NEW YORK – Owning an original Warhol or Monet might seem an unattainable dream to aspiring art collectors without millions to burn. We’ve all seen the heart-stopping prices paid at New York and London auction galleries and thought, ‘Wouldn’t it be nice…’ But a blue-chip art investment platform called Masterworks is changing the dynamic and making it possible, now, for anyone – even someone with as little as $20 to spare – to become an investor.
Based in Manhattan, Masterworks is a recently launched blockchain-based company that facilitates fractional ownership in valuable, high-quality art. In other words, if you participate in one of their offerings, you won’t own a whole Warhol, but you will own a share of the Warhol based on the amount of your investment, whether it’s $20 or $20,000.
Masterworks acquires artworks at auction, targeting examples they believe to be undervalued. The works are added to an art portfolio that Masterworks manages in much the same way a Wall Street firm like Goldman Sachs or J.P. Morgan might manage a Class ‘A’ mutual fund. The difference is, the “equity” made available by Masterworks is a tangible artwork. They are wholly responsible for each painting’s well being — its storage, transportation and insurance.
The first painting purchased by Masterworks was 1 Colored Marilyn (Reversal), from a series of oil and silkscreen paintings Andy Warhol created between 1979 and 1986. The company offered 99,825 shares in “Marilyn,” each priced at $20. Masterworks’ second acquisition was a Claude Monet painting, Coup de Vent, which the company purchased at Christie’s London for $6 million on June 20. Reportedly, Masterworks is also eyeing masterpieces by Pablo Picasso, Jean-Michel Basquiat, and other important 20th-century artists.
What’s the end game for investors? The sale of the artwork, of course. When a painting is sold, its shareholders split up the profits according to the percentage of their original investment. If, for example, you owned a 2% stake in a painting, you would then be entitled to receive 2% of the selling price (minus mutually shared management fees, auction commissions, etc.). To prevent monopolization, no single investor is allowed to own more than 10 percent of a given artwork.
Masterworks has a democratic process in place whereby the shareholders themselves determine if and when it’s time to take profits on a particular art holding. A painting can only be sold if the majority of shareholders invested in it votes to do so.
Not surprisingly, millennials comprise a large percentage of Masterworks’ current investors. They are a generation that is natively comfortable with online commerce. Also, they understand the concept of blockchain technology – which creates an immutable record of transactions and ownership – and the use of Ethereum tokens for buying, selling and trading, a feature that Masterworks hopes to introduce in the near future.
Click to learn more about Masterworks.
By Catherine Saunders-Watson, ACNI
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