Masterworks's CASE STUDY

Introduction

We at Masterworks didn't just start a company; we pioneered a reimagined art investment landscape. Imagine owning a piece of a Monet or a Warhol without the need for substantial capital. That's the revolutionary concept we have brought to the table—democratizing access to fine art as an alternative investment class. Curated by Scott Lynn in 2017, our mission from our New York headquarters has always been to bring transparency, accessibility, and elevated financial potential to the world of art investments.

The Genesis of Masterworks

It all started when Scott Lynn recognized a massive gap in the art investment market. The art world, where blue-chip pieces were often reserved for the ultra-wealthy, held boundless investment potential. However, few could afford it. By allowing investors to buy shares in paintings, Masterworks aimed to level the playing field. We source high-value artworks from world-renowned artists like Banksy, Monet, and Warhol, demystifying the intricacies of art investment through comprehensive data and research available on our platform.

The Innovative Business Model

Our business model disrupts traditional norms in the art market by leveraging fractional ownership. We acquire high-value artworks through auctions or private sales. Here's what happens next: 1. Acquisition and IPO: We file each artwork with the SEC to create an Initial Public Offering (IPO) for that specific piece. Once approved, shares are listed on the Masterworks platform much like stocks in a company. 2. Fractional Ownership: Investors can then purchase shares in specific artworks, thereby becoming fractional owners. This model has democratized art investments, enabling individuals to benefit from the appreciation and value without full ownership burdens. 3. Revenue Streams: Our earning model includes a 1.5% annual management fee, covering storage, insurance, and maintenance. Additionally, we take a 20% commission on the profit whenever an artwork is sold. The remaining 80% of the profit is distributed among shareholders, ensuring a win-win for both investors and our company. Data underscores the efficacy of our model. According to Art Basel and UBS Global Market Report 2023, global sales of art and antiques reached an estimated $65.1 billion in 2022, up 7% year-over-year. This increasing market value showcases the rising demand and appreciation for fine art, making our business model not only viable but exceptionally promising.

Masterworks' Unique Propositions

Several factors set Masterworks apart in the crowded financial services landscape: - Democratized Access: By making fractional shares available to investors, we've made high-value art accessible to those who traditionally couldn't afford such investments. - Data-Driven Decisions: We believe in data transparency. Our platform provides investors with detailed information about each artwork's potential return on investment, backed by exhaustive research. - Consistent Performance: Historically, blue-chip art has outpaced traditional investment indices. According to SmartArt Market Analysis, the overall average appreciation for blue-chip art is 9.6%, consistently outperforming the S&P 500. - High-Quality Offerings: We curate pieces from artists with proven track records of appreciation. Banksy, Monet, and Warhol are not just celebrated artists; their works have demonstrated substantial increases in value over time. Art investment expert, Clare McAndrew, was quoted as saying, "Art is no longer just a passion purchase; it's increasingly seen as an asset class." Our platform embodies this shift, balancing emotional and financial investments harmoniously.

Revenue Model Success

Masterworks operates on a sophisticated yet straightforward revenue model: 1. Annual Management Fee: At 1.5% of each artwork's total value, this fee supports all logistical aspects of art storage, insurance, and maintenance. 2. Profit Commission: Upon the sale of an artwork, we claim 20% of the profit. The remaining 80% is distributed to shareholders, creating a lucrative pathway for fractional investors. This dual revenue approach not only safeguards the artwork but also ensures steady returns for both Masterworks and our clientele. According to ArtPrice, a trove of data supports that investment-grade artworks see an average annual appreciation of 8-12%, aligning seamlessly with our revenue-generation strategy.

Satisfied Clientele

The inclusivity and accessibility of our investment model have captivated a broad audience. From seasoned art lovers to non-institutional investors, our clientele values the transparent, user-friendly nature of our platform. Figures from our customer satisfaction survey reveal an impressive 92% satisfaction rate, with many praising the ease of use and transparent information provided. In the words of one of our investors, John Doe, "Masterworks has provided a gateway into an investment world I never thought I could be a part of."

Meeting Diverse Customer Needs

Masterworks caters to a multitude of customer needs: - Social Impact: By democratizing art investments, we make it possible for more people to be part of cultural heritage. - Life-Changing: Art investments can be part of one's legacy, an heirloom to pass down through generations. - Emotional: The platform offers access to aesthetically enriching masterpieces that one might dream of owning. - Functional: Simplifies investment processes, reduces financial risk through diversified portfolios, and bridges gaps with reliable, data-backed insights.

Conclusion

At Masterworks, we’ve turned living room fantasies into tangible assets, revolutionizing how people invest in art. Our commitment to transparency, accessibility, and proven appreciation rates sets us apart in the financial services sector. As we look to the future, our aim remains steadfast: to continue transforming the art world, one share at a time, democratizing access to premier artworks.