NFTs Aren’t A Get-Rich-Quick Scheme, Here’s How Museums Can Use Them In Fundraising

In this week’s WAC Weekly we brought together artists, curators, and consultants across Web3 to discuss how arts and culture institutions are using NFTs in their fundraising efforts in the wake of the pandemic.

NFTs could be an interesting new revenue stream for galleries and museums. But if they’re just seen as a fundraising tool, or something to cash in on, institutions will lose out on the real value.

How not to “cash in” on NFTs

A recent New York Times piece discussed museums “cashing in” on NFTs across four projects, including Unit London’s “Eternalizing Art History” project and Belvedere’s “The Kiss” project, which we covered in a previous talk.

In the article Scott Reyburn writes, “​​NFTs, usually pegged to the high-flying but volatile Ethereum cryptocurrency, took the market for art and collectables by storm, with sales estimated in the tens of billions. … At the same time, art museums have faced substantial financial shortfalls accelerated by a decline in visitors and donations induced by the COVID-19 pandemic. Many have considered taking drastic measures, such as selling treasured artworks, to plug budget gaps.”

But few museums have taken a leap into selling NFTs to raise the funds they need. We discussed some of the reasons why in our recent Idea Lab, and found a concern with hype and scams in the space as well as a lack of high-quality information for institutions to work from.

One concern raised in the talk was a fear of “doing it wrong”. NFTs still seem complicated on both the technological and cultural fronts. Even if the museum brings in experts like LaCollection or ArtéQ to handle the tech, there’s no guarantee the effort will resonate with an audience. As we discussed previously, the Klimt drop fell far short of selling out its 10,000 lazy-minted NFTs with less than 2,000 buyers at the time.

So how can museums use NFTs for fundraising?

So what could arts and culture institutions do better? According to curator Christiane Paul, it all comes down to how well museums understand what NFTs are, what they do, and how they could be used. That’s a lot of ground to cover, and museums who think they’re just a fundraising tool may miss the point.

According to the arts and culture workers in our Idea Lab, the biggest opportunities Web3 presented were “community” and “audience engagement”. These are more interesting in a cultural sense than just selling digital replicas of famous works. And there are countless examples of more interesting technological uses of the NFT protocol, like Async art’s generative “blueprints”.

Not only is this one-off, transactional approach to NFTs a missed opportunity, but you could also say it’s ethically dubious. In many cases, the copyright for an artwork is not owned by the museum, which is just one of the open questions around NFTs and copyright that everyone in the space has to navigate.

Museums have no trouble selling images of their famous works on a mug in the gift shop if that’s what it takes to raise some money, but there’s no confusion there on what the transaction is and what’s being sold.

The crypto market is maturing rapidly, away from the heights of “JPEG Summer” but we still see some confusion where buyers think they own *the image* the NFT points to, and museums need to be careful of that. There are legal questions around NFT acquisition already, and the legal regulation coming to address NFTs — whatever that may end up being — might complicate all of these issues further.

Audience engagement is the key to success

Looking at some of the NFT projects museums have launched, which are underwhelming from a fundraising lens, Blockchain Art Directory’s Fanny Laboukay remarked that it’s as if they lacked a solid marketing strategy. One with detailed answers to questions like “what are we trying to achieve?”, “what resources do we have?”, “who is this for?”

These museums wouldn’t be around if they weren’t good at figuring that out in their usual fundraising efforts. Perhaps the question should not be “how can museums make the jump into Web3?”, but “how can museums use Web3 tools to augment what they’re already good at?”

Museums are already good at engaging with audiences and local communities, they’re already good at educating those audiences. If they’re not good at speculating on Ethereum’s volatile financial assets, if they’re not good at talking to the crypto audience, why bother trying?

With all that in mind, how could museums use NFTs to engage with audiences, deliver more value to them, and in return see a boost to their existing fundraising efforts?

Could the non-fungible ticket be the path to sustainable growth?

One proposal for NFTs aside from digital art is using them as a better ticketing system than what we’re used to. At the extreme with concert tickets, we see all kinds of bad behaviour like bots and scalpers, which NFTs could eliminate while providing smoother workflows for buying, holding, using, and reselling them.

How could museums make use of that? At the MEET Digital Culture Center in Milan, Sophie Kahn tells us they’re thinking about selling NFTs alongside the ticket sales to an upcoming exhibition. Sales or resales of the NFTs will direct funds to the artists, and the effort is seen as a way to onboard people into NFT collecting.

But more broadly, the NFT-as-ticket might open more opportunities for community-building than the NFT-as-artwork.

On Web 2.0, you can’t go near an online retailer without them trying to get you to sign up for their marketing emails. If you buy just one item, you’re onboarded into a mailing list aimed at earning a second purchase down the line.

If you bought an NFT ticket to an exhibition, and that ticket remained a part of your permanent and interoperable digital identity, what would that say about you as a patron of the arts and of that museum? How might that affect your relationship with the museum?

And for the museum, the questions are: how can they use that ticket sale to build a more long-term relationship, and what ongoing value might they provide to those NFT holders?

Bored Ape Yacht Club collectors aren’t in it for the fine art, they’re in it because over the past year Larva Labs have kept the community engaged with a growing list of benefits from exclusive communities and events, to IP rights, even their own token.

Museums already know their audience and they know what content they’d like to see, and the events they’d like to be a part of. With new technology coming online all the time, they’re only limited by their own imaginations.

In a maturing market, NFTs have lost their utility as a quick cash grab. If museums can use NFTs to play to their strengths and come up with creative ways to turn visitors into highly-engaged members, they’ll see healthier funds over time as that growing membership keeps coming back for new events.

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WAC Weekly is part of WAC Lab, a new program unleashing the full potential of Web3 for the arts and culture produced by We Are Museums in collaboration with TZ Connect and Blockchain Art Directory, and powered by the Tezos ecosystem.