Colin Gleadell offers some background on the Andy Warhol work being offered for fractional ownership by Maecenas, the blockchain-driven art syndication company. The idea of pooling assets to buy works of art is nothing new in the art market. Formal and informal funding arrangements underpin thousands of works held privately.

Gleadell’s close look at the Warhol work’s market and sales history suggests that Maecenas is relying more on the novelty and enthusiasm surrounding cryptocurrencies to attract investors than the long-term appeal of the work itself.

It was to have been the star lot in Bonhams’ contemporary art sale in February 2016. Andy Warhol’s two-metre-high painting, 14 Small Electric Chairs, was made in 1980 by reducing the scale of 14 separate paintings which he made in 1967 as part of his Death and Disaster series, and combining them in one work. The electric chair image was taken from a 1953 news report on the death chamber in New York’s Sing Sing prison. Single 1960s examples from that series are highly rated by collectors and have sold for as much as $20.4 million.

Bonhams’ later combination work, in which each image is reversed, was billed as a rare example of an historic icon and estimated at £4 million. But the Warhol market was going through a period of self-doubt, and the painting went unsold.

Over the years, 14 Small Electric Chairs hasn’t had much luck. In its previous outing at auction at Christie’s in 1999 it also went unsold when it carried a £430,000 estimate. But now, two-and-a-half years after its last auction appearance, it is back – not in an auction room or a gallery, but as a Blockchain investment challenge where it has been valued at a virtually unchanged £4.2 million.

The painting itself is not for sale exactly, just shares in 49 per cent of its purported value. The controlling 51 per cent is owned by Georgian art dealer Eleesa Dadiani, who set up in Cork Street three years ago to sell contemporary art and is believed to have been the unsuccessful seller at Bonhams.

One of the problems facing the art crypto-syndicators is clearly supply. Good works are in high demand in the art world. If you have access to one and you possess either the funds or access to funding, you’re going to buy the work. Good works, as most art market participants will tell you right now, are hard to find and easy to sell.

That leaves the folks who want to “democratize art” with few options. Hence we see this kind of work being offered for syndication. In a weak Warhol market, which one presumes few of the crypto-investors are aware is the current state of affairs, liminal works like this one are in an even weaker position. And there’s no telling how long it will take for the Warhol market to recover enough to pull this painting along with it.

That’s not syndication’s only risk. The private art market where so many works are owned in informal syndications is rife with seething conflicts. Few partners fully agree about when and what conditions are the right ones to sell.

Fractional ownership schemes like Maecenas seem would seem to be courting the same sort of conflict. The potential for hard feelings when works are sold at less than spectacular returns, or, worse, at solid returns when other works might be selling for more, is great in the art market. One only has to look at the number of lawsuits that followed the sales of works what were re-attributed to see the kind of regrets art sellers can have later.

As Warhol’s 14 Small Electric Chairs is offered for sale via Blockchain, can cryptocurrency succeed where the auctioneers failed?  (Telegraph)