A Banksy for under $170?

Apr 10 2014, 4:32pm CDT | by

My Art Invest, a new trading platform that launched in London today, is the latest art exchange to attempt to democratize art by allowing people to buy and sell shares of individual artworks. One share of Bansky’s spray paint on canvas Heavy Artillery Elephant, for example, can be yours for €120 ($166), while a share of Rome Pays Off, a Jean-Michel Basquiat screen print, one of an edition of 85, costs €166 ($229).

Buyers can either hold onto their shares until all the shares are sold and My Art Invest founder Tom-David Bastok sells the work,  distributing any profits, or they can opt to offer their shares for sale, at any price they see fit, on the My Art Invest exchange.

In theory, that is. As Melanie Gerlis reports in The Art Newspaper, “Attempts to divide works of art into equal shares, emulating companies that trade on a stock exchange, have proved problematic at best.” This is a diplomatic way of putting it, because as far as I can tell, every other attempt to set up an art exchange has failed miserably.

One of the more recent ones, Art Exchange, which launched in Paris in 2011, opened for business promising to make the art market more liquid by giving buyers an easy exit strategy, yet not a single art share has changed hands on the exchange since then.

Why is this model so difficult to pull off? One reason is that, unless you can actually trade your art shares, you make no return on your investment until all the shares in a work are sold, allowing the artwork itself to be sold, which could take “an estimated four or five years,” according to the My Art Invest website.

That is if the artwork can be sold at all, much less for a profit. The website does not address what happens if all the 100 or more shares in each artwork do not sell. Are buyers then holding on to a share certificate worth exactly zero indefinitely? Gerlis reports that since 2011 Bastok has already sold 200 paintings this way in his native France, where the company has already launched online, but has any cash has been distributed to investors?

If not, then the jury is out and the only reason one might still participate is if there is viable secondary market for buyers to resell their shares in the meantime. Is there? No, because according to the company’s website, “you have to wait until all the shares in an artwork have been sold in the primary market” first.

It’s true that My Art Invest offers buyers a couple of benefits that other art exchanges haven’t. The first is that a selection of the 100 works available to purchase will be shown in an East London gallery, which opened tonight with a street art exhibition featuring Banksy and Shepard Fairey. Would-be buyers can enjoy the works up close, and if they are so inclined, tap their share orders into one of the iPads made available.

The second is that if any one buyer purchases 25% of the shares in one art work, they can have that art work in their home for three months of the year. “We are different from other [art share schemes] because our aim is simply to be more democratic. We are making the art market more affordable and accessible,” Bastok told Gerlis.

Yet there’s a catch here. To take the art home, you must own at least 25% of the shares, have proof of an installed and working security alarm, appropriate insurance and pay a deposit equivalent to 150% of the price of the whole artwork, according to the website. For the most expensive works (which range from £500 to £100,000), you’d have to have £150,000 ($251,000) lying around in order to enjoy it at home for three months, however many shares you own in it.

Making the art accessible is certainly a great idea, because most art exchanges put their art in a vault, where the chance of buyers enjoying it is nil. Perhaps by showing works in a gallery, Bastok will be able to succeed where others have failed by developing a community of active buyers, and eventually sellers, for his exchange. With so much uncertainty about when any buyer can exit their investment, though, that could be tough.

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A Banksy for under $170? - Business Balla
 

A Banksy for under $170?

Apr 10 2014, 4:32pm CDT | by

My Art Invest, a new trading platform that launched in London today, is the latest art exchange to attempt to democratize art by allowing people to buy and sell shares of individual artworks. One share of Bansky’s spray paint on canvas Heavy Artillery Elephant, for example, can be yours for €120 ($166), while a share of Rome Pays Off, a Jean-Michel Basquiat screen print, one of an edition of 85, costs €166 ($229).

Buyers can either hold onto their shares until all the shares are sold and My Art Invest founder Tom-David Bastok sells the work,  distributing any profits, or they can opt to offer their shares for sale, at any price they see fit, on the My Art Invest exchange.

In theory, that is. As Melanie Gerlis reports in The Art Newspaper, “Attempts to divide works of art into equal shares, emulating companies that trade on a stock exchange, have proved problematic at best.” This is a diplomatic way of putting it, because as far as I can tell, every other attempt to set up an art exchange has failed miserably.

One of the more recent ones, Art Exchange, which launched in Paris in 2011, opened for business promising to make the art market more liquid by giving buyers an easy exit strategy, yet not a single art share has changed hands on the exchange since then.

Why is this model so difficult to pull off? One reason is that, unless you can actually trade your art shares, you make no return on your investment until all the shares in a work are sold, allowing the artwork itself to be sold, which could take “an estimated four or five years,” according to the My Art Invest website.

That is if the artwork can be sold at all, much less for a profit. The website does not address what happens if all the 100 or more shares in each artwork do not sell. Are buyers then holding on to a share certificate worth exactly zero indefinitely? Gerlis reports that since 2011 Bastok has already sold 200 paintings this way in his native France, where the company has already launched online, but has any cash has been distributed to investors?

If not, then the jury is out and the only reason one might still participate is if there is viable secondary market for buyers to resell their shares in the meantime. Is there? No, because according to the company’s website, “you have to wait until all the shares in an artwork have been sold in the primary market” first.

It’s true that My Art Invest offers buyers a couple of benefits that other art exchanges haven’t. The first is that a selection of the 100 works available to purchase will be shown in an East London gallery, which opened tonight with a street art exhibition featuring Banksy and Shepard Fairey. Would-be buyers can enjoy the works up close, and if they are so inclined, tap their share orders into one of the iPads made available.

The second is that if any one buyer purchases 25% of the shares in one art work, they can have that art work in their home for three months of the year. “We are different from other [art share schemes] because our aim is simply to be more democratic. We are making the art market more affordable and accessible,” Bastok told Gerlis.

Yet there’s a catch here. To take the art home, you must own at least 25% of the shares, have proof of an installed and working security alarm, appropriate insurance and pay a deposit equivalent to 150% of the price of the whole artwork, according to the website. For the most expensive works (which range from £500 to £100,000), you’d have to have £150,000 ($251,000) lying around in order to enjoy it at home for three months, however many shares you own in it.

Making the art accessible is certainly a great idea, because most art exchanges put their art in a vault, where the chance of buyers enjoying it is nil. Perhaps by showing works in a gallery, Bastok will be able to succeed where others have failed by developing a community of active buyers, and eventually sellers, for his exchange. With so much uncertainty about when any buyer can exit their investment, though, that could be tough.

Follow me on Twitter or find me on Facebook.

 
 

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<a href="/latest_stories/all/all/30" rel="author">Forbes</a>
Forbes is among the most trusted resources for the world's business and investment leaders, providing them the uncompromising commentary, concise analysis, relevant tools and real-time reporting they need to succeed at work, profit from investing and have fun with the rewards of winning.

 

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