Negotiated Resale Rights
The Negotiated Resale Right (“NRR”) available through Xipsy is a flexible, customizable approach to profit sharing for artists, galleries and collectors. The digital contract allows artworks to be initially sold with a condition that upon the first resale a percentage of the profit is shared with the artist, and, if desired, the gallery.
Typically, the NRR provides that 15% of the profit upon resale will be paid by the collector to the artist, gallery and Xipsy. However, this percentage can be increased or decreased by the artist and gallery in order to find a percentage that makes sense for a particular transaction.
Negotiated Resale Rights were created to give the art world flexibility when it comes to profit sharing. An artist can designate whether he wants a work to be sold with or without an NRR through the consignment agreement, and unless otherwise specified, there is no requirement that it must be. The gallery (or the artist) and the collector can negotiate the terms of any NRR, with each deciding whether the specific acquisition is right for the NRR. A subsequent purchaser is not required to enter into an NRR, so the initial collector is not constrained at the point of resale.
With NRRs, galleries have the opportunity to share alongside the artist in the rise in value of the artworks that they have exhibited and sold. While galleries do not always participate, when they do opt in, the gallery’s percentage of the NRR usually matches the ratio of the proceeds of the underlying sale – so, 50/50 or 60/40, and so on.
The NRR can be transferred by the artist (or gallery) prior to the associated artwork being sold. This is similar to musicians, writers, or actors selling their copyrights or residuals for a lump sum in advance of receiving the royalties.
Tracking Your NRRs
If an artwork has an NRR associated with it, the artwork’s Xipsy record will be highlighted. While the record may still be shared, a record can’t be transferred to a new owner until the original purchaser satisfies the terms of the NRR.
Upon resale, the collector records the sale through Xipsy, which then calculates the amount owed under the terms of the corresponding NRR. The collector submits payment to Xipsy, and Xipsy records the NRR as being satisfied, allowing the artwork’s record to then be transferred to the new owner. Xipsy distributes the payment to artist and gallery as applicable. For providing NRR management services, Xipsy retains a percentage of each NRR (calculated as 3% of the profit).
For more information on the Xipsy NRR, please read the Xipsy User Agreement and the NRR Terms and Conditions. For more information on Resale Rights generally, please see the articles and reports below.