As the world mourns the rock legend who lost a terrible battle against cancer on Sunday morning, more and more information about the man behind the myth surfaces. And little do we know about David Bowie, the businessman, and his revolutionary techniques of managing his own money.
In business just like in music, David Bowie (born David Jones) was a visionary. In 2002, he has predicted that music would become just like a public utility for which people will have to contribute on a monthly basis.
“Music itself is going to become like running water or electricity,”
he told a New York Times reporter 14 years ago.
He also envisioned a system to collect money rapidly before crowdfunding even emerged as a concept. In 1997, he was in a desperate need for money so he invented the ‘Bowie bonds’ – a new type of securities that gained the trust of Wall Street investors.
In a fairly short period of time, the securities helped Bowie collect $55 million. Bowie secured his pre-90s hit records through the bonds to secure his royalty revenues for the coming decade. Analysts deemed the bonds ‘revolutionary’ for the era.
It was a win-win situation – while Bowie raised cash quickly, investors gained a 7.9 percent interest rate. Plus, the bonds were especially attractive because they seemed a safe alternative to invest in the music industry which was considered at the times rather risky.
When the bonds were first issued they have received an A3 rating, which is the 7th securitization rating in the top tier. The issue was bought entirely by Prudential Insurance Co. of America, and the artist used the money to pay his taxes and invest in real estate.
Analysts underscored that it was the first time anyone had the idea to secure their intellectual property. David Pullman, the man who helped Bowie carry out his plan concerning the bonds, recalls that the star understood very well what intellectual property was about.
Bowie’s move was copied by other artists including Isley Brothers and James Brown. But seven years later, the bonds were downgraded nearly to junk status as music sales saw a sudden plunge. Eventually, the bonds were paid off within a decade.
Nevertheless, Ziggy Stardust creator did not despair. He believed that intellectual property would become a thing of the past by 2012, and that live shows would be the only options left to artists.
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