Canadian financing and investment platform Xposure Music recently announced a significant infusion of $42.5 million in debt and equity funding, bringing their total to over $50m.
The Montreal-based company has cut data-informed deals with nearly 100 artists over the past 18 months, all listed on their website, including UK’s Sainté and T-Skins. They signed a partnership with global digital distributor Too Lost in November.
Co-founded by childhood friends and neighbours Ryan Garber and Gregory Walfish, Xposure was launched in 2021 with the goal of helping indie artists. Over the last few years it has evolved into financing.
“We were inspired by platforms like Cameo that made celebrities accessible. We wanted to do the same thing for A-list artists,” Walfish told Music Week. “Ryan, growing up in the entertainment space, his dad was the chairman of Cirque du Soleil. He ran Caesars in Vegas [CEO of Caesar’s Acquisition Company]. He had this awesome network of artists like Steve Aoki and Kygo and other big names. So the original idea was to build a platform where artists can submit their music to A-list artists.”
The pair then pivoted to making the platform a place where emerging artists could approach industry professionals for career guidance. “We scaled to 25,000 artists and had over 200 record label executives and managers,” said Walfish.
“Through that process, we learned that what artists really wanted was a record deal and when diving a little bit deeper what they wanted was money to fund their future projects,” he explained. “And so, that brings us to November 2023, we signed our first artist catalogue. And since then, we’ve done nearly 100 deals.”
Here, Ryan Garber and Gregory Walfish talk to Music Week about their vision and how the financing will fuel the company’s growth…
There have been major catalogue acquisitions in recent years not just by music publishers but by non-traditional investors. Is that the model you wanted to follow?
Gregory Walfish: “We’ve definitely seen the larger catalogue sales, like Queen, Justin Bieber and Future, and part of it is inspired by that, but also wanting to give those same opportunities to independent artists. There hasn’t been a lot of capital flowing into the smaller deals. So we wanted to bridge that gap because an artist can’t go to a bank and get a loan against their royalties. It doesn’t exist. In 10 years from now, it might exist, as the asset class becomes more recognised.”
Young artists, in general, are often overwhelmed by the prospect of signing a deal. How have you structured these deals to make them attractive for independent artists?
Ryan Garber: “For these artists to get access to this funding is something that’s relatively new. Our main goal is that nothing is biased; it’s all data-driven. We look at all of the data associated with the artists, all of the earnings, all of the historicals, and we make a fully transparent, fully data-driven offer to them. So every artist has full transparency over how our offer is created. We break it down by track, by album. We give them options to do fractional ownership deals. We give them options to sell one song or their whole catalogue or none at all.
“We really pride ourselves on transparency, so that artists know exactly what they’re signing and exactly what they’re selling so that no artist feels like they were ripped off, no artist feels like they were deceived, which can happen a lot in these messier type of label deals or management deals, where an artist can sign something that they’re not 100% sure what they’re signing. This is a very transparent model where what we’re offering and what we’re showing is what you get.
“It’s a blessing that these artists now have access to capital. I’m not saying we’re like the superheroes that came in and offered that service because it existed before we started, but it’s something that’s still really new, and that’s growing quickly, and that’s really exciting. It’s democratising the music industry for these smaller scale artists that have less opportunity.”
We really pride ourselves on transparency, so that artists know exactly what they’re signing
Ryan Garber
If these artists are up-and-coming, how are you projecting what their future earnings might be on their music?
RG: “We won’t sign a deal with an artist that has no releases or just planning on releasing. We need to make sure that an artist at least shows a little bit of historical data and success. We’ll usually look at things that are at least two years old, so that you have a little bit of that data to back it up and you can forecast a lot more accurately.
“The music industry is very data-rich. Every distributor and publisher provides super detailed statements that show you the amount of streams, where the streams are coming from, the source, geography. It really gives you a holistic picture of how the artist is performing, who their audience is, and makes it much easier for people like us to forecast accurately and give them a really accurate depiction of how their catalogue is going to perform and what we think it’s worth.”
GW: “Our algorithm has been trained to detect different consumption based on genre and region, ad-supported stream versus not, different streaming platforms, different levels of artists, and, obviously, age being the biggest factor. The minimum is two years. And so, we’re not trying to buy a song necessarily before it goes viral; we’re usually buying it after it goes viral. That way we can really predict how it’s going to perform over time.
“And just to add on to what Ryan said before, the biggest difference between signing a deal with Xposure, versus signing with a record label is that artists don’t understand what they’re signing. They don’t understand royalty rates. They don’t understand recoupment. Some do. But, they do a deal with us, it’s cash for this percent of my song. Everyone is familiar with an exchange like that.”
You’ve got a partnership with Too Lost, what does that involve?
GW: “Too Lost manages distribution of our master recordings, not our compositions on the publishing side. We also work with other distributors and labels. We can work with anyone as long as there’s a royalty stream. So whether that’s on the master side or the publishing side, we’re flexible.”
So unlike a publisher, you’re not doing song camps or sync placements?
GW: “We have some sync placements. We have some partnerships with different companies to do that. But we’re not doing song camps. We’re not necessarily doing A&R work. We’re not doing any future releases. We’re not really developing the artists and helping create records. That’s not what we do.”
With this big infusion of money, how much is being allocated to acquiring new catalogues or songs and how much to expanding the company?
GW: “Almost all of it is going towards new acquisitions. Our company is fairly lean. We are profitable.”
We’ve seen the larger catalogue sales and part of it is inspired by that, but also wanting to give those same opportunities to independent artists
Gregory Walfish
And are you looking to cover any specific genres?
GW: “We have artists from all around the world, not just in the United States or Canada. We have Mr Tout Le Monde out of France. We have Runtown out of Nigeria. We have Sainté out of the UK. There’s a lot of really awesome artists on the roster. Those are some of the larger ones, but also a lot more up-and-coming ones that maybe went viral on TikTok or you’ve heard on the radio, and they have really strong fanbases. That’s what makes it so special, appreciating some of the work that these artists put out and then being able to follow their journey after taking the funding from us.”
RG: “If you visited our website and looked at our roster, you would assume that we go mostly towards hip-hop and rap, but that’s just because that’s what’s come our way. But we want to be genre agnostic. We want to touch every genre, every geography. It just happens to be that in the first 100 deals we’ve done they’ve mostly been in the hip-hop, rap space, mostly in the US. But we’re really looking to expand that.”
Based on your experience in the tech music space, do you have any predictions, in terms of AI and DSPs?
GW: “We know that AI is going to have a big impact on the music industry. I think it’s going to be net positive. I think there’s going to be a lot more music created than what’s being created now. I think we’re at 150,000 or 200,000 new tracks a day, and maybe it’s even higher now. I think that as a consumer, whether there’s 200,000 new songs a day or 500,000 new songs a day, you can only listen to so many songs in the day and it’s not that many. So as catalogue owners and partners to artists that have songs that are already released, I don’t foresee a massive effect of AI on existing rights holders. I think it might become harder for artists to break through, given there’s even more songs being created. But, ultimately, it’s only going to grow everything. And as a partner and catalogue buyer, I think it’s going to be positive for us.
“I think a concern that people might have is how does AI play into streaming fraud? This is something that I’m optimistic about. I think that Spotify and some of these platforms are taking it seriously and is only going to get better. You see a lot of lawsuits and press around streaming fraud, so I think that AI is only going to help be able to detect what’s real and what’s not, rather than have a negative impact and create more of it.”
RG: “I also think it’ll be net positive, but one potential negative that we’re already seeing is that if you go back 20, 30, 40, 50 years, you see Bruce Springsteen, Elvis Presley, Queens – going forward I feel it’s going to be hard to have those types of fanbases or type of artists that really revolutionised music because of the sheer volume of music that’s being released now. You already see a shift where people are starting to be fans of songs and not artists anymore. You’ll listen to a song and you’ll love a song; you won’t even know the artist that’s singing the song. That part will be hard to replicate, the fandom and the craze that goes around artists. I just hope that AI doesn’t make it so that there’s such a high volume of music that people stop being real fans of artists.”
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