Using NFTs to Crowdfund Creative Projects

February 15, 2022

Michael Maloof and his creative partner Andrew Spellman have always found a way to stay ahead of digital trends. The music duo known as Half an Orange has racked up over 100 million streams worldwide and partnered with a wide range of prominent eSport figures like Ninja, Sonic Fox, and Team Liquid. They’ve also had their music featured in Rocket League. As the first ever animated artists to sign a DJ residency, they’ve solidified themselves as influential voices for creative execution in the metaverse, staying ahead of the web3 trends we’re seeing unveiled now.

While they previously mastered the glamor of digital avatars, their direction for selling NFTs is more focused on their fans. Viewing them as a way to ‘surprise’ and reward their audience, Maloof used NFTs as a way to circumnavigate the traditional channels of getting content funded through a music label or streaming service, instead electing to crowdfund one of the first animated shows sold as an NFT.

The sold-out project hosted episodes to purchase of NFTs ranging from $100-200. In order, the episodes combine to tell a larger story in the Half an Orange universe. All the episodes ranged from 1-5 minutes.

Not only does the money raised go to funding new episodes but also gives production credits for when the duo publishes the full versions on YouTube.

Although animated series have grown in popularity alongside the rise in streaming platforms, crowdfunding them can be tough. Critical Role, the most profitable stream on Twitch, was crowdfunding their animated series Vox Machina before Amazon pulled the trigger on producing the full 12 episodes. Since some people who participated in the crowdfund are not Amazon Prime subscribers, they feel left out from being able to reap the benefits of what they put in.

Before NFTs, situations like Critical Role's were the norm for crowdfunding. Contributors bought in with the charitable idea that they may or may not be getting something in return, primarily just because they liked the project. What Maloof proved is that at the very floor, crowdfunding with NFTs not only gives contributors a tangible asset but a way to reward token holders regardless of the project's progress. Plus, if it's successful, people can trade the NFT on a secondary market.

As a new method of empowering creatives without the need of producers or studios, we asked Michael what it was like crowdfunding a show with NFTs, their plans around rewarding token holders, and where they see this method of fundraising going. Here’s what we learned:

How did you come up with this animated series? Why did you decide to use NFTs to crowdfund for it?

All of our music was released through the electronic label Monstercat. We needed a way to stick out amongst their talented roster and catalog of electronic acts (Marshmello, Kaskade, Infected Mushroom, Pegboard Nerds, etc). We decided the best way to differentiate ourselves was by learning how to illustrate, animate, and direct music videos to help turn our music into a universe that fans could lose themselves in.

We got a lot of support from our music videos, especially on the esport and video game side. Ninja, SonicFox, Mew2King, EchoFox, Hbox, Team Liquid, and other giant brands and streamers in the space started sharing and guest starring in the videos. Our friend, Ben Dupris (Sundance Fellowship Member), helped us enter them in film festivals. During the festival runs we started getting offers to turn the music videos and world into an animated TV show. We had never thought about the videos making money. Up until that point they were a way to market our music. We were in the process of selecting a TV streaming service to partner with for our show when COVID hit. The whole TV and music industry went silent. Our careers, and the careers of our friends, were over.

I had been into NFTs in the early days of buying CryptoKitties and learning to write basic smart contracts. Nothing really came of it. I noticed the CEO of Monstercat, Mike Darlington, tweeting about NFTs. We started talking and he suggested rewriting and animating the TV scripts we had written for our canceled show into NFT short episodes. He introduced us to Bitski and one month later, we finished and released the first episode. We loved the technology and community behind NFTs but didn't think it would make any money. There was nothing else to do though. Tours were over. Labels weren't releasing music. NFTs came at the perfect time.

The debut episode of Non-Fungible Oranges made $20,000. Through 4 episodes we ended up making the same amount of money that TV streaming services had been offering us for rights to the entire show. We started telling every musician and artist we knew to get into NFTs.

You all have been performing with digital identities well before what's now being called 'the metaverse'. What did you think when you first saw the rise of NFTs? What excites you about their potential?

We have been doing live digital concerts since 2017. Minecraft, Team Liquid, Rocket League, Sansar, Live Nation, Monstercat, Roblox, Twitch, Reddit, VRChat, Sirius XM, and others have all been really generous platforms for our live digital concerts. Prior to COVID, most people seemed to view digital shows as an afterthought. It was a very niche market mostly geared towards gamers.

Once COVID hit, people had no choice but to give digital live streams a try. They started exploding in popularity. My parents were even watching a Jimmy Buffet stream live on YouTube. That’s when it hit me how big live streaming music was going to be.

The growth was staggering but there was no real way to make money off of the streams. It was great for promoting music but we would do live streams with 1 million unique viewers and walk away with $100. NFTs help solve that issue. We can create digital tickets, digital rewards, and really empower our community during the viewing process.

How do you approach using multiple mediums to execute your projects? For example, in your animated series, where does the drawing board begin?

Regardless of the medium, we start everything with pen and paper. We try to write every day. Poems, short stories, songs, scripts, etc. Then we'll bring our ideas to the studio, pitch them to each other, and figure out what medium best works for the story we wrote. The story is always more important than the medium.

For animation, we move from the final script to a storyboard (sketching out each key scene and moment). From there, everything is illustrated and modeled in Adobe Illustrator and Blender. Then we write all the music and record all the voice acting (most of the characters are voiced by us).

Next up is animation, which takes the longest. Once the animation and editing are done, we develop the sound effects and score the episode. Then we spend a lot of time compressing the video’s file size down to best work on the different Web3 platforms and ecosystems. Each episode takes about eight weeks.

Do you have any plans for adding digital extras for token holders? Would that only be tied to the animated series or do you all plan on integrating other media too?

Rewards and utility are incredibly important to us. They help build a community and encourage collectors to feel part of the journey. For collectors of Non Fungible Oranges Season 1 we gave a bunch of rewards: free 1/1 custom designed physical shirts, their name credited in each episode, free blu-ray box set of season 1, free vinyl of our upcoming album, free NFTs (including all of Season 2 when it is released), physical stickers, and we're making an announcement about holders earning royalties on our art. Those were all surprise rewards though. None of them were promised prior to the sale of the episode.

On that note, do you have any NFT projects coming up that involve strictly music? For example, some people are selling singles and then chatting with fans about it afterward in gated Discords.

We are the Head of Product and Creative for Monstercat’s NFT music platform RELICS. The platform has helped raise $450,000 for small artists on their roster who are struggling to generate income during COVID. A few of our songs can be found on the platform. The platform includes 3D virtual hardware we designed, called IDOLs, that let you bring your music with you into the metaverse.

Finally, do you see other people following the model of using NFTs as a way to crowdfund projects? What went through your mind on why it made sense for y'all?

The best NFT projects aren’t based around crowdfunding for a future promise. Instead, the artists find ways to continually surprise their fans and buyers.

Our first episode was complete and then we sold it to fans. Unlike a Kickstarter, the buyer immediately receives what they purchased. The beauty of NFTs is that there are no middle men. Artists can immediately sell what they created to their fans. They don’t have to sign away any rights. This allows artists to keep the majority of revenue their creations generate. With more revenue, they can invest more money into the project. It let’s the artist focus on rewarding fans instead of middlemen.

Let’s take music as an example. A major label will usually fund your entire album but take a 90% cut of your royalties. If the song does well, the label sees the majority of the rewards with the album’s success. With NFTs, you could self-release one song at a time and sell it directly to fans. You collect 100% of this revenue and use it to continue making more music, content, and rewards for your fans. The artist and fans now receive the rewards from the art performing well. Labels can still play a role, but in web3 they are a partner to the fans and creators, not the sole owner.