MoMA: a museum that grows with its audience
People generally don’t think of art museums as a source of innovations but the slow, patient and thoughtful changes that The Museum of Modern Art (MoMA) made in recent years have served its business missions well.
At first glance, MoMA’s business model could appear like a total mismatch with its operations. With admissions and membership accounting for less than 30% of revenues, one may wonder if fund-raising, endowment investing and retail sales should be the focused areas of growth. Indeed, bringing in a third of sales in 2014, auxiliary activities grossed 8% margin and included sales from retail, publishing, and restaurant operations.  They contributed to a majority of net income and supported profit-losing activities such as curatorial programming and acquisitions.
Then, the logical question is, will the Museum be even more financial sustainable should we scale down programming and acquisitions? MoMA operates a lot like the Harvard Business School, where most of its operational resources are dedicated to the MBA program that barely breaks even but allows for the reputation to sustain high margins in executive programs and publications. Ultimately, the special exhibitions and programming stimulates ongoing glamour and conversations without which the museum will lose identity.
Subsequently, how do you prevent museum administrators to push for programming expenses and expect retail sales and private donations to cover for the deficits? Research has shown that in the late 1990s auxiliary revenues from museums in New York City averaged 19% of total operating revenue and support, albeit contributing to a mere 2% of these museums’ total income. 
Established more than eighty years ago, MoMA’s operating model has not shifted from its core. Accordingly, Glenn Lowry, the Director of MoMA, designed components of the operating model to lift sales and patron support:
- Acquisitions: MoMA is one of the few museums that actively acquire collections in bulk. As living contemporary artists rose to dominance in the art market, MoMA responded by acquiring the P.S.1 Contemporary Art Center in Queens and commissioning artists to experiment new forms of performing art, digital art and architectural design. This effort not only sparks attendance from the young, local tri-state community but also fit with the Board’s interest in growing the appreciation and support for contemporary artists.  
Curation and education: The scholarship and curatorial integrity has always been the holy grail that MoMA prides itself of. That being said, commercially successful projects such as the Rain Room (2012) have pushed museum’s programming to a new populist extreme. MoMA has attempted to satisfy two distinct – and at times conflicting – groups of audience: local residents and out-of-town tourists. The museum needs out-of-town shoppers to drive attendance and retail sales, yet local patrons like Bloomberg Philanthropies are looking for community engagements. The physical capacity of a museum space will inevitably reach its limit. Hence, despite critics’ outcry , the acquisition of the bankrupted Folk Art Museum next store, in my mind, was an effective asset transferal to expand reach. With 30% more space, the museum provides effectively all visitors the opportunity to wander, get lost, shop and dine – while adding flexibility in the orchestration of collection display. 
- Making use of its collection: digital strategies have been on the forefront of a debate on museum’s public representation in the information age. On MoMA’s financial statements, digital assets and activities represent a minimal portion of transactions. While it may remain true that the art collection is tangible and (mostly) physical, the use of it is becoming increasingly conceptual. From the placement of Picasso’s Les Demoiselles d’Avignon (1907) and Monet’s Water Lilies (1914-1926) to the licensing, digitalizing and commissioning of derivative images, artworks and goods for sale, MoMA has gradually expanded the definition of commercialism in the context of art appreciation.
In times of transformation, it is also worth noting that MoMA hasn’t abandoned many of its historical practices. It is not hard to imagine the exhaustion of historic content and public interest if the permanent collection was static – but the fact that its collection changes every year while activities and staff who support these activities remain similar makes MoMA a well-oiled machine. Its high retention rate during the 2008 financial crisis  and the deep-rooted association with pop culture and young generations have fed into an operational model that created a competitive advantage against the Met, the Whitney and other museums in town.
 MoMA. (2015). Annual report 2014. Retrieved Dec 6, 2015. https://www.moma.org/interactives/annualreportFY15/assets/MoMA_FY15_AR_FinancialStatements.pdf
 Schloss Lauren Brandt. (2001). “A Study Of Revenue And Income From Auxiliary Activities At Manhattan’s Four Largest Art Museums 1996-1999.” Columbia University/Teachers College. Retrieved Dec 6, 2015. http://www.artsadministration.org/thesis/a-study-of-revenue-and-income-from-auxiliary-activities-at-manhattans-four-largest-art-museums-1996-1999/
 MoMA P.S.1. (2000) “Statement of Affiliation.”Retrieved Dec 6, 2015. http://momaps1.org/about/affiliation/
 Glenn Lowry. (2015). “Message from Glenn Lowry.”Retrieved Dec 6, 2015. https://www.moma.org/interactives/annualreportFY15/assets/MoMA_2015_AR_Glennsletter
 Robin Pogrebin. (2014). “Critics Voice Objections to MoMA’s Plan to Take Down Folk Art Museum.”The New York Times. Retrieved Dec 6, 2015. http://artsbeat.blogs.nytimes.com/2014/01/09/voices-rise-in-objection-to-moma-decision-to-tear-down-folk-art-building/
 Glenn Lowry and Diller Scofidio + Renfro. (2014). “Building for the Future: A Work in Progress.”Retrieved Dec 6, 2015. http://www.moma.org/about/building
 MoMA. (2012). Annual report 2011. Retrieved Dec 6, 2015. https://www.google.com/webhp?sourceid=chrome-instant&ion=1&espv=2&ie=UTF-8#q=moma%202008%20hiring%20freeze
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Student comments on MoMA: a museum that grows with its audience
Great post Lily.
In a way, do you think it is easy for MoMA to maintain its competitive advantage? As one of NYC’s big five (MoMA, Met, Whitney, Guggenheim & American Museum of Natural History) you know who your main competitors are and there are very high barriers to entry. Moreover, most of your customers will visit more than one (if not all) of the big 5 in a given year.
-LL Cool Chea
I enjoyed reading your post a great deal because MoMA is my favorite museum in NYC. To LL Cool Chea’s point, how will the museum maintain its competitive advantage? As you’ve mentioned, they’ve acquired the space used by the Folk Art Museum to expand their “reach” to a broader audience, with the hope of increasing revenue and net income. However, I wonder as they continue to expand their “reach,” are they risking damaging their brand equity? If so, and they aren’t considered one of the preeminent modern art museums in the world, can they maintain the “curation and education” component of the operating model? Just a few things to consider as they MoMA looks to creating a sustainable financial for itself…