By: Ryan L. Johnston, Chief Marketing Officer, aShareX, Inc
What do jelly donuts and expanding asset markets have in common?
Your narrator, a self-proclaimed donut connoisseur, posits that a jelly donut’s magic begins and ends with the indulgent center. While one cannot ignore the exterior architecture providing a jelly donut’s supporting structure, a world of goodness exists in the middle that magnifies one’s enjoyment if sought.
To maximize the jelly donut experience, one must focus on the indulgent sweet center, ensuring each decadent bite contains the optimal ratio of jelly hidden in the middle to the golden delicious exterior that is readily apparent when holding this coveted treat in one’s hands. This keen emphasis on the jelly is similarly applicable when effectuating expansions of many asset markets, where the often-overlooked middle-market potentially offers the sweetest benefits.
Perilous to Overlook Middle-Market
I’ll apply the jelly donut analogy to art. Art sales held relatively steady in recent years, with ~$68 billion in annual turnover1. A survey by Art Basel and UBS of 2,800 high-net-worth individuals found that, for H1 2023, 9% of respondents reported considering artwork purchases valued $1+ million, down from 12% in 2021, indicating a “rapidly thinning high-end” after a post-COVID-19 pandemic sales surge2. With the global art market so heavily-reliant upon a modest group of ultra-wealthy buyers – who generated $2.1 billion in sales valued $1+ million in H1 20233 alone – the question becomes: how can a broader audience access art ownership, thereby expanding the category? How can we turn up the heat on this proverbial oven?
Cooking Up Creative Solutions
The answer: rather than focusing on the readily apparent ultra-wealthy outer crust of the donut that has historically comprised the market’s scaffolding, we must instead tap into the sweet jelly center to enhance market participation.
Previously, the art market democratized ownership via lower-cost print sales; this holds true today. From 2008 to 2023, Phillips’ annual turnover in its worldwide “Editions” auctions increased by 827%; in 2023, the department achieved sales of $40 million, up ~20% over 20224.
Tried and True
Many luxury brands expanded their addressable markets with middle-market sub-brands offering “affordable luxury.” Some examples are Armani’s “Armani Exchange,” Tiffany & Co.’s “Return to Tiffany,” and Starwood’s “Aloft” hotels. Says Kelly Meng Parnwell, luxury brand management lecturer at Goldsmiths College, University of London, “Consumers buy low-priced products with luxury logos, not for the aesthetic value of the product, but for the social value that luxury brands can provide them.”
Yet most of us want to have our cake – or in this case jelly donut – and eat it too, preferring an iPhone Pro to SE model. Similarly, prints are not a viable solution for collectors and investors wanting an original artwork but lacking the financial wherewithal to purchase the piece outright.
Sizeable Market, Much Jelly
With artworks below $50,000 comprising 90% of art lots at auction, and 45% below $5,0001, demonstrable demand exists for middle-market buyers. The most active collector segment is for works priced $10,000 to $50,000, which grew from 17% in 2021 to 25% in 20232. Such enthusiastic participation at these more accessible price points bolsters many financial experts’ arguments when proclaiming fractional ownership the future of finance.
Applicability Beyond Art
By fractionalizing asset ownership, with art being one example, companies like aShareX increase market participation by collectors and investors who want their bite-sized share of the category’s historical upside (8.5% annualized returns from 1950 through 20215), seek portfolio diversification via alternative assets offering low correlations to stocks and bonds6, or simply love an artist and want to own their works for emotionally-driven or social currency reasons. This dynamic applies to many asset types, including but not limited to: diamonds and gems ($340 billion annual sales7), collectible cars (outperformed S&P 500 with 280% returns from 2008 to 20218), sports memorabilia (projected growth 500% by 20329), and real estate ($3.69 trillion global value in 202110).
With an innovative focus on the heretofore untapped goodness in the jelly donut’s center to expand addressable markets, fractional investment platforms like aShareX enable middle-market buyers, historically priced out of market participation, to invest with affordable amounts and in ways that work for their individual portfolios. To learn more and register, visit https://asharex.com.
