Museum economics: how the contemporary art boom is hurting the bottom line

Superb piece by Prof. Robert Ekelund of Auburn University (HT: MR blog). The popularity of museums in US is shocking to most Indians who rarely visit museums.

Prof Ekelund says it is economics which should drive working of museums. They are like any other orgainsation. Currently. three factors are affecting museum economics: fashion, demographics and billionaires.

….The economic point here is that if a museum like the Met isn’t able to keep up as its customers’ tastes change, revenue will likely fall. And by the time it might recognize this, it’s already too late to do much about it because the costs to acquire the in-demand art is sky-high. Since museums acquire either as a donation or a purchase, in the absence of a generous gift, the only alternative is to acquire a “distinguished” collection of work from another institution or private collector.

…In a world with about 1,800 billionaires, it only takes a relative few to drive high-end art prices to astronomical levels. Recessions, stock market declines and turmoil in international affairs rarely subdue the fight among these collectors for the best of the best, especially in contemporary art. And billionaires themselves are increasingly setting up their own, private museums, further distancing the ability of public museums to get the good stuff.

…. A third interrelated problem is that demographic issues have exacerbated the problems of museum finance and operations by putting pressure on the revenue side of the equation. Unemployment, early retirements and the aging of the population in the United States have all contributed to increased attendance at museums of all types. You might think that’s simply a good thing. And in many ways it is. But more traffic means higher costs, and when those additional visitors don’t result in more revenue, profitability goes down.

This is because of the longstanding movement toward making museums “free” by having individuals, government or businesses “sponsor” the cost. But when that support gets reduced by budget costs or another reason, museums must either choose to pick up the tab or lose patrons by suddenly charging fees.

Nice bit..

 

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