California Case

The California Art Royalties Act came into existence in 1976 to help young and/or struggling artists to receive payment for the resale of their work. It was argued that young artists are forces to sell their work at modest prices, and years later see their works sold for much more. This act entitles artist to 5% of the sales price of their appreciated work but the responsibility falls on the seller of the art to find the artists and pay them their royalty fee. If the seller does not pay the fee, the artist has the right to sue for damages and attorney fees. However, if the artist cannot be located in 90 days, the royalty payment is transferred to the California Arts Council where it is their duty to locate the artist.

The goal of this act is to help artists receive payment for their work similar to the way artists of other natures, primary authors in their payment of royalties for their works. However, art is rather different because this act only pertains to original works of art not prints or copies. Therefore, this act places the artist partial ownership of the work even after the artist physically parts with the piece.

The California Art Roylaties Act does not necessarily help struggling artists for a number or reasons. Firstly, now the artists is fully invested in their work. At first glance, this seems a promising outcome, but the artist must keep track who owns their painting and where it is located. This act was enacted to help struggling artists, but keeping complete track of their art on top of their struggling art career may pose problems. Additionally many of the artists may have no knowledge of the California Art Royalties act or have the financial means to sue for attorney fees and damages. In fact, it is more likely that an established artist would have to means to properly keep track of their artwork and receive their proper royalties, rather than the struggling artist. The act also says that the artwork must be sold for over $1,000 and have appreciated since its original sale. This is problematic because it is unlikely that this will occur often for the work of most un-established artists, the majority of whom will never become well-known artists.

The Royalties Act decreases the present value of the art. The present value of the art is less, because the price of the piece of art will most likely sell for a cheaper price because of the new 5% royalty payment, the present value will decrease and it will be more difficult for the artwork to appreciate. This is because the present value of an asset is the sum of all future returns discounted to their current rate, therefore the sum of the future returns will be smaller due to the price increase due to the royalty payments. Furthermore this will hurt the unknown artist because the artwork will most likely be bought for less.

By establishing this 5% royalty payment fewer people will be willing or even able to purchase the artwork due to the fact that