This is from an article in the New York Times.
When the taxi baron Robert Scull sold part of his art collection in a 1973 auction that helped inaugurate today’s money-soused contemporary-art market, several artists watched the proceedings from a standing-room-only section in the back. There, Robert Rauschenberg saw his 1958 painting “Thaw,” originally sold to Scull for $900, bring down the gavel at $85,000. At the end of the Sotheby Parke Bernet sale in New York, Rauschenberg shoved Scull and yelled that he didn’t work so hard “just for you to make that profit.”
The uproar that followed in part inspired the California Resale Royalties Act, requiring anyone reselling a piece of fine art who lives in the state, or who sells the art there for $1,000 or more, to pay the artist 5 percent of the resale price.
Cheap Talk 
4 comments
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November 17, 2011 at 5:12 am
n=1
Well, in Britain, authors get royalties from library circulation.
November 17, 2011 at 9:47 am
donald wittman
I have a chapter in my book, Economic Foundations of Law and Organization, devoted to artist (and writer) royalties. In general, artist royalties are bad for artists as it shifts the risk onto artists from investors, who are less risk averse. If artists desire more risk, they can hold on to some of their paintings as their price depends to a great extent on their oeuvre rather than the characteristics of a particular painting. Of course, those artist who are unanticipatedly more successful than when the painting was originally sold benefit from a royalty system. Artist royalties also increase transaction costs which is a detriment to both the artist and the investor.
November 17, 2011 at 12:57 pm
Peter
Free art!
November 18, 2011 at 9:28 am
JOSE
What about Hold-up? Although 5% seems small, it has to be pain in every transaction. This will increase the average tenure of each piece of art…
Making pieces of arts way less “liquid” than they should be, even watercolors!!