CA Art Business & Marketing 3 — Questions and Answers
Question 1: What does the term 'resale royalty' (droit de suite) give artists the right to receive?
- A percentage each time their artwork is resold (Correct answer)
- A refund if artwork is returned
- Royalties on prints made from their original work
- Payment when their work is displayed publicly
Correct answer: A percentage each time their artwork is resold
Resale royalty laws (such as California's CARA) entitle artists to a percentage of proceeds each time their original artwork is resold at a profit.
Question 2: Which business structure offers an artist personal liability protection while allowing pass-through taxation?
- Sole proprietorship
- LLC (Limited Liability Company) (Correct answer)
- C-Corporation
- General partnership
Correct answer: LLC (Limited Liability Company)
An LLC protects personal assets from business debts while allowing profits and losses to pass through to the owner's personal tax return, avoiding double taxation.
Question 3: An artist is negotiating with a publisher to reproduce their illustration in a book. Which right should the artist grant to keep other uses available?
- All rights
- Work-for-hire rights
- One-time reproduction rights for the specific book only (Correct answer)
- Exclusive worldwide rights in perpetuity
Correct answer: One-time reproduction rights for the specific book only
Granting one-time or limited rights for the specific book preserves the artist's ability to license the same image for other uses such as prints, merchandise, or other publishers.
Question 4: Which of the following is a non-dilutive funding source for artists?
- Angel investment
- Venture capital
- Arts grant or fellowship (Correct answer)
- Equity crowdfunding
Correct answer: Arts grant or fellowship
Grants and fellowships provide funding that does not require giving up ownership or equity, making them non-dilutive compared to investor-based funding.
Question 5: What is 'net 30' in an art commerce invoice context?
- The buyer receives a 30% discount
- Payment is due within 30 days of the invoice date (Correct answer)
- The artist has 30 days to deliver the work
- Artwork must be returned within 30 days if unsatisfied
Correct answer: Payment is due within 30 days of the invoice date
Net 30 is a standard payment term meaning the full invoice amount is due within 30 calendar days from the invoice date.
Question 6: A potential collector asks for a 'certificate of authenticity.' What should this document minimally include?
- The artist's tax ID only
- Title, medium, dimensions, year, artist's signature, and a statement of authenticity (Correct answer)
- Only the purchase price and gallery name
- A list of the artist's past exhibitions
Correct answer: Title, medium, dimensions, year, artist's signature, and a statement of authenticity
A certificate of authenticity should contain key identifying information about the work and a signed statement from the artist confirming the work is genuine.
Question 7: Which type of art fair model requires artists to pay a booth fee upfront regardless of sales made?
- Juried consignment fair
- Commission-only fair
- Traditional booth-rental art fair (Correct answer)
- Online virtual fair
Correct answer: Traditional booth-rental art fair
Traditional booth-rental art fairs charge artists an upfront fee to display their work, and the artist keeps 100% of sales but bears the risk if sales don't cover booth costs.
CA Art Business & Marketing 3
What does the term 'resale royalty' (droit de suite) give artists the right to receive?