ExFM Explains Why It Deserves $750K

This morning, Betabeat read the news that local start-up ExFM had raised a fair chunk of money to expand beyond its simple-but-clever music discovery extension for the Chrome browser. ExFM catalogues the addresses of all the cloud-hosted music files you come across while browsing and files them away in a library so users can stream and share them later, avoiding the liability that comes with hosting files or letting users upload them. The tactic allows ExFM to curate the music that’s already freely available on the web for users, with a touch of randomness.

But the online music market is a notoriously hard nut to crack, and it’s been the demise of many beloved start-ups. Legal challenges recently brought down New York-based Limewire, and the case could also be made that Myspace’s downfall was in part due to the fact that it became so mired in trying to court musicians to the platform. While some artists and labels are getting hip to using the web for branding and promotion, many still don’t get it–and the music industry’s institutionalized giants still look at any distribution channels they don’t totally control as untamed seas ruled by criminals.

So what’s ExFM’s plan?

Well, they’re not 100 percent sure. But ExFM’s COO Charles Smith got on the phone with Betabeat this morning to explain the possibilities that persuaded investors to give the company its latest round of $750,000.

Betabeat had speculated that the company might try referring users to places where they can buy the music ExFM has unearthed for them–ExFM will do some of that, Mr. Smith said, but he doesn’t see that as a major revenue stream. Instead ExFM will bill itself as a platform for bloggers who want to be tastemakers, small and medium bands who want to reach new audiences, and artists and labels who want rich data about their fanbases.

“Music is kind of an unlimited resource,” Mr. Smith said. There are almost two million songs to discover on Bandcamp, he said, and Soundcloud has more than two million users–that’s a ton of music to digest just between those two sites. If a situation arose where ExFM had to remove a song from its database, they could easily point the user to 50 songs that were just as good. “Bands need to be able to target audiences for what of their goods are scarce,” he said. “What’s scarce are things like concert tickets, limited vinyl and licensing opportunities. Attracting the right audience to your scarcity, if you will, is something where we see a lot of opportunity in the future.”

So, how does ExFM plan to do that? The next step is to develop an iPhone app, Mr. Smith said, which will resemble some of the existing socially-connected music services like Blip.fm in that users can stream a feed of their favorited (“noted,” in ExFM parlance) tracks, follow the streams of others, and discover new feeds to follow. It’s a more efficient way of finding music than finding music blogs you like and remembering to check them, or relying up that friend who follows this stuff obsessively. ExFM plans to pitch the service to music bloggers and other tastemakers–sort of like Apple’s iTunes-shilling music social network Ping.

The company is also working on an Android app and a player that bloggers can embed for their readers, another way to introduce music bloggers to the ExFM network. Eventually, Mr. Smith, who previously worked in business development at Etsy,  hopes the network will be robust enough that ExFM can collect meaningful data on listening habits that can help bands know their audience better.

“If you have a community that is engaged in your art, being able to direct messages at them when you produce new art is a very effective way of marketing yourself. But knowing who that audience is is difficult, especially when you’re one step removed from the transaction when Ticketmaster is selling your tickets or venues are selling your tickets,” he said. “If we’re able to provide artists with data about who is actually listening, if we can give them advertising opportunities or packaging opportunities around addressing that audience, that’s data they can use to build their audiences. Any time you have data not just about what’s getting popular, but about who your true fans are, who your core fanbase is, that’s something that gets very interesting for any artist.” ExFM Explains Why It Deserves $750K