David Bowie passed away. It appears by all reports that he was ill for quite some time, and being very private kept the information regarding his condition away from the public's eye and ears. I'm still processing what his death means, he as the artist and cultural icon will be missed. Yet, his influence on the world is more demanding for us to reflect about. Bowie was an astute business man. Many do NOT know of how he became , I believe, the first artist to sell (Limited 10 year) bonds for his future earnings of his "art". What does that mean?
Bowie Bonds are asset backed securities of current and future revenues of the 25 albums (287 songs) that David Bowie recorded before 1990. Bowie Bonds were pioneered in 1997 by rock and roll investment banker David Pullman.[1] Issued in 1997, the bonds were bought for US$55 million by the Prudential Insurance Company of America.[2][3] The bonds paid an interest rate of 7.9% and had an average life of ten years,[4] a higher rate of return than a 10-year Treasury note (at the time, 6.37%).[3] Royalties from the 25 albums generated the cash flow that secured the bonds' interest payments.[5] Prudential also received guarantees from Bowie's label, EMI Records, which had recently signed a $30m deal with Bowie.[3] By forfeiting ten years worth of royalties, David Bowie was able to receive a payment of US$55 million up front. Bowie used this income to buy songs owned by his former manager.[4] Bowie's combined catalog of albums covered by this agreement sold more than 1 million copies annually at the time of the agreement.[3] However, by March 2004, Moody's Investors Service lowered the bonds from an A3 rating (the seventh highest rating) to Baa3, one notch above junk status.[6][7] The downgrade was prompted by lower-than-expected revenue "due to weakness in sales for recorded music" and that an unnamed company guaranteed the issue.[8]
The Bowie bonds liquidated in 2007 as originally planned, without default, and the rights to the income from the songs reverted to David Bowie.
NY TIMES: At the time it was a good deal for Mr. Bowie. He got upfront cash for a decade’s worth of royalty and licensing revenue without having to give up ownership of his songs. Originally rated A3 by Moody’s Investors Service, Bowie bonds were later downgraded to Baa3, just above junk status. By the early 2000s, Internet file sharing had become a factor, and musicians were generating less income because album sales were declining.Still, Mr. Bowie’s Wall Street collaboration inspired other celebrities to cash in while the getting was still good. Edward Holland, Brian Holland and Lamont Dozier, the Motown hit songwriters, did a deal, as did James Brown and Rod Stewart. In 2002, DreamWorks SKG entered into a $1 billion deal involving its film catalog.
At least we still have his body of work.
NY TIMES: At the time it was a good deal for Mr. Bowie. He got upfront cash for a decade’s worth of royalty and licensing revenue without having to give up ownership of his songs. Originally rated A3 by Moody’s Investors Service, Bowie bonds were later downgraded to Baa3, just above junk status. By the early 2000s, Internet file sharing had become a factor, and musicians were generating less income because album sales were declining.Still, Mr. Bowie’s Wall Street collaboration inspired other celebrities to cash in while the getting was still good. Edward Holland, Brian Holland and Lamont Dozier, the Motown hit songwriters, did a deal, as did James Brown and Rod Stewart. In 2002, DreamWorks SKG entered into a $1 billion deal involving its film catalog.
At least we still have his body of work.
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