David Bowie was one of the most influential musicians of the twentieth century. He was known as a cultural chameleon throughout his long and colorful career, showing interest in several fields beyond the confines of the music industry. But did you know that the talented musician also rocked Wall Street?
In the mid to late nineties, David Bowie sold asset-backed securities called “Bowie bonds.” These bonds awarded investors a share in the late musician’s future royalties for ten years.
What were Bowie Bonds?
David Bowie realized that he could generate revenue from his extensive back catalog from his years in the music industry. In the mid-nineties, he, along with banker David Pullman and his financial manager Bill Zysblat, came up with a new scheme to generate money. Come 1997; Bowie sold Bowie bonds.
Bowie bonds were asset-backed securities bought by then US insurance company Prudential Financial for $55 million. It allowed investors to be awarded shares by future royalties in ten years. Prudential committed Bowie to repay his new creditors out of future income with a fixed annual return of 7.9%.
Bowie then struck a deal with EMI Records, which allowed him to package and sell bonds on royalties for 25 albums he released between 1969 and 1990. According to the Financial Times, the albums included singles like The Man Who Sold The World, Ziggy Stardust, and Heroes. The British legend also used part of the $55 million to buy out his former manager, Tony DeFries. (Source: BBC)
The Bowie bond was the first of its kind, where a musician sold intellectual property rights via bonds. Moody’s Investors Service, a financial services company, rated the Bowie bond as an investment-grade rating subject to a low risk of default. However, the Bowie bond came out around the same time as the advent of online music sharing services, causing lower sales of recordings. (Source: CNN Business)
The bonds enjoyed a relatively short success, causing the change of Moody’s rating from investment grade to BBB+, just one step above junk status. This meant that the bond was considered a risky investment. (Source: DW)
Artists Who Followed Bowie’s Steps
David Pullman, the banker who helped Bowie with the creation of Bowie Bonds, also helped several artists who decided to follow the cultural chameleon’s footsteps and dip their toes in Wall Street. Here are a few of the artists Pullman helped.
- Ashford & Simpson – the songwriting duo responsible for Ain’t no mountain high enough and I’m Every Woman. The Pullman group issued a $25 million bond in 1999.
- James Brown – also known as the Godfather of Soul, entered a $30 million deal with the Pullman group in 1999.
- Marvin Gaye – the Pullman group, arranged a bond issued to the late singer’s estate to which his wife and children shared the profits from the share of his bonds.
- Iron Maiden – the first heavy metal band who followed the Bowie bonds format in selling intellectual property of their music.
- Song Writer Duane Hitchings – the songwriter responsible for hits of artists like Rod Stewart, Heart, Tupac Shakur, Notorious BIG, and Steve Perry. Pullman estimated his catalog’s value ranged from $25 to 100 million.