As the art market continues to evolve, especially with
to concerns about the privacy of buyers and sellers. This emerging technologies, such as NFTs and blockchain, the
requirement for transparency might conflict with the dialogue surrounding resale royalties will likely adapt,

Volume 3 Issue 1 (2025) 7 doi: 10.36922/ac.2875