Rock pioneer David Bowie was a financial innovator, too

Late rock legend David Bowie shattered financial barriers as well as musical ones.
Faced with the need to raise cash, Mr. Bowie, who died Sunday at the age of 69 from cancer, considered selling his master recordings in 1997. Instead, he securitized the rights to release his albums made between 1969 and 1990. Essentially, he took out a $55 million loan from investors, secured by the income streams from some of his biggest recordings, including Aladdin Sane and Ziggy Stardust.
The bonds paid 7.8% and were self-liquidating, meaning investors got a bit of principal back each year, much like a mortgage loan. The advantage to Mr. Bowie: He kept his recording masters as well as the income from his catalog after the bonds matured in 2007.
Other artists, such as the Isley Brothers, James Brown and Rod Stewart, followed Mr. Bowie’s lead, forming a brief burst of celebrity bonds. The music-writing team of Ashford and Simpson — remember “Ain’t No Mountain High Enough?” — raised $25 million on the copyright income from 247 of their songs.
The Bowie Bonds represented a turning point in asset-backed bonds, where investment banks realized that you could package more than mortgages and credit-card debt. Bonds backed by intellectual property — such as songs and films — jumped from $380 million in 1997 to $840 million by 2000. Later, technology companies joined in the intellectual property securitization business, issuing bonds backed by patent revenue and other intellectual property.
As the Internet has made file-sharing easier, income streams from music have become smaller and harder to come by. As he told the New York Times in 2002, “So it’s like, just take advantage of these last few years because none of this is ever going to happen again. You’d better be prepared for doing a lot of touring because that’s really the only unique situation that’s going to be left.”