Founded in 2017 by US tech start-up entrepreneur Scott Lynn, Masterworks is the first company in the world that lets people buy and trade shares in masterpiece works of art – making owning a piece of a Picasso, Hirst or Koons now possible for everyone.
The company's first offering, which is registered as a public offering with the Securities and Exchange Commission and tracked on the Ethereum Blockchain, is one of Andy Warhol's iconic Marilyn Monroe screen prints.
The company purchased the work for £1.8 million at an auction in 2017, and is offering shares in the painting from $1,000 upwards. The second work on offer will by a landscape by Claude Monet, just snapped up for a cool £4.7 million at auction in London, with shares available from as little as $20 each.
We sat down to speak to him, and find out more about his idea.
Candid Magazine: What exactly is blockchain?
Scott Lynn: A blockchain is a distributed database that is not owned by any particular company, and powered by people by contributing computing power from around the world. This prevents any particular government from controlling or regulating the activity that occurs on a blockchain. Applications or currencies can run on top of blockchains for this purpose. For example, Bitcoin is a currency that runs on its own blockchain, which is not owned by any particular company or country. This has allowed it to become the first “global” currency that is used by people from around the world.
CM: What does Masterworks do?
SL: Masterworks is offering shares in great works of art available on the blockchain. This simply means that you can purchase a share in an Andy Warhol painting for $20, and your share ownership is recorded on the blockchain. Over time, we plan to allow you to buy and trade your shares on the blockchain with approved exchanges. We are building a stock exchange for great works of art.
CM: Where did the idea come from?
SL: I’ve been building technology companies for the past 20 years, and collecting for roughly the same amount of time. Two passions colliding! For better or worse, investment-grade works of art have become incredibly expensive over the past decade. The best examples from the best artists routinely command prices north of $10 million. For almost everyone, these price points are cost-prohibitive. In order to invest in these works of art, a new model was needed — specifically, the ability to purchase shares for as little as $20.
CM: How have artists reacted to the idea?
SL: Artists love the idea of thousands of people owning one of their paintings. Fundamentally, the art world is a very small community and needs to engage wider audiences in order to survive. If an artist takes a painting public through the Masterworks platform and gets 10,000 investors, those investors are more likely to follow that artist in the future and engage with her work.
CM: Why sell a Warhol as the first work?
SL: Andy Warhol is a household brand in today’s world. The Marilyn paintings are iconic and most people are familiar with the subject matter.
CM: Tell us about your collection of art? Is it owned via Block Chain?
SL: My collection has evolved over the years, but now is focused collection of great examples by mid-century artists, including de Kooning, Still, Rothko, Newman, Gorky, Frankenthaler, Gottlieb, Chamberlain, and more.
CM: Are you going to pick which art can be invested in, and if so, how?
SL: At the end of the day, we are providing an investment product. It’s critical that we purchase paintings that we believe will appreciate significantly in the future. We have a team of three people who analyze works and try and predict future appreciation potential before adding them to the Masterworks program.
CM: What advice would you give to potential collectors?
SL: Fundamentally, collecting art is about collecting the most important objects of our generation or of prior generations. New collectors often fail to realize that a brand name artist is not sufficient to satisfy an object as important or as a suitable investment. For my collection, I tend to focus on the following questions; the historical importance of the artist, focusing on the object first, and the artist second, I think access matters more than price and I don’t diversify.