David Bowie, Financial Wizard
With the announcement today of the death of David Bowie, tributes from fellow artists and his millions of fans are pouring in. While it may be impossible to ever estimate his impact on rock music and pop culture generally, we can get a handle on his contribution to the field of business and finance. As many outlets are reminding us today, Bowie was a savvy and innovative investor, in particular when it came to his own intellectual property.
In 1997 he sold $55m of "Bowie Bonds", asset-backed securities that were backed by the current and future revenues of the 25 albums he recorded before 1990.
Rather than getting steady income from the revenues of his back catalogue — including records such as The Rise and Fall of Ziggy Stardust and the Spiders from Mars and Let's Dance — the bonds allowed Bowie to borrow more money up front.
After that deal, other artists with valuable back catalogs went the same route, including James Brown and the estate of Marvin Gaye. Bowie was also a music industry and IP realist who, even when CD sales were still a cash cow for record labels, foresaw where digital content was heading.
I don’t even know why I would want to be on a label in a few years, because I don’t think it’s going to work by labels and by distribution systems in the same way. The absolute transformation of everything that we ever thought about music will take place within 10 years, and nothing is going to be able to stop it. I see absolutely no point in pretending that it’s not going to happen. I’m fully confident that copyright, for instance, will no longer exist in 10 years, and authorship and intellectual property is in for such a bashing. Music itself is going to become like running water or electricity. So it’s like, just take advantage of these last few years because none of this is ever going to happen again.
We haven’t quite come to the point of copyright no longer existing, but we’ve certainly found ourselves in a place where the old profit model for content companies and individual artists alike has been upended since the early 2000s. Ironically, it was the revolution in digital music and concerns about file-sharing that chilled the market for “Bowie Bonds.” After a flurry of high-profile contracts with other entertainers following his own 1997 deal, the trend largely died out.
Music fans, of course, will be listening to David Bowie’s music long after his experimentation with royalty-backed bond securitization is a forgotten financial footnote. But the successful management of his own business empire is an excellent lessons to artists today. There are all too many managers and business partners who allow performers to engage in the lazy romantic notion that worrying about money is somehow inauthentic and a distraction from creating new art. Don’t believe them. Financial independence and owning the rights to one’s own work give entertainment professionals greater freedom to create and innovate than “not worrying about the numbers” ever did.