The MacNeil/Lehrer Report; Law on Artist's Profits

ROBERT MacNEIL: Good evening. Jim Lehrer is away tonight. It sometimes seems that citizenship in this country is a never-ending course in whom to feel sorry for next. Well, according to the State of California the latest candidates are poor, starving artists. This week a law went into effect in California giving artists the right to share the profits whenever their works are sold or resold. It`s an established principle in several European countries, but it`s thrown the art world here --the art industry -- into shock and controversy. Will the law prove a disaster for the art market in California? If other states, especially New York, follow suit, will the center of the international art market move away from the United States? That`s what we examine tonight. With me is Gail Christian of Public Television Station KCET in Los Angeles.

GAIL CHRISTIAN: California Artists` Royalties Law has been called the first step toward economic justice for the artist; but is it really? Here`s how it works: Effective January 1, the law gives artists a five percent royalty on the entire resale price of paintings, sculpture and drawings valued over $1000 and sold for a profit, provided that the seller resides in California or that the resale occurs in this state. The seller has ninety days to find the artist and pay him. If he can`t find him or her, then the seller pays the royalty to the California Arts Council. The Council holds the money for the artist for seven years, after which it can spend the money for its own programs. The problem is there are no criminal penalties for violating the law, and it`s up to the artist to keep track of sales and to sue, if necessary, to receive unpaid royalties. Robin?

MacNEIL: It`s estimated that very few artists -- about one percent of living American artists -- can regularly sell a painting for over $1000. Most artists` income from sales of their art allows them to live near or below the poverty line; they must sup port themselves with second jobs, and the chance that someday their work wi11 sell for thousands of dollars is remote. But if that should happen there is no way for them to profit from the appreciated value of early works. A dramatic example occurred in 1973 when pop art collector Robert Scull auctioned a large part of his collection in New York, including an early painting by Robert Rauschenberg. That moment is preserved in a film by art historians John Schott and E.J. Vaughn entitled "America`s Pop Collector -Contemporary Art at Auction." Here are some excerpts from that film:

ROBERT C. SCULL: You know, when you own four or five paintings -- you don`t have to have two or three hundred paintings -- anybody owns four or five paintings of an artist -- original works by an artist -- is already part of that artist`s life; you already have received the vibes enough to write a check out for it, and suddenly he`s living with you every day. You keep thinking about the progress of the artist, what he`s doing now, what kind of work is it in relation to the work you bought. In other words, what happens is that ownership is involvement. Acquisition is involvement, and with art it`s probably the most exciting kind of involvement. Of course, owning a nice share of IBM is an involvement, too. You`re involved in the industrial powers of a company to make money for you -- that`s involvement, too; but with art, you`re into something else -- you`re into a different kind of a high.

(Scull Auction, 1973)

AUCTIONEER: ...twenty-five thousand dollars, twenty-five thousand four hundred and twenty-five. Twenty-five thousand dollars four twenty-five, thirty-five, do I hear thirty? Thirty thousand dollars. Thirty thousand dollars, more? Thirty-five thousand dollars.

BIDDER: Forty.

AUCTIONEER: Forty thousand now. Forty-five thousand...

BIDDER: Fifty now.

AUCTIONEER: Fifty thousand dollars now. I have fifty thousand dollars...

BIDDER: Five.

AUCTIONEER: Fifty-five thousand dollars, now; fifty-five. I have fifty-five thousand dollars...

BIDDER: Sixty.

AUCTIONEER: Sixty thousand dollars now. At sixty-seven thousand dollars...

BIDDER: Seventy.

AUCTIONEER: Seventy thousand dollars, seventy.

BIDDER: Five.

AUCTIONEER: Seventy-five thousand dollars, seventy-five.

BIDDER: Eighty.

AUCTIONEER: Eighty thousand now. Eighty-five thousand dollars, do I have? Eighty-five thousand dollars...eighty-five. I have eighty-five thousand dollars going, eighty-five. And down it goes, and at this time and room now, it`s eighty-five thousand dollars. Sold for eighty-five thousand.

ROBERT RAUSCHENBERG: You didn`t even send me flowers!

SCULL: Send you flowers? Nothing happening -where? for what? I should have, anyway.

RAUSCHENBERG: For the great markup.

SCULL: You`re right, you`re right! (Laughing.)

RAUSCHENBERG: I`ve been working my ass off for you to make that profit?

SCULL:(Still laughing.) How about yours? You`re going to sell now. I`ve been working for you, too. We work for each other. Oh, I stopped you cold! (Laughing.) I stopped you cold.

RAUSCHENBERG: Let`s make a deal. You buy the next one, okay?

SCULL: Why not?

RAUSCHENBERG: At these prices, you buy the next one.

SCULL: Well, I`ll take a look at it...

RAUSCHENBERG: Come to the studio.

SCULL: All right, why not?

MacNEIL: But do they work for each other? In seventeen years that painting, Rauschenberg`s painting called "Thaw," had increased in value from $900, `which Scull had paid. for it, to $85,000, as you just heard -- the price Scull received for {t at that auction. After the incident you just saw, Rauschenberg began working for an artists` royalties law. His accountant and financial advisor has become the foremost advocate for a national artists` royalty law, as well as one of those primarily responsible for the new California law. His name is Rubin Gorewitz, and he represents some 600 artists, including zany top names. Mr. Gorewitz is also president of an organization called Artists` Rights Today. Mr. Gorewitz, why does the artist need this Law?

RUBIN GOREWITZ: For the first time in history an artist will know where his art works are .He will know the price at which they are reselling. For the first time the umbilical cord will not be severed between the artist and his art work.

MacNEIL: You mean, most of the time an artist doesn`t know where his work is and what it`s selling for?

GOREWITZ: That`s right. And many times they`re in different parts of the world and he has no way of knowing where they are. There`s a big problem many times when an artist wants to do a retrospective; it`s to try to find out where those works are and how to get them back.

MacNEIL: And unless it`s sold at a public auction like that, he doesn`t actually know what a dealer or a collector -- whoever owns it -- is actually getting for it?

GOREWITZ: Exactly.

MacNEIL: And under this law now, he will know.

GOREWITZ: Yes. This isn`t anything new in the world; there`s been a law like this in France. In fact there`s been an organization called SPADEM in France that`s been in existence since 1896. You see, in France they have royalty laws called "droit de suite," they have moral laws protecting artists so that you cannot tamper with an artist`s art work. Here in this country, for example, you can buy an art work and destroy it, and there`s no legal claim...

MacNEIL: Isn`t the French law only for art that is reproduced, like prints, and things like that?

GOREWITZ: No, no.

MacNEIL: It is not.

GOREWITZ: It`s all public sales or art, and a straight three percent of every art work sold, regardless of whether it`s sold at a profit or a loss, and regardless of whether the artist is alive or dead; this law is only during the lifetime of the artist.

MacNEIL: Will this new law, the California one, and the national one that I suppose you`d like to see follow from it...

GOREWITZ: Absolutely.

MacNEIL:...does it really help the poor artist, or merely the established artist who can sell at $1000 or over a painting?

GOREWITZ: It mostly helps the poor artist. The major artist, if he needs some more money, he can go out and sell another art work -- he doesn`t have that sort of problem. But the major artist today was that poor artist yesterday. And for example, when Pollock died and his art work was sold to Australia that he originally sold for $15,000, and then he died two years later and recently it was sold for two million dollars to Australia. His wife, Lee Krasner, did not get a penny of that. The same thing like Willem de Kooning. There are still struggling poor artists whose major works sold at high prices then and are still getting low prices now. A little sequel to that film, that followed with Bob Scull, was when Bob Rauschenberg says, "Come on over to my studio and buy a new work now," and he says, "No" -- Robert Scull then said, "Do you have any of those old works left? I`ll pay you that price for the old works of twenty years ago, but the ones you`re doing now, come on, Bob; that`s not worth it now, you know that." That`s the sort of conversation that passed on.

NacNEIL: I see. Why are you so involved in this? You`re an accountant; what do you stand to get out of it?

GOREWITZ: I think if this law and the other thirty-six artists` rights projects I`m working on -- if we can get all them passed and put into effect, I stand to make about ten thousand dollars a year from that, because that is exactly what it costs me now to run around the country. This all comes out of my own pockets, my own expense money, and I`ll be able to save all my own money once all these things pass. There is no group that sponsors me, there`s no money that anybody gives me; there`s no particular artist or any artist group that says to me, "Here is money. Go do this." This is strictly a personal missionary thing I`m doing.

MacNEIL: Okay. Let`s go back to get some other views with Gail Christian in Los Angeles. Gail?

CHRISTIAN: In the United States, the typical artist`s training includes art school, perhaps an apprenticeship, and most often many years of working at odd jobs or teaching in order to pay cost of materials and living. Daniel Cytron-is a painter of large abstract works. After graduating from the Otis Art Institute in Los Angeles he served an apprenticeship and spent several years eking out a living as a warehouseman, a house painter, a gardener and a handymen. For the last five years he has managed to support himself, finally, by selling his paintings. Mr. Cytron, as an artist, do you really need this new law?

DANIEL CYTRON: Sure. I need it very much.

CHRISTIAN: Why? How is it going to benefit you?

CYTRON: It`s going to benefit me by being one of the demands I already make.

CHRISTIAN: There seems to be this attitude or opinion that the artist`s only obligation is to paint and that artists are so childlike that they can`t manage their own affairs, they need the state and federal government to legislate for them.

CYTRON: Artists -- if I can speak for myself -- I need as much nurturing as I can possibly get in order to do my work. A lot of my friends are artists, including myself, for years were working at below minimum wage just to keep going; because the amount of time I needed to spend on my own work required me to get anything I possibly could because I was only trained for this one activity, and this is all I`m really good for, in a sense, and I do my maximum output. I want to do this.

CHRISTIAN: But there`s a lot of talk that this bill, in fact, is not going to protect the struggling artist, only the successful artist. How do you protect the artist like yourself who for years has had odd jobs and is just starting to barely make a living at art?

CYTRON: How I`m protected is by my own initiative and my own responsibility, by making demands on people who own my work and by making demands on myself and being responsible for my own activities -- being responsible for keeping track of my own art work, by being responsible for the materials I`m using in making my work, that it has certain values that I require, keeping up technically, keeping my own history of where the paintings are by keeping track of them -- by being generally responsible for what I`m making. In a sense, I`m a manufacturer, inventor; I`m everything, and therefore I have to take care of it in such a total sense that it, in effect, encompasses my own life.

CHRISTIAN: Are you satisfied with the offer of five percent that the bill provides?

CYTRON: No. Originally, when I first started using -- I use a contract between myself and the person who buys my work -- and my original contract I took originally from Edward Kienholz, who in the early sixties made his own contract, fifteen percent. And upon experience I said, okay, listen, let me just get the idea across, and I cut it down to three percent; and the law came around and said five percent. As far as percentages go, it doesn`t mean that much to me. Personally, the idea is the spirit, the fact that in the future I`m going to be participating and that the person who buys the work knows that I have a vested interest in my own activities.

CHRISTIAN: Would you sue to collect a royalty?

CYTRON: Sure. And I have been sued -- or at least, asked to be sued because of my wanting to have these rights.

CHRISTIAN: Would other artists sue?

CYTRON: What other ones have?

CHRISTIAN: Or in your opinion, would they?

CYTRON: Sure.

CHRISTIAN: Two groups of California collectors are threatening lawsuits to overturn the new royalty law. One collector who opposes the new law is Albert Elsen, an art historian who teaches a course called "Art and the Law" at Stanford University. Mr. Elsen, is this new law going to discourage you from buying paintings in California?

ALBERT ELSEN: Me personally? Well, I`d say to some extent it is. Speaking for many collectors that I know, it definitely will discourage them. I think the objections are these: the law is discriminatory; California collectors and dealers are discriminated against. The collectors and dealers in forty-nine other states are not liable to this residual right. It`s unconstitutional; it confiscates private property not, as taxes normally do, for the state and the welfare of all, but for private individuals; it takes five percent from.... It`s a retroactive law, by the way. It affects works that we acquired before January first. It takes five percent of those works on their resale if they appreciate in value and returns them to the artist. It violates all contracts we had with the artists or with dealers. It is a law that is a disincentive to buy, to donate and to sell. If you donate a work-to a museum, you have to pay the artist the equivalent of five percent. If you sell, it`s five percent of the gross price. You can lose money on it. So that there is, generally speaking, a feeling that the promulgators of this law have not looked at the whole art system and seen that what`s bad for collectors and bad for dealers and bad for museums is in the long run not going to be good for artists.

CHRISTIAN: There are no laws to enforce it; would you violate the law?

ELSEN: No, I wouldn`t violate the law. I could postpone having to comply by not selling, but the way the law is set up it invites evasion and deception. There are ways to avoid complying with the law which are not illegal -- group sales, package sales. But it is going to be taken to court and its constitutionality tested.

CHRISTIAN: Are you opposed to the five percent? I think most people look at collectors as being fat cats. The attitude is, "Come on, five percent -- you can certainly afford to give an artist five percent."

ELSEN:I think we`re talking about the principle of the bill. I oppose the principle of the bill. So far in this program, it`s been said that this is the first time the artist has gotten an economic right; he has that under copyright. It`s been said that there`s no way that the artist can profit from the resale of one of his earlier works once he`s sold them; that`s not true. If the artist maintains in his inventory early works, they will appreciate in value. You see, the assumption is that there`s a conspiracy to deprive the artist of his just economic rewards; and dealers, and collectors and even museums are seen as part of this conspiracy. The fact is that Mr. Cytron, when one of his paintings is resold, he benefits. It affects his unsold work, it affects his future works. In fact, if collectors don`t sell paintings, they don`t establish new market values for them. So there`s a myth at work. Rauschenberg has replaced Van Gogh as the great victim of the art world.

CHRISTIAN: Let`s return to New York. Robin?

MacNEIL: Thanks. Dr. Elsen has made a lot of points; let`s just take up a couple. of them, starting with you, Mr. Gorewitz, on his point that if it`s bad for museums and bad for dealers and bad for collectors it`s going to be bad for artists, too -- what do you say?

GOREWITZ: It`s basically better for collectors than it is for artists. Collectors benefit much more than the artist, under this bill, for various reasons.

MacNEIL: How?

GOREWITZ: First, it doesn`t affect the dealers at all -- it doesn`t affect that first sale. Everything that happened before happens now exactly the same, there`s no change at all for the dealer. The only one who is really affected is the collector when he has to resell. The collector benefits in four very distinct ways: One, there`s a big distinction between an art collector and an art investor. As an art collector you have to pay capital gains tax if you sell at a profit, but you cannot deduct capital losses if you sell at at a loss, you cannot deduct your insurance, as an investor can. So when you start paying royalties and you`re reselling, you fall under that category of an investor; so you have tremendous benefits under Internal Revenue, and the artist helps that way. If you want to get a bank loan and you want to use the art as collateral, many banks throughout the country are starting to do this -- Europe is doing it, and the United States is just starting now -- the artist, Mr. Cytron, now, through his records, will know everybody who ever bought his works, what they paid for it originally, how it`s gone up in value, and he`ll be able to be the financial advisor to this so-called "fat cat" collector and provide him with all the information of what the values of the art work are, so you know the bank will say, "Yes, it`s gone up in value -- it`s a good risk. We`ll loan you money on it."

MacNEIL: It helps to establish the collateral value of art, in other words.

GOREWITZ: Absolutely. And the artist is the only one who can do that. It helps the insurance companies, because now the artist, as Dan Cytron said before, will stand behind that work; he has an invested property right, an intellectual property right in it, so if there`s ever any damage, the artist himself will supervise the restoration of it and see that it`s done under his specifications so he can then assure the insurance company, "Yes, I`ve restored it. Now I guarantee it`s my work again." Whereas if he doesn`t have that interest in it, the insurance company has nobody to turn to, and the insurance will have to make full restitution.

MacNEIL: That`s quite a catalog there. Let`s just go back out to the Coast...

GOREWITZ: And there are more.

MacNEIL: Let`s take those just for now. Although I don`t know whether you consider, Dr. Elsen, those too crass advantages, or has our accountant here told you things you didn`t know, as advantages?

ELSEN: I don`t think they`re advantages; first of all, if banks are going to loan on paintings, there may be a question about going to the artist as the authority on their works. There`s a kind of conflict of interest there. Mr. Gorewitz has talked about how this bill will allow artists to keep track of their works so that when they have a retrospective these can be found; that`s done by curators and it`s done by dealers -- dealers do that. In other words, I don`t see anything that he said as an advantage. To me, it`s kind of casuistry.

MacNEIL: Mr. Gorewitz?

GOREWITZ: I didn`t understand the last word.

MacNEIL: Casuistry.

GOREWITZ: Oh. I still don`t understand it.

MacNEIL: False argument...arguing falsely.

GOREWITZ: Okay. The other advantages, there, that an artist would have -- the artist is the only one now that could say that work is not a fraud, that`s not a forgery; that is my work. You see all these stories about these forgeries of some works of George Washington in Washington, D.C., and there`s two or three of them and nobody really knows which one is the original. And only the artist himself could really tell, because he can recognize his own child. The artist, as I said before, is the only one that could restore it properly and assure the insurance companies. And it`s not the artist who`s the financial man, it`s the artist who has the background, he will then be able to tell the bank, like Mr. LaMesa -- you were at the same...no, you were not at that conference in New York -- who`s with the Federal Insurance Deposit Corporation, trying to get more and more banks to do this, and very successfully. And I`m supposed to meet with him in Washington. And the artist would then be able to say, "Bob Scull bought this in 1963, Tom Jones bought it in 1974," from the resale records. So it`s not that he`s a financial connoisseur . but he will have these, normally, through the resale....

MacNEIL: I see.. I`d like to know why -- and go back to Mr. Cytron on this -- why should art, which is a kind of property, in a way, like a piece of fine furniture you might compare it with, although I`m sure you`d make distinctions there; but why should it be considered any differently than another kind of property, and why shouldn`t it be bought and sold without any restrictions?

CYTRON: First of all, it`s not property in the ordinary sense, just the way a writer or a playwright or a dancer or a composer s not making property per se; he`s dealing with something that`s apart from the normal course of -- you can`t reproduce it, you can`t...you can make another video machine, but you can`t make another painting. As the law says, it`s products of the mind, and as a product of the mind it`s something that`s unique. And it`s a cultural property, it has nothing to do with a chair that you can take to restore and, "Give me another Louis the..." you know, whatever it is. You could constantly reproduce something else, but this is not the same.

MacNEIL: No, but that would be a reproduction; what about a piece of signed antique furniture by Sheraton, or somebody like that? I mean, that can just be bought and sold without any restriction, at the moment.

CYTRON: Well, at that period of time -- I can`t speak for those people. They weren`t willing to initiate their responsibilities and assert themselves.

CHRISTIAN: Robin, I`d like to ask Mr. Elsen a question. If this is not the way to do it, what is the way?

ELSEN: The way to do it is to say to yourself, "All right, who are the needy artists, and what do they need?" Rauschenbergs don`t need the money; California bill is a bill for the Rauschenbergs and the Warhols. What we need, and what has been proposed by collectors and dealers and museum people, is that a percentage of the sales tax on the sale of art be set aside and put in a fund to be administered by some organization appointed by the governor or the legislature. And this organization would look at the problems of genuinely needy artists. There`s a precedent for this in the Bay Area Rapid Transit system -- BART is one that is funded in part by a percentage of the city sales tax in the Bay Area.

CHRISTIAN: Mr. Cytron, what`s wrong with that?

CYTRON: All right, listen. First of all, the California Arts Commission is composed of artists, and they`re the people that are administering this bill. The bill itself -- what can I say? -- needy artists...everyone is a needy artist who decides to go into exploring themselves and willing to risk the fact that they are a one-man operation. You`re not going to get anyone but the people in this... first of all, this law was one of many laws that are in effect right not. There`s an Art for Public Buildings law that was put together by artists, not by dealers and collectors; there is an Artists-Dealers Relation law that`s now in California, there is this Royalty law, and all these things tend to make the responsibility -- they`re initiated by the artists because the artists know what`s best for themselves. You ask the person who`s sick, "Where do you hurt?" You don`t tell them where they hurt and how they`re supposed to feel.

MacNEIL: Mr. Cytron, can I just ask Mr. Gorewitz what he thinks of the simple sales tax idea that Dr. Elsen has just mentioned.

GOREWITZ: Al Elsen and I are friends; we`ve met many times and had lunch together. I was just out in California with him, attending the same conferences. We`ve had this exchange before, personally and very lovingly.

MacNEIL: Well, have it for us again.

GOREWITZ: (Laughing.) Okay. I would love very much to help him in this one discrimination area, Al, where you say you`re being prejudiced in California. Help me get it passed in all the other states, so that we can all share equally the goods and the bad of it. And secondly, I would love to help you with this welfare fund in California. As you may know, Bob Rauschenberg -- well, there are many artists that you think are wealthy, and five years ago I had to personally loan Bob Rauschenberg two thousand dollars. I know of the many people, the destitute people; I know where his income goes, and he does not have much of it to himself; but I don`t want to get into individuals. There are other great artists living today that you think are very wealthy but are very poor, and that is what drives me to do these things, by my first-hand knowledge of these. The average artist I help makes two to three thousand dollars a year; and although my name is associated with people like Rauschenberg, there`s 600 to 800 others that are unknown, and those are the ones I`m mostly concerned with. We set up a foundation called Change, Inc., and we`re in the process of setting it up in California right now, with Henry Hopkins and several others out there, which is a fund that we set up and over the last six years we`ve given over $150,000 to needy artists, to artists who can`t pay their rent, can`t pay their food bills. And we`ve given over $150,000; our total operating costs from those six years were about $53. And all of the money that comes in goes right out.

MacNEIL: I hate to interrupt you, but obviously we can`t sort of hear the whole thing tonight. But I`d just like to know what you thought of the point about-why couldn`t a sales tax on every sale perform this same function?

GOREWITZ: I`m very much in favor of that, but then when you do that, then you`re going to get the Elsens of the other type of opposers who will say, "Wait a minute. The sales taxes on-furniture should go to the furniture makers and the sales taxes on automobiles should go to the auto makers, and the sales tax.,.." Fine. If Al can help me avoid that kind of opposition -- I don`t want to have one thousand Al Elsens out there; I`m happy with the one I know here, that I like -- but I`m trying to say that in Change we are doing that now. And most of the major artists want to contribute their share of the royalty to foundations such as Change and the wealthier funds.

ELSEN: You`ve just made the best argument for no legislation and no government involvement at all. If the artists can set up organizations such as yours and help each other, terrific. What the artists out here deeply resent, for example, is the law telling them they cannot waive that five percent; they don`t like the paternalistic aspect of it. They don`t like the ideas -- with due respect to Mr. Cytron -- of being bookkeepers and detectives and being involved in litigation.

MacNEIL: I think we have to leave it there, Dr. Elsen. Thank you all very much in California. Thank you, Gail, and thank you, Mr. Gorewitz. Jim Lehrer and I will be back tomorrow night. I`m Robert MacNeil. Good night.