What can museums do with NFTs?

In the wake of the pandemic, the cultural industry is suffering. NFTs offer a new revenue stream and, potentially, new audiences. Here are some ways museums and cultural institutions can leverage this new digital asset class to secure their own futures.

NFTs and the 1% — a short-sighted cash grab

Thus far, museums have jumped on the NFT bandwagon in the same way that the art world usually fetches its most staggering prices — through auctions and private sales of “masterpieces.”

The auction model has both benefits and drawbacks. On the one hand, it generates a much needed influx of cash, and can have the added upside of a PR blitz — a veritable spectacle that can put a museum on the digital map, so-to-speak, at least momentarily. On the other hand, it falls into the familiar pattern of only being accessible to the 1%.

The Uffizi Gallery in Florence is a recent example of this trend. During the pandemic, its attendance dropped from 4.4 million to just over 1 million, as reported by The Art Newspaper. To recoup losses, the museum sold an NFT of Michaelangelo’s Doni Tondo, which was reportedly purchased by an Italian art collector for $170,000.

The Uffizi split the proceeds with its partner in the sale, the Italian company Cinello, who specializes in the creation of “1:1 scale digital versions of masterpieces. These digitised works of art, which the company calls DAW (an acronym for Digital Art Work), are limited, numbered, authenticated by the museum, protected by patents, supposedly impossible to reproduce and accompanied by an NFT token,” according to the website Cointribune.

The museum is now working on its next NFT sale. As reported by Artnet, “A dozen other major works from the Uffizi’s collection will also be turned into DAWs in the near future. Among those on the list are Botticelli’s The Birth of Venus, Raphael’s Madonna del Granduca, Caravaggio’s Bacchus, and Titian’s Venus of Urbino.”

The NFT frenzy misses the point, but makes for great PR

Considering that the NFT frenzy was triggered by Christie’s $69 million Beeple sale — itself perhaps the most expensive PR stunt ever performed — it’s unsurprising that this marketing methodology has been embraced by other art market players.

From mega-galleries (i.e. Pace Gallery) to blue chip artists (i.e. Damien Hirst) to renegade speculators (i.e. like the “collectors” who set a physical Banksy on fire before selling its NFT), interest in the new digital asset class shows no signs of abating, even as NFT prices careen wildly from record highs to record lows … and in record time.

Meanwhile, such activity actually contradicts the underlying philosophy of blockchain technology. Intended as a peer-to-peer transactional network with a utopian vision of borderless trade, blockchain-backed NFTs are quickly becoming just another cog in the wheel of status-driven commerce. Make no mistake — it doesn’t have to be this way.

NFTs and sustainable growth

NFTs — as well as blockchain — are still nascent technology, and their energy consumption and environmental impact have been the source of intense controversy. These are issues the tech world is racing to solve, and Ethereum’s purported move to a proof-of-stake protocol, currently set for early 2022, is one example of the steps being taken across the crypto community to reverse-engineer blockchain’s ecological impact. Assuming that Ethereum’s migration to proof-of-stake is successful, that should decrease the network’s energy consumption by up to 99.9% and enable a more sustainable NFT marketplace.

With environmental impacts lessened, museums can now leverage NFTs for their own sustainable growth. Rather than offering only “masterpiece” NFTs to their richest patrons, museums should leverage NFTs to engage their base audiences. Those “average” art lovers who constitute, for example, the 4.4 million annual visitors that the Uffizi Gallery welcomed before the pandemic.

Here’s a short list of the many ways museums can utilize NFTs with long-term growth in mind:

• Museums can sell NFT “merchandise” through their museum shops, as they do now with exhibition posters, postcards, design objects, and other collectibles.
• Museums can sell original NFTs, created in collaboration with contemporary artists, to accompany their exhibitions. These can be limited digital editions in a range of prices, or open editions that would be more affordable and accessible to a broad audience.
• Museums can leverage “multi-use” NFTs and sell them as entrance tickets to exhibitions, or as patron tickets to benefit galas and other fundraising events.
• Museums can acquire works — digital or physical — for their permanent collections and sell NFTs of those pieces as fractionalized ownership tokens, so that their audiences are (literally) invested in the museum’s accessioning activities.
• Museums can substitute NFTs for the physical membership cards that most museum patrons receive.
• Museums can curate digital exhibitions of NFT artworks, thereby engaging with new artists — and audiences — from all over the world, with no shipping, travel or storage expenses.
• Museums can leverage smart contract technology to ensure that they receive resale royalties from every NFT they sell. Over time, these residuals will compound into a new, and hopefully more sustainable base operating budget.

The nonprofit art world needs to get creative with NFTs

The pandemic continues to pose an existential threat to cultural institutions on a global scale. NFTs offer more than one possibility for museums and other institutions to shore up their finances and broaden their audience engagement. Afterall, museums are meant to be stewards of culture — past, present and future.

We just happen to find ourselves at a critical juncture, in which the speed of technology has outpaced these same institutions’ ability to contextualize it. The rise in digital art, NFTs and the crypto-community is changing visual culture — and Art History writ large — right now.

How museums meet this cultural shift can elevate their programs and establish their authority in the newly digitized art world, or leave them behind. The ICA in Miami recently announced their “acquisition” (it was actually a gift) of a cryptopunk NFT, thereby shepherding NFTs into the museum “establishment” as part of a museum’s permanent collection. But, this is still the old way of doing things.

If museums want to retain any cultural relevance, they should educate (and invest) themselves in how NFTs can (and will) transform the art world. Then, they should incorporate NFTs into their business models and membership paradigms, as well as their curatorial practice.

They have nothing to lose and everything to gain.

Authors:

• Christina Steinbrecher-Pfandt, CEO Blockchain.art (BCA)
• Emilie Trice, Curatorial Advisor, Blockchain.art

Blockchain.art (BCA) is committed to creating a sustainable, ethical, and responsible digital art market via the NFT standard.