Fractional ownership has long promised to democratize access to art, and a new company is bringing blockchain into the mix. But the price of small investments is high fees that eat into potential returns.

By Maria Gracia Santillana Linares, Forbes Staff


Marilyn Monroe gazes over the eclectic decor of New York’s trendy Zero Bond private club as former fashion icon Baby Jane Holzer, 82, muses about her former friend Andy Warhol—and blockchain art. “He would have loved it,” says New York Magazine’s 1967 “It” Girl. “In some way, that’s what he was doing with the multiples.”

Warhol’s version of Monroe, keeping watch against a hot pink background with eyeshadow to match, delivers a touch of 1960s kitsch to the room’s more modern palette. It is one of a series of works the artist created that are based on a single publicity shot, created 50 years before the philosophically similar series of pixelated punks and spiritless simians became all the rage in the blockchain-based non-fungible-token (NFT) market.

This isn’t the most famous of Warhol’s Marilyns. That would be “Shot Sage Blue,” according to famed auction house Christie’s. That version features the image on a light blue background and sold for $195 million last year. The pink iteration comes from Holzer’s personal collection. It was made in 1967 and is marked number 81 out of 250 prints. It is estimated to be worth $531,800.


The prices represent 10% markups on the previous sales. But that is not all. Investors are also paying a 10% procurement fee, 1.5% annual management fee, and a 10% sales fee. Thus, investing $1000 may represent less than $800 in artwork.

Marilyn Monroe, the film star who has been iconified, glamorized and rhapsodized, is now becoming fractionalized and tokenized thanks to a Delaware company called Freeport and blockchain technology. Ownership of the pink print is being chopped into 10,000 shares represented by tiny bits of computer code. Developments in technology and finance now make a piece of the portrait available to the art-loving masses for as little as $531.80 for 10 shares, the minimum amount any investor can own.

If this kind of fractionalization endures, art will become a more viable and accessible asset class for individual investors. But the promise is overshadowed by a digital market that is, in reality, just as illiquid as the analog version it is trying to replace. The process is also loaded with management fees and markups that require serious appreciation for buyers to just get back to even.

The pink Marilyn is part of the initial collection from Freeport. The company is minting shares in each of four Warhol prints as fungible tokens on the Ethereum chain. Freeport is looking for up to 4,000 investors who want to own stakes in screen prints of Marilyn, actor James Dean in his Rebel Without a Cause garb ($198.50), Mick Jagger circa 1975 ($226.30) or a double portrait of Mickey Mouse ($781.80). The prices represent 10% markups on the previous sales of each print. But that is not all. Investors are also paying a 10% procurement fee, 1.5% annual management fee, and a 10% sales fee. Thus, investing $1000 may represent less than $800 in artwork. Buying blockchain enhanced art via Freeport entitles investors to a percentage of future profit from sales of the works and the right to display the tokenized versions in virtual galleries on their computers. A secondary market allows shareholders to sell their stakes to other investors via the Ethereum blockchain.

Three of the Warhols are from Holzer’s collection, and the fourth, Mickey Mouse, is owned by collector Michael Haber.

Holzer, now a Palm Beach real estate agent, is an incongruous sight at Zero Bond, surrounded by the kind of suit-and-sneakers crypto bros you might expect at this kind of art and blockchain event. But apart from supporting the art and Warhol’s legacy, she says it’s a good deal.

“Yes I’m an art snob, but I really care about value,” she says. “If you’re looking for an investment, this will go up.”


Fractional ownership is about investing in, rather than collecting, art. Investors buy securitized shares of an artwork (largely paintings) and wait for a profit once the piece is sold. So far, the timing and price of that sale is determined by the company that fractionalized the work with limited input from shareholders. Blockchain-based approaches for digital art shift that power to shareholders. Proponents say this method of investing democratizes access to art for investors who don’t have the hundreds of thousands, if not millions, of dollars needed to buy an entire Warhol, Picasso or Basquiat. It also increases the pool of art investors, a benefit for an illiquid asset class subject to shifting tastes and trends.

Since its creation in 2000, the ArtPrice 100 blue-chip index, a measure of works by the 100 best-selling artists at auctions, has outperformed the Dow Jones industrial average, increasing over sevenfold vs fivefold for the stock index. Last year, the art barometer was up 3%, compared with a drop of 8.7% in blue-chip equities.

“If there’s this asset class that’s outperforming the S&P 500, why don’t we allow more people to invest in it?” asks Colin Johnson, Freeport CEO.

But only top tier art has proven to be a market-beater. A broader measure, the Artprice Global Art Index, which includes all public auction art sales, was down 18% last year and up about 5% since the turn of the century. Moreover, investment advisors caution that art-market barometers can paint overly rosy scenarios. Indexes are “skewed to the upside” says Philip Hoffman, CEO of London-based The Fine Art Group, a global art finance advisory firm. Auction-driven indexes do not account for private sales or devalued works that never hit the market. Away from the likes of Picasso, Monet and Warhol, auctions of large lots can easily overshadow prices of works from lesser-known creators.

The numbers also can be inflated by collecting fads, says Hoffman, noting that contemporary art had an especially strong year in 2022 due to increased dealer sales in the West, subtracting interest from other categories.

Fractional investing at least provides diversification for individuals by allowing them to make multiple small investments with a given sum of money, says Robert Read, head of art and private clients at global insurer Hiscox. Fractionalization “gives people a chance to spread their risk there rather than taking a bet on something and not see returns,” he adds.

Still, fractionalized art is a tiny fish in a small pond, accounting for less than 1% of $67.8 billion in global sales in 2022, according to the latest annual Art Basel and UBS Global Art Market report. In the last five years, approximately $625 million worth of fractional ownership was sold, according to art market research firm ArtTactic. Most of the transactions came from individual investors through Masterworks. By contrast, more than $600 billion of stocks change hands on an average day in the U.S., according to data from the Securities Industry and Financial Markets Association.

“You’re really dipping your toe in such a small pool,” warns Read.

Then there’s the issue of the actual returns. Art is usually considered a long-term holding, with collectors and investors retaining pieces for years, if not decades. On average, purchasers own Warhol works for 16.4 years and have seen annual returns of 2.1%, according to ArtTactic.

Fractional owners have little control over when they see payouts. No fractional art ownership company currently offers dividends, in fact they charge yearly management fees. Some fractional companies that do not offer blockchain options do have secondary markets where shares can be traded. In the case of Masterworks, a New York-based fractional ownership company that does not have blockchain offerings, only registered investors can see share prices. But given the market’s short history (the first fractional ownership company, Masterworks, was founded in 2017), there have been few instances of investors actually cashing out at a profit.

Unless an asset management firm or brokerage offers it on a low-cost basis, “I just don’t think art is suitable for retail investments,” says Hoffman. “​​This is for people if they want to have fun with $1,000.”

The model in itself is tricky. Until companies can sell all the shares for a given artwork, the seller retains ownership, and investors’ money is held in escrow. In the case of Freeport, once all the shares for an artwork are sold, the company takes control via a limited liability subsidiary for each print, and the artwork in question will be transported to Delaware for safekeeping, Johnson tells Forbes. The investors will then own shares of the company that was created to hold the print. Like a failed Kickstarter funding, potential investors will get their money back if all shares in a print are not sold by the closing date–currently July 4 for the Warhols, though Johnson says that can be extended.


The idea behind fractional ownership is not exclusive to art. It has been applied to real estate (think timeshares), private jets, luxury yachts and even racehorses for those looking to have access to assets without committing the capital needed to fully own them.

In the case of intellectual property, fractionalization differs from joint ownership. While patents and copyrights can be issued to multiple inventors of one asset, fractional ownership most often refers to many investors owning the physical aspect of an intellectual property but not necessarily the copyright. The story starts in 2010, when former sports agent Marion Darnell Jones was granted a patent for a system of fractional ownership in intellectual property by contribution to a trust, according to the patent filing. Focused on celebrities, Jones saw the system as a way for their fans to become direct investors in celebrities, entitling them to a series of benefits and a “time-valued payout.”

The system she described would later be applied to art ownership. By the end of the decade, several fractional companies like Feral Horses, Maecenas and LookLateral had launched, primarily focusing on art, but a lack of regulation minimized investor interest. In 2018 Masterworks sold its first securitized shares registered in the United States with the Securities and Exchange Commission (SEC) and investors through Maecenas and acquired a 31.7% stake in Warhol’s 14 Small Electric Chairs (1980) for $1.7 million in various traditional and crypto currencies, including bitcoin and ether. While the sale showed a fractionalized blockchain transaction was possible, about two thirds of the 49% offered to crypto investors was not taken up.

The first fully tokenized sale of art shares came in October 2021 when Zurich-based Sygnum Bank partnered with fractional art ownership company Artemundi to create shares of Pablo Picasso’s Fillette au béret (1964), minting art security tokens (AST) to be traded on Sygnum’s distributed ledger.

Last month, Sygnum and Artemundi announced the Picasso had been sold for an undisclosed amount that gave investors about a 15% annualized return on their money, with prices varying according to how long the tokenized shares were held.

Investors interested in fractional ownership through Freeport must create an account on the website with an email address, date of birth and address information and then pay for shares with a debit card, wire transfer or a credit card (the last requires a 2.5% fee). Once the offerings close and the shares are minted onto Ethereum, Freeport’s blockchain partner Vertalo, an Austin-based tokenization company, will create what are called keyless wallets for customers who wish to directly control their investments. This system allows Vertalo to hold custody of the seed phrases needed to access the wallets so users do not confuse their private keys if they have more than one. Blockchain die-hards will also be able to withdraw their share tokens and deposit them in external wallets.


Blockchain technology boosters say tokenization provides immutable records of an artwork’s ownership and transaction history with readily verifiable provenance that is certainly appealing to the art industry, which has been plagued by theft and forgery. Initially created to digitally time-stamp documents so that their origin could not be changed, blockchains could be a benefit to a market in which a work’s provenance is sometimes as valuable as the art itself.

This may not sit well with the traditional art world, where “people make money out of lack of transparency,” says Hoffman, adding that resistance from “the existing old-fashioned secondary market” is holding back the application of new technology.

Even with blockchain verification, the data is only as good as the seller who mints it. “A chain that is purportedly unchangeable can at least give you a snapshot in one point in time,” says Leila Amineddoleh, art and cultural heritage lawyer and founder of Amineddoleh & Associates, a New York-based firm, but whether that “information is accurate or not is kind of an open question.”

The technology looks better for resales. It can power “secondary markets much more readily than just financial systems, so it helps with the liquidity side of that,” says Mason Edwards, chief commercial officer of the Tezos Foundation, the foundation behind the Tezos blockchain that uses a proof-of-stake mechanism to validate transactions. Tezos has become popular with artists because of its low transaction fees and commitment to minimizing its energy consumption.

NFT investors have dabbled in blockchain art’s version of fractional ownership since the crypto market’s peak in 2021, mostly through decentralized autonomous organizations (DAOs). Organizations like AssangeDAO, PartyDAO and FlamingoDAO, which are essentially investor alliances, have bought some of the most expensive NFTs ever sold, at prices reaching $53 million.

The key difference between DAOs and fractionalownership companies lies in who has the decision to sell. DAOs leave that decision to their members instead of waiting for a business–which is charging annual fees–to pull the trigger. In the case of the new fractionalized Warhols, Freeport makes all of the buying and selling decisions.


It is difficult to conceive of a better artist than Warhol to try to bring the worlds of art and blockchain together. His anti-establishment credentials remain unblemished, and his limited-edition variations of iconic subjects are familiar territory to crypto-savvy investors buying Crypto Punks or Bored Apes with varying traits.

“Warhol is an artist that they can be very familiar with,” says Johnson. “Contemporary and pop art are going to be your best bet for folks that don’t really know much about art to start getting interested in investing.”

His works have also accrued significant value since they first hit the art market in 1961, and are among the most liquid in the world. In 2022, 2,159 Warhols were sold at auction for a combined total of $590.2 million, according to ArtPrice, an art market research firm. In the first three months of 2023, Warhol works have sold for nearly $22 million, according to data firm My Art Broker.

Holzer may not be the first person that comes to mind when talking about digital art on the blockchain, but she’s certainly seen how his art has gone from outre to mainstream.

“It’s eye candy” she says of all the pieces up for fractional sale at Freeport. They may not encompass all of Warhol’s most popular works, but the accessible price-point is what lures buyers in.

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