Have you ever wished that you could share in the success of your favorite musical artists? A platform that provides the opportunity to invest in emerging and established artists on an easy-to-use platform, AmplifyX empowers anyone to participate in and shape the music industry. Joining David Jensen and Cecily Chambers on the show today is Adam Cowherd, the Founder and CEO of AmplifyX. Adam shares how they’re democratizing access to capital for motivated musicians and explains how, by funding artists, you can add the potential for music royalties to your portfolio and help shape the industry for years to come.
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AmplifyX With Adam Cowherd
In this episode, we have CEO and Cofounder Adam Cowherd from AmplifyX. They’re creating a whole new digital and asset class for music creation, distribution, and listening. You can invest directly in an artist, an album, or a song through the AmplifyX platform.
Welcome, Adam. How are you doing?
I am doing fantastic. How about yourself, DJ?
I am excellent. We’re happy to have you in the house with us. Cecily is excited because of all the music stuff you guys are doing. Why don’t we start by asking you, are you still Amplify? Are you AmplifyX now? Tell us a little bit about the brand evolution.
Back when we worked together in the past, we initially started as Amplify because it embodies everything that we’re doing and what we want to do with these artists. When we brought on designers and started growing the team, we wanted to make sure that we had a defendable name, and AmplifyX is something that doesn’t exist. We have the .com URL and entirely new branding to go alongside with that.
What’s the value proposition of AmplifyX?
AmplifyX is a platform that allows artists to raise capital for a piece of their future streaming royalties. In turn, this creates a new uncorrelated asset class for investors.
You’re creating new types of assets, leveraging the blockchain in order to manage the ledger and all of the transactions. How are you allowing anybody off the street to assess lead to invest?
We are both SEC and FINRA compliant. We got our Funding Portal license from FINRA.
Explain that to us because we don’t know what that is.
A Funding Portal license is a license that allows us to host issuers or in our case, artists on our platform that allows people, anyone over the age of eighteen to invest in these different offerings. We’re similar to a bank light is how I like to describe it.
You’re bank light. You’re bringing the product, who are the artists that people would be interested and attracted to want to see and participate in their success. Can you tell us a little bit more about how investing works?
It’s similar to a crowdfunding model. Have you ever used Kickstarter or Indiegogo or something like that?
Absolutely, and I know Cecily has.
Instead of getting a CD or something like that on a bi-annual or annual basis, you’re going to get an actual deposit in your bank account based off the artist’s performance. How we structure it is through a revenue share note, which is money off the top of their gross streaming, royalties and digital music sales.
Tell us a little bit more about the artist you’re attracting. You’re on this show because you’re making structured mischief and that’s what we’re excited to learn about. Tell us about the artists that you’re attracting. Are we talking about established artists, emerging artists, everything across the spectrum?[bctt tweet=”Music is something that speaks to almost every single person. The average consumer listens to 27 hours of music a week.” username=””]
We’re attracting everything across the spectrum. I like to break it into two main artists aggregates essentially, where you have the emerging artists. Artists who have some traction already over 50,000 monthly active listeners, tens of thousands of fans on social who are trying to grow their base. This is going to be to invest in new content creation, promotion, and overall living expenses. You’re also going to have catalog sells from these different legacy artists who maybe are looking for a liquidity event. Maybe an artist finished up their label and the owner is looking for a different financing option, where they have more control and they have complete ownership of their intellectual property.
I love that component to it because it gives the power back to the artist when I feel like the music industry has been about the opposite over the last several years.
Cecily, you’ve got family in the music industry. I chatted with one. What do you think Caryn would think of this?
I think he would love it because I feel like the more power that can be given back to the artists the better. That also leads to more creative control in a lot of ways. An artist can be functioning from the place of being in their center and knowing what they want to put out there in the world versus having to have that be dictated by a record label. More power to the artist is helpful overall.
You have a launch coming up, and that’s partially why we’re doing this. Let’s promote you. Where should people go? Do they go to AmplifyX.com?
They can go to AmplifyX.com. You’re also going to be seeing us in some major periodicals in addition to across social media and different platforms like that.
How many artists do you have and what’s the launch going to be like?
We’ve had about 60 artists apply through our website. Of those, we’ve got verbal confirmations from ten that we think would be great fits. With our first initial launch, we’re going to launch with 3 to 4 artists, and then on a monthly basis, we would be doing artists and batches following that.
It’s more of a boutique approach at first.
Plus, this way, we can create some buzz and that in turn will help a lot of these artists gain additional followings. When you’re launching multiple artists at once, you’re going to get a lot of bleed and transfer as well. Our investors might be like, “I didn’t even know about this person, but I want to invest in this one,” and start to build these little portfolios.
I related to the story of how you were sitting in your apartment in New York, listening to a new artist, and you said, “I wish that I could invest in this artist’s career.” That’s what sparked you in creating this idea. I’ve had that before too. We do a lot of branding and art direction for different musical artists. There was one that was a bit more of an emerging artist that we did. I listened to the music in my house for several weeks on repeat and had that same thought.
You wanted to invest in this person’s future.
It’s such a good idea.
Adam, what’s your ultimate mischief-making here? On some level, you are disrupting the music industry status quo, but are you creating completely a whole new category of a new asset and how to experience music, invest in music, and participate in music? How would you describe that or an early piece of that?
I see it as fractional ownership of an entire cultural asset class, where this is something that hasn’t existed. We’re seeing this huge rise of fractional ownership with what companies like Masterworks is doing with fine art or Rally Rd. with cars, but none of those have consistent revenues that are being paid out on a monthly basis to the artist. That’s where I think we have some major opportunities because AmplifyX is tangibly tied to the real markets. You can price these using multiple analyses or DCF. We essentially can become something similar to an investment bank where these artists are doing baby IPOs in essence.
This changed because of the JOBS Act with Obama, is that right?
Correct. Obama signed a JOBS Act in 2016, which allowed regulation crowdfunding. Everyday people can invest in privately held companies.
That makes sense because these artists are essentially entrepreneurs. They are their own little individual businesses.
We’re just applying a venture capital model to these artists because lots of the time they haven’t historically been treated like companies and entrepreneurs, but that’s exactly what they are. They have all these different income streams. They’re marketing and promoting their product, which is themselves and their content and IP. For example, if you went to an entrepreneur, a typical traditional entrepreneur and said, “I’m going to give you $1 million for all of your IP and 80% of your revenue forever.” Nobody would take that deal. That’s what labels are doing with lots of these emerging artists. We think that there’s a major opportunity there to change that.
That’s been the history of the music industry of artists and repertoire. A&R is that function that would find that new talent and be able to package, market, hone, and develop it. That was the music industry saying, “The value add that we’re bringing is we’re identifying the talent and we’re helping to nurture and grow the talent.” What you’re saying is let the talent decide and call that for themselves. Let them be an entrepreneur that we can invest in, or that we help connect venture funding in essence, through individuals, through their fans into that actual entrepreneur endeavor.
It is crazy how all of this is happening because of social media. If there were no social media, people wouldn’t be releasing TikTok or YouTube videos or Instagram stuff. That’s completely revolutionized and changed the game.
Go one step further, we used to talk about companies that wanted to go direct to consumer. They wanted to have their own version of Amazon, but that’s evolved into what we’re calling social selling. Social selling is when individuals like a product or service and can say, “I’m wearing these cool Adidas shoes. Here’s a chip in them. If you like them, as I’m promoting them on social media, I get a percentage from Adidas in terms of the sales.” Funnily, you’re doing the same thing. You’re enabling that connection. You’re doing it in a bigger way, creating an asset class that’s an actual adhering to FINRA and everything that SEC needs for you to own an equity or an asset. The enabling to assess these points is being done in many ways through social. Is that fair?
Absolutely, because how I look at it is the record industry was set up in the 1930s, back in a time when the recording was super expensive. For distribution, you had to manufacture records, then distribute them to the biggest big-box retailers, have your stuff on the radio, and have a physical promotion. When you had these 80/20 deals, it made a lot more sense back then, but now you can distribute to all digital music stores and streaming platforms for $20 a year using something like DistroKid. You can promote yourself on social media and realistically, the value proposition of the label has changed.
The means of production is what you just described. There was much overhead that the music labels, the music industry carry. They carry that overhead, hence the 80/20 split because they had this giant frigging bill. If you didn’t pan out as an artist, they still got cut. They still had to pay that bill for all that overhead. Now, the means of production is inexpensive. You don’t need the music industry to do that.
What happens, Adam, if you have an artist that’s on your platform and people invest in that artist, and then they do at some point decide to sign with a major label?
We have friendly artist’s terms in our contracts that if in the event of signing with a major or a large independent label, then there’s payout like buyout clauses so also the investors are getting rewarded. It’s not anything unreasonable where it’s going to be some multiple of the trailing-twelve-month revenue for that fractional ownership of those royalties.
I don’t want to get deep into the technology, but at a high level, can you elaborate a little bit more on the enabling technology that you’re either creating that’s unique intellectual property or that you’re leveraging existing platforms to put this system together?
We’re using a standard crowdfunding type of technology for our platform, which is fully SEC and FINRA compliant and mobile responsive. We’re kicking off the build of native mobile applications. In addition, a major differentiator between us and our competition is we give a lot more data to both the artists who we work with, but then also the investors on a platform. We aggregate all the streaming and social media metrics and data, and perform some trend analysis to give everyone the right tools to make intelligent decisions. We haven’t seen many other players do that.
Who are your competitors? Who are the competitors that aren’t doing that?
Competitors like Vezt and Indify are the most direct. Royalty Exchange is a big one where they’ve probably processed the most transactions. They’ve done $75 million worth of revenue on their platform, but then they’re more for the accredited investors because their minimum deal size is $100,000. Most people don’t have $100,000 to invest into one singular song.
If we want to invest in Jhené Aiko, and we love Jhené’s latest album that’s going to be coming out where she’s working with her music chimes and her crystals, can I put $500 in or $5,000? Is there a minimum?
She would have to be on the platform and be selling a fractional piece of that album for you to be able to invest in her. Let’s say that she was, it would be up to her to decide what the minimum investment is. Our platform can do anything, $25 or more.[bctt tweet=”Make sure that you’re building something that you believe should exist.” username=””]
Adam, something that is exciting and unique about this is that people our age, and I don’t know if this is universal but for instance with me, I don’t think that I would have gotten into investing unless my fiance was all about compound interest and has taught me how to have a SEP IRA and all of these different things. I feel like a lot of people that I’m close with that are my age don’t invest their money. I love the fact that this platform is an organic way to get people into investing their money and probably early on. A lot of your users I would think would be kids that are listening to music that are super passionate about it and want to get involved.
We think that this is going to be an asset class that is going to have prevalent adoption because music is something that speaks to almost every single person. The average US consumer listens to 27 hours of music a week. DJ, we’ve had conversations about crypto in the past that have a market cap of $300 billion in aggregate now. That’s not even tied to anything tangible in the real world. Think about how many people understand crypto and what that valuation of that market is versus how many people listen and love and understand and what that opportunity could look like.
I love that comparison. That’s what’s interesting about you and other of your competitors, but you guys are going to be leading the way here when you officially launch. You’re taking something that people understand and making it easy for them to invest. They don’t need to understand all of the rhythms and ups and downs of crypto, different currencies of the blockchain that supports that, etc. All that you’re saying is, “If you like this artist or you like this song and your 18, 15, 12, or 9 years old, and you get an allowance, you could put $5 to invest in that artist,” assuming that the artists will allow you to invest at that level. That’s compelling.
What I like also where you’re going, I’ve got an eighteen-year-old nephew who’s just off to college in the fall. I gave him a bit of money to invest. He’s trying to figure out the ways to do that. I need to hook him up with you, Adam. I made him go reading a classic Rich Dad Poor Dad, which is a Gen X or Baby Boomer book to get him thinking about how he can take the money and look at the returns over time versus go pointed on a car or go blowing it on a trip with his girlfriend or whatever he wants to do. He should still do that, but he should also put some of it, decide and invest in things that are going to have an exponential compound growth.
The great thing about this too is that every person that you get to invest is as they call a spreader. They’re going to spread the information about that talent to their friends, get all of their friends listening to it, post about it on their Instagram and their socials. You’re going to see that there’s a lot of this spreading of the word. Brendan Kane, a friend of ours, is a social media guru. He talks about that and how he worked closely with Taylor Swift. She would do these special events where she would have the fans come and she would meet them after her performances. She would spend the entire evening talking to every single person that came in and doing photos with them. That spread so far and wide because everyone would start posting those photos on social media. It grew exponentially. There’s great potential for that to happen here as well.
What is your social media strategy?
We see artists being a large proponent of this where when they come onto the platform, it’s in their own best interest to promote it. The investor on a platform, it is their best interest to promote it as well because they get paid every time somebody listens to that music. They become these defacto spreaders, ambassadors, whatever you want to call them that are going to create this intrinsic virality. We’re hoping that we can create some engaging and high K factor.
We may not want to use the word spreader, given this pandemic that we’re having.
That’s true. Ambassador is a nicer word, but I was using the word that Brendan uses in his book.
I know you are, but it’s funny how in a matter of months, that might not be an appropriate word anymore.
Adam, I wanted to ask you a little bit about becoming an entrepreneur and taking that risk, and going out into the unknown. I know previously you’ve worked at Goldman Sachs and Ernst & Young. You’ve had a traditional career in stable places. To take that leap, was that scary? What were some of the things that helped you self-soothe and know that you could accomplish it?
While my career path has been traditional post-college, growing up, I always knew I wanted to be an inventor, a founder, and an entrepreneur. That led me to study Physics at the University of Michigan. I thought about doing a PhD in Astrophysics and worked in a research lab for about two years during undergrad, before going to Goldman Sachs and moving more into the business realm. I’ve always been curious about building things. Doing work with Ernst & Young and Goldman, it gave me experience in the financial industry and how the biggest companies in the world operate and organize, and taking that and applying that to my own startup. If I didn’t have the experience building out innovation centers at Fortune 500 clients at Ernst & Young, I wouldn’t have had the experience building and leading teams to build these products. It was complimentary. In terms of staying sane, I’m not going to lie, being an entrepreneur is a roller coaster.
I always say it’s not for the faint of heart.
It has been phenomenal, but then we’ve had some weeks in the past that have not been phenomenal.
You woke up thinking, “Why am I doing this? What did I get myself into? What did I get my investors into?”
I feel extremely confident in the team and our ability to execute on this. It’s all about making sure that you’re building something that you believe should exist. This is something that should exist based on my own wants and desire.
There is a hole in the marketplace.
You’re inventing a marketplace. Not a whole, but you’re creating a marketplace.
What was that like the day you quit your job or the first day that you started AmplifyX? Did you start AmplifyX when you were still working at these other companies?
I was doing some moonlighting when I was still at Ernst & Young, but the first day after, it was surreal. I had moved into a new apartment in West Hollywood with my Cofounder Bobby Kamaris. We had a three-bedroom that we created a home office and worked out of there. The first day we were doing a lot of wire framings and building the first version of the websites and things like that, but it was cool to know that every single thing we did was in our control.
Also, how you moved. Sometimes all these things come to a head at one time, and then you’re in a new space in your mind and also physically.
I want to ask you something. We have a model as we’re trying to codify what it takes to make effective mischief. This idea of rebels with a cause and structured mischief creating good in the world. Bending, rewriting, or inventing new rules is what you guys are doing to create good in the world. Part of that is we’re trying to codify a model that we’re calling a minimum viable collective. As an entrepreneur, you know this idea of a minimum viable product, but more from a people perspective, the personalities that you need in order to create something that is breakthrough. This minimum viable collective is that there are three personality types, not three people. You could have a group of 100 to 200 people large, but you’ve got to have this dynamic of a hipster, a hacker, and a hustler. I want to get your thoughts or ideas. Does that resonate with you? If so, which one are you?
We can define them a bit more too if that’s helpful.
Of the three Cofounders of AmplifyX, I know who the hacker is. That would be Joel Luxenberg who was there in the early days of crowdfunding and the last company was an AI company. I would be the hustler in that initial trio. Even when people say, “I don’t know how I would make this and get this done,” I’m going to be the person who’s going to find a way to get that done. Bobby has his pulse on the culture. I would call him the hipster. That was the perfect type of combination for a starting team and why we’ve been able to be successful to date.
As you’re adding people, are you seeing that you have those three persona types that are part of the team and maybe some of you start to share hats? Maybe sometimes you have a hacker or a hipster hat on. This sounds like an idea of a minimum viable collective resonates with you.
That’s what I am thinking through the full team. Most people tend to fall into one of those buckets.
The thing about the hustler too is they could be almost the person that builds community initially, pulling the team together and then also taking what the hacker and the hipster have created and bringing that out into the world and spreading the word about it.
Given that model and given your experience, are there any downfalls or insights about when the hacker and the hipster, or the hacker and the hustler, or any combination they’re all are having a challenging time together? Is there something in this model of hipster, hacker, hustler, and this idea of a collective that can bridge you through those troubled and tough moments, and also accelerate or emphasize the good moments?
There have been tough moments, but you have to trust your entire team with your life. A wise man once told me trust, but verify, and making sure that everything is what people say it is, is important. That is something that did have an impact on our business because we might have been too trusting at a certain point, but making sure that you’re verifying everyone’s work and everybody’s roles are exactly what they say. Making sure you’re putting people in the environment to succeed, and they have the support necessary to succeed.
I also feel like as someone that has employees that work for me, coming from an abundance consciousness has been important. There have been places that I’ve worked in the past growing up where I felt like that wasn’t the case. Making your team feel comfortable and that you feel like things are abundant and there will be more work coming in and not making your employees feel nervous about that is a good way to lead.
I liked that idea of abundance because I think about it as safety and transparency as well, where you need to be fully transparent. At the end of the day, when you’re the leader, you are the accountable one. It is good to make sure that your team has that idea of abundance and safety and they are conscious. It allows them to do their best work because then they’re not as constrained or worried about something that they might not even have any control over.
Especially in this whole time of Coronavirus, people are worried about losing their jobs. At the start of lockdown, when I would call on my team, we would talk through what we would be handling the next week and what I would need help with. That made them feel a little bit easier about everything because I’ve heard lots of stories where people have to cut off their help and then say, “Next week, I’m not having you back.” Looking in the future and planning with your employees, that helps a lot. I also think with abundance, the more you live in an abundance consciousness, the more abundance comes to you. It’s like an energy thing.
Let’s talk about the abundance that you’re going to launch. Tell us a little bit more about what it is going to be. Is it an event? Is it a drive-in jam that we were talking about that Berlin and London have been having in terms of raves, trying to manage COVID? What are you doing in terms of launching?[bctt tweet=”Building habits is so important. Making those small changes on a daily basis is going to compound into large life-changing habits.” username=””]
We’re going to have a few different launch activation events. Some with third-party partners like Cadenza.tv or Genie TV who are launching some cool live streaming performances. In addition, we’re coordinating with our PR firm to get a lot of press coverage on our first launch date. We’re working with the artists to set up their social media presence and different avenues, whether it’s email lists and different things like that to drive a meaningful amount of traffic to the platform.
What is the marketing overlay? You said you have a number of publications that will help be promoting this. Can you talk about those at this point? What should we be looking?
We’re going to have a press piece on our website on AmplifyX.com. We’ve already been on quite a few podcasts in the music industry like Bobby Owsinski’s, Ryan Carrillo’s, and the Music Tectonics. We’re featured in FinTech news outlets and a couple of music outlets and all of that will be right there on the website.
I still have a couple more questions. Cecily always loves to ask this question. I’m going to ask it this time. If you could share something with your younger self about what you’ve learned at this point in your career, what would it be? Would it change something that you thought about that you wanted to do as your younger self?
Give yourself one piece of advice.
The thing that’s jumping to my mind is things take a lot longer than you want them to take. I am an eternal optimist and sometimes, I put rather aggressive timelines on things.
DJ does that too. I remember when we were talking about our show back at the end of February 2020. He said, “We’re going to get the first five of these done over the month of March.” I said to him, “Do you feel like that’s a bit optimistic?”
COVID then hit, so I get to use COVID as an excuse, but it’s a good point.
I think COVID hit everybody’s business hard.
Yes, it has, but you’re right. I’m a bit older than you and I need to remind myself that constantly. You have to enjoy the process.
It’s good to be optimistic though.
To sum that up, being optimistic is great and that would be good for internal deadlines, but when managing expectations externally, it’s always better to be a little bit more conservative.
A follow-up question is, what advice would you give people that are either looking to make a change in their life? I’m not saying they’re necessarily going to go be an entrepreneur or start a new business, but in a small way, be able to say, “I want to change my situation at home, at work, or my situation related to food.” It could be a lot of things. From your experience, this is another aspect we’re trying to codify the structured mischief angle, how people inspire themselves to bend, change, or redefine the rules.
I’m going to give two brief answers there. One is building habits is important. Those small changes on a daily basis are going to compound into large life-changing habits, but then also taking time to step away from your day-to-day. I remember when I decided, “This is going to be the day I’m going to quit Amplify,” I went for a hike by myself in a Los Angeles National Forest. I was completely disconnected from everything. I didn’t even take my phone with me. I was alone with my thoughts. I think being present and being alone with yourself is going to lead you to understand what you want and what is important to you.
When you said leave Amplify, do you mean to leave EY?
Leave EY to start to Amplify.
I thought that’s what you meant, but I wanted to confirm for our readers. We don’t want to confuse our readers out there. Cecily, I know you have a couple more questions for Adam.
I think that being a present thing is key. During this time of Coronavirus, it gave me a lot more space to be in my center and think about the direction of my company. I got creatively reinspired. I love that you say that. What do you feel is the biggest challenge you’re facing now?
We’re in a privileged place where everything is moving forward. The biggest challenge is going to be to put this out into the world and make sure that it works.
Do you feel like there were things that you learned about yourself that were maybe surprising in your response to the COVID crisis?
COVID, while it is a terrible thing, it gave us a lot of opportunities to focus and get our internal operations into a good place, move some people’s roles around, and the ability to execute and get these FINRA licenses and make sure that all the contracts are ready and we’re ready to launch. Taking that time was important to us in our success. Most people see it as a huge negative. I see it as it gave us time to put everything together and make sure that we did it right.
You’re not the first person I’ve heard that from. Not only the number of startups but a number of CEOs that have large companies that they’re like, “We have been rushing to market either with a new set of products or new expansion plans or whatever it is. It has allowed us all to take a breather and to think about our business and our leadership resiliency, to realign and readjust to what is important.” I think the way that it’s allowed you to launch your business, get all of your ducks in a row. It is also allowing other mature businesses to pause and take stock. I see it also as a little bit of a blessing as well. Not for the poor people that have been impacted by it or have passed away from it. That’s horrible, but in general, it has allowed a lot of us in our personal life, our business life, and our spiritual life to hit the pause button and take stock.
There were phases of that. Initially, everyone was in fight or flight mode and we didn’t understand what was happening. We still don’t understand everything. We had no idea how long this was going to last and how dangerous it was. All of the sudden, our lives were completely disrupted. Everyone was in that evolutionary like, “The tiger is coming after me. I have to run,” feeling. As people started to take a step back and go, “I have to settle into this because it’s going to be a while,” I think people were able to be a little bit more than doing constantly.
In that being, like being with your family and taking a beat to think about your creative inspiration or connecting to a playfulness that you had as a child and re-evaluating what is important in this world. Also, the social unrest and everyone banding together around that and saying, “It’s not fucking okay anymore the way that we’re going about everything.” All of those moments, there’s a lot of trauma and sadness that came from the time, but there’s also a lot of optimism and positivity that came from that. I hope that looking back years from now, we see this upsurge afterward that continued on like positivity and being the oneness in each other.
It’s all about coming together and fixing problems that have existed for so long, and then that healing where I think COVID almost created a catharsis of type.
Adam, thank you so much. We’re excited for you. Good luck and break a leg with the launch. We’ll look forward to investing in some of those first artists.
Thank you so much for having me on the show.
Thank you, Adam. It was awesome to chat with you.
About Adam Cowherd
Adam Cowherd is the Founder and CEO of AmplifyX. Prior to AmplifyX, Adam worked in New York for Ernst & Young where he consulted global banks, asset managers, and credit card companies on digital transformations. After a few years, Adam made the move to Los Angeles to help EY build out their innovation practice.
There, he worked with Fortune 500 clients to operationalize innovation centers, corporate accelerators, and launch next-generation products/services. Adam left EY in 2019 to build AmplifyX to give everyday people access to the music industry by commercializing an asset class around royalty ownership.