Unpacking Museums Selling NFTs to Craft Best Practices for The Web3 Space
In our latest session, we discussed the recent NFT sales and auctions that have been organized by different leading museums, such as MoMA, Musée d’Orsay, and LACMA, that have been sparking debates within the art world.
The WAC Lab group’s reflections stand in a unique position in the intersection between digital art on the blockchain, museums, and crypto and intend to help craft best practices and guidelines for the Web3 space in the future.
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Five case studies to spark debates about the future of the Web3 space
At the beginning of the year, Musée d’Orsay organized the exhibition AGORIA { Le Code d’Orsay }, in which the artist Agoria was invited to give his take on the museum, its architecture, and its masterpieces. The NFT artworks were included in a sale on the NFT marketplace, objkt.one. Part of the profits have been donated to the Musée d’Orsay.
At the same time, MoMA held an online auction curated by the digital art platform Feral File. Building on the success of the 2021 collaboration and online exhibition Unsupervised, by artist Refik Anadol, MoMA and Feral File launched SOUND MACHINES with contemporary artists including Holly Herndon & Mat Dryhurst, Yoko Ono, Danielle Brathwaite-Shirley, Tommy Martinez, American Artist, and 0xDEAFBEEF. The works are freely viewable online and also via online auction, with 30 sets minted on the Ethereum blockchain. 60% of the proceeds are destined for the artists and the rest is divided into the other two parts, to benefit sound art and collection care at MoMA, and to Feral File for production costs.
At the beginning of last year, we also saw artist drops curated by LACMA, such as the project Remembrance of Things Future, by 0xDEAFBEEF, in collaboration with Cactoid Labs, an experimental blockchain consultancy. The project uses blockchain and tools like generative code to select objects from the encyclopedic collection of LACMA and create new digital editions inspired by them. A percentage of the proceeds was destined to support the museum’s Art + Technology Lab.
Last year also, Haus of Electronic Arts — HEK in Basel developed and launched the HEK NFT shop, using the fxhash generative art platform with artists such as Leander Herzog and Quasimondo.
And even before that, at the end of 2022, the Buffalo AKG Art Museum launched its online exhibition and fundraiser dedicated to NFTs, Peer to Peer, also presented in partnership with Feral File. After the exhibition, the digital art platform offered the works for purchase as limited editions registered on Ethereum. Half the proceeds from the sales were destined to benefit the Buffalo AKG Art Museum, which reopened in 2023 with a gallery dedicated to media art and a digital technology lab.
Those five projects not only have been sparking debates within the art world but could also impact our practices, anticipating new roles and missions for museums in the Web3 future.
The controversy around museums selling artworks
After Mike “Beeple” Winkelmann sold an NFT of his EVERYDAYS: THE FIRST 5000 DAYS in 2021 at Christie’s for $69 million, was it only a matter of time for museums to start collecting NFTs?
Blockchain technology has helped create new markets and audiences for digital art. In some cases, blockchain itself has become the medium, as some digital artists use blockchain-based tokens and smart contracts just as painters use canvas, creating works that can only exist as NFTs. But non-fungible tokens can also represent ownership of an artwork.
So do museums need to own an NFT to collect the work it represents? The mere existence of the question indicates that non-fungible tokens are already encouraging people to think about art differently and that maybe NFTs can help cultural institutions rediscover their purposes.
As a matter of fact, museums don’t own art in the conventional sense. They hold it in trust on behalf of the public, acting as a sort of custodian for future generations. Museums are also nonprofits that benefit from the federal tax code. In addition to not paying federal taxes, nonprofits are also exempt from paying sales tax and property tax.
A WAC Lab participant thinks it’s problematic for a museum to have an auction with no purpose for fundraising behind it, since that is making cultural institutions part of the market. For instance, the smaller art centers and galleries couldn’t compete against MoMA and other museums that represent mega-corporations. For the participant, if museums sell NFTs in their shops as digital souvenirs in the context of fundraising, it has to be contextualized.
“When it’s done like they did it for the auction of the Musée d’Orsay, or Feral File and MoMA, it can create ethical problems. Museums have a public responsibility, they are not marketplaces, especially in Europe. They are public institutions with a responsibility towards the public. If museums start to become marketplaces, then they have to get the same taxation that everybody else gets.”
Another participant underlined: “In the Buffalo AKG exhibition, the artists only received 16.67% of the funds, and the museum took the lion’s share. And they do not necessarily have the tax burden in the same way in the U.S. they do in a traditional donation environment.”
They also pointed out that, at least in the U.S., a problem artists face in comparison to cultural institutions is that the law does not benefit them: “In the U.S., when an artist donates a work to be auctioned to raise funds for a museum for charitable causes, the museum receives the funding, the collector receives the tax write off, and the artist not only doesn’t get paid for their work, they too have to pay taxes to the federal government on the work they’re donating.”
Another participant remembers a serious problem artists in the Web3 face: the lack of representation, and that it’s also important to be aware of which creatives are being platformed and why. The financing behind their art has specific politics and guidelines, which makes the money go often to the same circle of artists.
“Some artists in the space are being bulldozed to position themselves over others because they fit the narrative, don’t push the envelope, or fall into a certain kind of cultural silo. I’ve seen a lot of institutions attempt to divorce our subculture and its underpinnings to wash that. Even the GLITCH exhibition was hypercharged in terms of the kinds of conversations that came out. Because there are trans and female artists who pioneered that particular creative practice, and it was a bunch of men showing up on the exhibition block.”
Blockchain alone does not bring the transparency needed
While it is common practice in the traditional art market to hold auctions or silent auctions to raise funds for museums, the Web3 space has tried to move away from this and celebrate transparency. However, we see that it is not always the case and that the main problem is still opacity.
“There has to be a transparency that is still not there, even with the blockchain.”
What is important within the Web3 space, where transparency should be a guideline, is to be clear on how the money is going to be used, and where it’s going afterward has to be clear from offset.
For instance, HEK Basel commissioned artists to create new digital artworks to be sold in their shop. This was a new product presented as such. They split the benefits of the primary market but removed themselves from the equation on the secondary market, as a museum is not supposed to get benefits twice from a product sold in their shop.
On the other hand, if you look at the collaboration between the Musée d’Orsay and Agoria on objkt.one, you see clearly that the museum takes 5% of royalties on the secondary market.
In the case of the MoMA and Feral File collaboration, “SOUND MACHINES”, the use of the funds from the sale is explained as follows: “Proceeds go to the artists; to benefit sound art and collection care at The Museum of Modern Art; and to Feral File for production costs” (source). However, the online exhibition is presented as a regular exhibition on the MoMA’s website, avoiding mentioning the blockchain component, and, obviously, the sale. On top of that, it is important to mention that MoMa took 20% of the sales from the primary market, and 2.5% from the secondary (source).
If we look at the fundraiser organized by the Buffalo AKG Museum on Feral File, we see the museum took 50% from the primary market and 5% from the secondary market.
On top of that, since most museums do not own the digital wallet, another layer of non-transparency is added: “Since it’s a second party, I’m not sure it will be transparent in their book at the end of the year, showing the general results.”
A participant reflects that it can be hard to learn more and access the information about who was getting what percentages: “It’s interesting how the different tech platforms either share or don’t share this type of information. In that respect, I don’t think any of the cultural institutions have cracked the code on clarity.”
The group agreed that what happens is an integrated communications problem, and what are the best practices for updating the public on the money. Good communication, from the start to the use of the funds, would be a way to gain trust, understand the importance of transparency in the Web3 space, and start building a community by involving the collectors.
Focusing on the why and not the how of digital art
The discussion also revolved around the idea that Web3 natives should take more time and attention to communicate the concept and main intentions of the space, so it can reach farther than just the inner network. A reflection was that focusing on the concept behind the art instead of the format could be a way of onboarding new people.
“People don’t care how you make stuff, they care why you make stuff. They don’t care if it’s on the blockchain or what sort of code you use. They only care if they like the work, if it means something to them. And I think the more we go back to our discussion about why the art instead of how the art, we may open doors and bring people into the Web3 space instead of turning them off and talking about what frame buffers were used in the creation of the artwork.”
The problem is that when working in the blockchain space, a big part can be exploring the how, the technical side of things. And that can be difficult for people to digest and overcome, especially those who do not belong to the space yet.
On one hand, there are obstacles still involved in speaking about NFTs, depending on which part of the world you’re in. In Asia, e.g., technology is more absorbed into the culture. On the other hand, only focusing on technology is not helping onboard new people into space.
“That’s a problem when you have people who only come from the technological space and become artists overnight in the NFT space. Technology is not a main topic in the art world, we only use it as a tool, as a means of expression.”
Technology has and will continue to evolve. And also, due to that constant change, working with digital art and conserving it is an act of complete commitment.
Together, the WAC Lab group is pushing the envelope so cultural institutions understand the transparency, representativity, sharing of knowledge and responsibility that come along with undertaking the Web3 space.
WAC Weekly is part of WAC Lab, a program unleashing the full potential of web3 for the arts and culture produced by We Are Museums in collaboration with LAL Art, and powered by Tezos.
