A Real-Life NFT or Another Financial Bust?
By Georgia Cantrell
Unknown. Hallden Computer Center (Trinity College, Hartford Conn.). 1983. 10 x 8 in. Trinity College, Watkinson Library (Hartford, Connecticut, USA).
A look into the first ever Art IPO Company
Art used to gain attention from its groundbreaking techniques or subject matter. Nowadays, the only attention it gets from the wider public is when a piece, shatters record breaking auction prices at Sotheby’s or Christies. In the 21st century, people are fixated on dollar signs whether it’s something they can afford or not. This is where ARTEX decided to come in. Most people will never have the opportunity to own a Picasso or a Jeff Koons (if you’re that type of collector) but ARTEX is attempting to fix that by giving everyone the chance to invest in masterpieces.
Co-founded by Prince Wenceslas von Liechtenstein and Yassir Benjelloun-Touimi, ARTEX is the first ever art stock exchange. Their big claim is that they “enable investors to trade shares of iconic master pieces on a fully regulated venue”. Starting with shares of $100 anyone can now be a partial owner of iconic artworks such as a Rembrandt. But what if you want to sell the piece? What if a co-owner wants to sell the piece but you don’t? How will you see financial rewards? Is ARTEX a lucrative business or will it fail within the next 5 years?
Let’s start with the basics. Art is like a savings account hanging on your walls. To help you imagine this here’s a hypothetical example. You walk into a gallery and purchase a slightly unknown piece for $5,000 in 2005. You later find out that the artist was Banksy, and the piece is now worth $250,000 ten years later. This means that since you didn’t sell your piece, the value increase year over year as his work increased in popularity. Just like when you put money in a savings account and don’t spend it the bank rewards you with an interest rate and your balance increases. This example can be applied to ARTEX but just becomes more complicated. Instead of having one name on the savings account you now have multiple which means that the artwork now has multiple owners.
ARTEX took Francis Bacon’s Three Studies for a Portrait of George Dyer public for $55 million in 2023. While it is unknown how many $100 shares were actual purchased, having multiple shareholders, in any stock, will increase its value regardless. The question is what happens after the checks have been written? As it concerns the Bacon pieces, they will be displayed at a yet to be determined museum. But what happens if a shareholder wants to sell their share for a financial reward? This is where I find that ARTEX will run into a problem.
Firstly, the price of the portraits will soar due to the purchasing of shares with the fact that they are iconic pieces. This will make it virtually unaffordable for a sole buyer to purchase if all shareholders agree to sell. Secondly, to sell the piece as it would normally at an auction house or a private sale it seems like all shareholders must be in agreement which seems unlikely to happen. Lastly, ARTEX doesn’t state what the repayment is for shareholders who (if possible) decided to cash out on their investment. So far, it seems to me like this is going to be another SBF issue.
