How can museums make money? Jim Broughton from the Natural History Museum London talks about how his museum has identified new areas for expanding their revenue-generating activities, without compromising either credibility or core purpose.
Jim: Hello everybody, so, yes, finance after lunch on the final day. Tough gig. I also want to just apologise for my voice, it’s absolutely the remains of a cold and nothing to do at all with last night’s event at Science Gallery so I can confirm that for you first.
So lots of the things that we’ve been talking about over the last couple of days have come back to our museums relationships with money, what we tell ourselves about money, what we tell our partners, our funders, our advocates, our external colleagues about money.
So I thought what I’d share with you today is a process we’ve been through in our museum to think about what money means, think about the whole museum relationship with the stuff and how we can then turn that into a process, a filter mechanism for thinking about the kinds of partnerships that we are going to get involved in that add to us and enhance us when money is a large part of the equation.
So just to begin I suppose first thing to say is I work at this museum here, a large museum, big national museum in London, fairly well known. My job title, International Engagement, means many things to many people, I always describe it as kind of the point where the museum’s diplomatic activities, our advocacy and partnerships, and our business services all come together, so the things that we do institutionally in the world as opposed to the science that we do in the world.
That makes sense to me. If you were to ask my mother what I did she says he’s the guy that sells dinosaurs to China. Now that’s not wholly true by the way, but what I wanted to do was come up with something which illustrates perhaps some of the notions that we need to despatch, so really what is it that our museums do, it’s not such a narrow field of activities, what are the mechanisms by which we engage with other partners, what are the areas we’re interested, what are we doing it for, all of those kind of misconceptions we need to get rid of.
So I thought I’d then take it further and say well museums are never going to be great businesses, and let’s start by looking at what museums have that they can exchange for money, so were we economists we’d be talking about goods and services and all those kinds of things.
So when you start looking at it you could say it’s a pretty productive beginning, the first thing that we do is we provide entertainment, people like entertainment, you can only give it to the people who pay for it, you can exclude people from having it if they don’t pay, and it’s in abundant supply. You can sell entertainment to people again, and again, and again. It’s limitless, it’s not a finite resource, so far so good.
Then there are the other things that we do, so museums we contribute to the furthering of the learning in society, so … and that happens through education, through research, through all those kinds of things, but societies need those things anyway, we need them on the basis of merit, and the problem is we also need those things for human culture to move forward regardless of our ability or willingness to pay for them, so it’s pretty hard to then have a financial relationship around those things that’s absolutely transactional.
And then there are all the other things, and the things that we’ve talked about so many times over the last couple of days, so the fact that we help our national economies to grow, we make [unintelligible 00:03:50] look good overseas, we buy in society, we’re able to co-opt people to our agendas so we soft-power. All those things are great as well, they’re absolutely things that we do for the public and common good, and the challenge with these things is that you get them whether you pay for them or not. It’s almost like saying I don’t pay my taxes and therefore I don’t want the army to protect me in time of war. Tough, they do anyway. So again it becomes very hard for us to think about how we can commercialise each of these aspects of the benefits we bring for society. And it gets harder still.
All of these things are wrapped up in joint products, so the products that we generate using all these benefits are absolutely inseparable. So take the example of a researcher, a researcher who is involved in doing a project that generates ostensibly pure research, it’s almost certainly going to have an element of economic growth as part of it, because we’re museums it’s going to be generating stuff that we’re going to use in learning programmes, it’s almost certainly going to find some outlet because we want to talk about that content in our public programmes and then there’ll be a [unintelligible] of entertainment, all those sorts of things.
So we’ve got this strange combination of things which are hard to sell benefits wrapped up in indivisible products, that’s really hard. And to take it even further there’s the long-term nature of what we do, so the fact that we work across multiple generations, this is a quote from the American Economist James Tobin about intergenerational equity, so the fact that, you know, the whole thing that we do is preserving assets for society through a very long period of time, down the generations, and making sure that the things we preserve for the future are not undermined by what we’re doing today. It’s pretty hard to sell exhibition tickets to people who haven’t been born yet.
So, as businesses, museums, yeah, the cards are stacked against us. So what happens, how do we get funded. So as we’re here in Europe, I’m from a national museum, other national museums in Europe, you know our governments who give us a proportion of our funding recognise these things, they give us a proportion of our operating income in order in some way I suppose to recognise these things that we’ve provided for society that can’t be transacted.
If you were to look at our colleagues in the Prussian State museums, or in Paris, or in Madrid, or in Russia again generally half, sometimes a lot more of their operating income is giving to them as government grants and aids and of course they have to find the rest, and we do that through commercial activities or our charitable activities. And lots of the commercial activities of course hinge around our ability to transact around that bit of entertainment that we provide, so 15 to 20 Euros on the door makes a significant dent in that bit of money we still have to find. The Louvre I think currently makes about 65 million Euros a year from admissions alone so, you know, absolutely considerable potential there.
And then in the UK, as ever, we try to do things a bit differently, so our museum, many other national museums in the UK have this paradox of getting slightly more than half of our operating income through government grant and aid, but also a condition of that grant and aid being that we are free at point of delivery certainly for access throughout our permanent galleries, permanent collections.
So the one thing that we have in abundance that’s a commodity that we can transact around we’re not allowed to sell, and that makes it super-challenging in those kinds of environments to think about how you find the rest of that money, and that’s where the conversation begins, almost internally. How do we move from this reality of needing to find so much money to balance the books, to do all the good work that we do into a place where our relationship with money is founded upon an understanding that what we’re doing is rooted in our principles, rooted in our mission, serves our audiences in the right way and is credible?
So our mission, David talked about his mission this morning, and similarly our organisation has crystalized its own kind of, I suppose, core principle around what we do and everything that falls from that. So as an organisation we study planet earth, more life on it, so … and we’ve done that for 200 plus years now in various forms, so challenging the way society thinks about the natural world is absolutely what we do, unites our science, our public programmes, our research, all those kinds of things, and we do that by looking at the natural world in the past, the way the planet evolved, and life on it came into being, we do it by looking at living biodiversity and all of the implications around that, and we do it by providing data that helps inform a debate around sustainability, and climate change, and resource use, and all those kinds of things in the future, so the first thing absolutely critical.
Secondly it’s thinking about who that mission is expressed to, who our audience is, who are our constituents, and where do we do those activities. So let’s start local, it’s the public, it’s the people we are funded primarily to serve, it’s our peers in the scientific community, it’s our funders, it’s our advocates, and it’s the business world. These are the kinds of audiences almost who we would address. And where do we do it, well we do it on site in the museum, we do it nationally around the country, we do it beyond the national borders elsewhere in the world, and increasingly we do it in digital space, and these things are almost like layers of an onion radiating out from where we are.
But what’s also interesting when you try to visualise things this way is that you can see that the further to the right across this diagram that you move the further you move away from our central location, our kind of core facility, and the further you move away from our … I suppose our fundamental audience, the public. So you can then start to think about how we might fund each of those activities the further they go from that left-hand side of the diagram.
And we can look at kind of where those relationships exist, so the public we find them everywhere, the scientific community we tend to find them outside our four walls but everywhere else, etcetera, etcetera, but you can see very quickly that peers and advocates, the business world, the kinds of relationships we have with those people are further from our public purpose, further from our site, and therefore we should be looking at alternative ways of funding those activities increasingly through things that generate a surplus, a net contribution to the deficit in our public grant and aid. So far so very theoretical.
The other thing is why, what quality measures can you apply that enable you to filter out all the many opportunities that exist around your mission, so ultimately we should be doing things for I would say five reasons, they’re good for us, they’re good for our reputation, they enhance us, they help us engage more deeply with larger audiences, they help, in the case of our museum, a science museum, advance human knowledge through the study of the natural world, we help our sector by transferring knowledge and as a learning culture in our organisation we learn from the people we work with, and ideally we make a net contribution to our operating deficit.
Easy to think of this in some ways as a kind of like a graphic equaliser on a 1980s stereo, you know, these are a set of sliders and we need them all to remain above zero for us to get a nett benefit at any point. And of course if any of those sliders falls below zero, if we’re damaging our reputation, or we’re alienating our audiences, etcetera, of doing bad science then we really have to question whether we should be doing that activity at all regardless of how its funded.
And this kind of dialogue, this kind of metric, can be really empowering for having that conversation with colleagues internally within the organisation about the credibility of what they do, so we can begin to break down those fears of commercial work or work that has money attached to it even if it’s just recovering costs as being somehow unclean. We need to stop those fears from, I suppose, proliferating and people worrying that we’re in it for the wrong kind of reasons. So if people understand that everything we do is work that’s credible that enhances us that’s in the service of our mission regardless of how it’s funded they feel happy about it and we get better work out of it too.
So I thought I’d just give you some examples of what that looks like for us, what it looks like in our organisation when we apply that filter and then engage in projects that make an overall financial contribution to our grant and aid deficit, and I’ve picked things that are not the things that you would expect us to be talking about in terms of the day-to-day consumer facing things like retail, and catering, all those sorts of things.
So … here’s an example, this is a picture of Phobos, one of the moons of Mars. We’ve been working for a number of years now with the European space agency on building what we’re calling the analogue collections. Essentially these are big trays full of minerals that replicate what we expect the surface of the Martian moons and Mars and the moon etcetera to be like in order that’s when spacecraft or scientific instruments are tested, they can be tested pre-flight in conditions that as closely as possible replicate the mineralogical, or chemical, or geological surfaces of planets where they’ll end up going because nobody wants to spend a lot of money on spending a space probe to Mars only to find out that it’s attacked by the dust or corroded by the surface.
So, a great example of a project for us which is really advancing human knowledge, is funded well by the European space agency and absolutely enhances our reputation. And you can see a little scatter gram here in a way to kind of almost help us display what the major benefits are of that project.
Another example, this is probably one of the more presentable images of its type, so this is what happens when a bird hits a jet engine and comes down to the far end. Quite often as you can imagine what’s left is pretty hard to identify. Now it’s absolutely critical, in fact it’s statutory required in the UK that these impacts are investigated. So when you’ve got that kind of mess left often the only way you can determine what the bird was is by DNA analysis, or microscopic analysis of the base of the feathers because feathers are all morphologically different across species.
Why do we do that, well actually several important reasons, as soon as you know what it is then you’re able to determine how big it was, whether it was on its own, whether it was flying at a certain altitude or not, all those kinds of things which provide really important parameters for the refinement of jet engine design, also for the planning of habitat management around airports, the layout of airports, all these kinds of things absolutely contribute to public safety.
So a really exciting project, working with Rolls Royce for a number of years around that and it’s a project that we think oh, absolutely pushes the scientific frontier in this area, but of course we’re working with industry, we’re working on the basis that both parties understand it’s absolutely about providing a much sought-after almost unique business service.
Something else, a project that many people will know, cultural institute, The King Abdulaziz Center for World Culture in Dhahran in Eastern Saudi Arabia, a project that has many partners, many museums, cultural institutes, consultants working on it around the world, but something really exciting, a project that we became involved in five or six years ago during the planning stages, essentially to masterplan a gallery of natural history and to develop the content for that.
But what’s really exciting about that is where it’s gone since, so although it’s a … not an existing cultural organisation, it’s a CSR kind of initiative on behalf of a major corporate, it’s turned into a relationship that’s really exciting, so we had a team in Saudi, in fact just a few months ago working with 30 or 40 young people from across the local area and a mixed gender group as well, again logistically not easy in Saudi, but helping them embed a culture of volunteering into their organisation in a place where that really wasn’t something that was understood at all. And we have future things in the pipeline with them, so we’re working in the future on learning how to develop customer service standards in a place that doesn’t really have a strong kind of experiential kind of service culture, or working on how to evaluate visitor behaviour and satisfaction in exhibitions.
So these things are really now helping to transform an organisation in an utterly immeasurable way, in a … from a level where there’s … these things are known to something which is really going to help them embed in their locality in the future.
Another example, this is not something we do for vast amounts of money, it more or less recovers our costs, but it enormously again helps our reputation, helps science, so we do a lot of forensic work for the police services around the UK, and it’s pretty gruesome work I have to say, I mean some of the staff who are involved in this are called to crime scenes in the middle of the night, and shallow graves in the woods, those kinds of things, but by studying things like the insect lifecycles, the hatch cycles of various kind of … of the organisms that pray on decomposing flesh you can establish time of death, it’s not all that … that dark. I mean some of it is work around looking at contaminants in the food industry for example trying to work out, you know, how things got tainted in the supply chain or whether certain cases for claims for compensation are legitimate, but again it’s work that’s absolutely critical and very hard for those kinds of services to be found outside of an institution with the unique combination of skills and facilities they have, so the CT labs, the imaging suites, the reference collection, you know, the expertise that exists in our people, so, again, really important.
And lastly perhaps an example of a project which is much more I suppose familiar to us as museums, work we might be doing with another museum, so this is the Sarawak Museum in Malaysian Borneo. It’s a museum with which we share a complex history, we’ve been working together in various forms for over 130 years, they were founded on the recommendation of one of our scientists when he was traveling through the Malay archipelago, and recently however they’ve received enormous investment from the Ministry of Tourism to transform their building, build a safer store for their collections, to transform their organisation also so they can become the modern State museum for Sarawak in the 21st century. Now that’s something which again really works well with us, it sits well with our ambitions to engage with different kinds of audiences in mega biodiverse nations, it works really well against our ability to want to transfer knowledge organisationally, it creates opportunities for us to do mutual field projects up in the jungles of Borneo, but also there’s a service to be provided here, there is an architectural team who needs to understand the technical requirements required to build, specify, and operate a class-leading museum in a market where those services are entirely unprocurable anywhere else, but they are services that otherwise would be bought from the commercial market.
So our ability again is to separate what we do for the long-term, what we do from institutional, and what we can do within a design process working with an architectural team, and again it’s a really positive conversation between all of our colleagues involved in that project.
So, just a few examples, I’d like to give you a strong finish, I’m not sure I can, maybe it’s an obvious finish, but essentially what does the perfect project look like for these kinds of things? Well, if we’re going to do something that makes us money, doesn’t sell out, then it has to enhance our mission, or our credibility, support our mission, address various of those audiences ideally in various spheres of influence, and it has to contribute more than what it costs us to deliver it otherwise it’s not helping with that big intransigent kind of business problem that we have at the outset.
Jim Broughton, Head of International Engagement, The Natural History Museum London spoke at MuseumNext Dublin in April 2016 about how museums can make money without compromising either credibility or core purpose.