David Bowie — alias Ziggy Stardust, Aladdin Sane, the Thin White Duke, the Man Who Sold the World and the Man Who Fell to Earth — was also the Man Who Sold Asset-Based Securities.
Though not as celebrated or fondly recalled as the late genius’s many inventions and reinventions on stage, on screen and in the studio, the financial instruments that came to be known as Bowie Bonds were every bit as innovative.
Bowie, who died Sunday night, is being eulogized for being far ahead of the curve both artistically and on societal issues.
The 1997 introduction of these bonds, tied to the future royalties of his older music catalog, reflects Bowie’s understanding of where both the financial world and the music business were headed amid digital disruption. There, too, he got in front of the pack.
But no one dances to a 10-year bond or hums a 7.9 percent annual return.
If Bowie Bonds weren’t a crowd-pleaser, it is still impressive how Bowie anticipated the eroding marketplace to a degree few others did and navigated a groundbreaking path to make it pay.
Not everyone could successfully. Not everyone would.
A writer in London’s Daily Mirror in 2009 suggested — tongue-in-cheek, he later said — that Bowie’s innovation inspired the increasingly complex financial instruments that packaged subprime mortgages and ultimately set off the global economic downturn and credit crunch.
Now that would be a man who sold the world and fell to Earth.
The financial calculus of bundling non-liquid assets into tradeable securities may not comport with how fans want to think of the rock stars of their youth.
But most big music acts on tour these days are traveling corporations and, for some, the performers are playing roles they may well have outgrown long ago even as they give the public what they want again and again.
Such was Bowie’s knack for shape-shifting early in his career that when he sought to set aside his chameleon-esque on-stage personas in the 1980s, many thought he was inhabiting just another character, albeit a far more prosaic one.
“I guess it’s flattering that everyone believed I was those characters, but it also is dehumanizing,” he told the Los Angeles Times’ Robert Hilburn in 1987.
In terms of commercial success, Bowie’s career had peaked with the blockbuster “Let’s Dance” album of 1983.
In a bid to continue advancing as an artist without being hemmed in by his past successes, he announced plans to stop performing his older hits after a 1990 arena tour. The vow may have been sincere, but he reneged when audiences made clear they were more open to hearing newer material when accompanied by familiar stuff.
Realizing how strongly people were attached to his older catalog primed the market for Bowie Bonds.
Bowie had been among the first big-name artists to release music exclusively online when he put out “Telling Lies” in 1996. He saw what digital technology was doing to the music business. More significantly, he saw what it would do to upend the distribution system’s profit model.
Bowie initially considered selling his master recordings outright. But a financial adviser named David Pullman came up with this way to keep the masters, securitize the cash flow from his royalties and throw a return back to investors.
Bowie cut a $30 million deal with EMI that gave it the rights to recordings from between 1969 to 1990, guaranteeing him more than 25 percent of the wholesale U.S. sales royalties.
That got bundled into $55 million of so-called Bowie Bonds, which Prudential Insurance — the one with the slogan “Get a piece of the rock” — took on.
Bowie had reason to want to get a quick payday even if it meant leaving cash on the table, as he explained to the New York Times’ Jon Pareles in 2002.
“Music itself is going to become like running water or electricity,” Bowie said. “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. It’s terribly exciting. But on the other hand it doesn’t matter if you think it’s exciting or not; it’s what’s going to happen.”
The singer more or less nailed that, although he overshot in predicting copyright protection would “no longer exist in 10 years.” The clock is still running on that one.
Moody’s, which originally gave the Bowie Bonds an investment-grade rating because it anticipated low default risk, dropped it to a notch above junk status by March 2004, citing industry-wide “weakness in sales for recorded music.” Things change.
Not everything an artist does is art. Beauty is in the eye of the beholder. Where Bowie Bonds rank among his creative endeavors is open to debate.
But it paid him the equivalent today of more than $88 million upfront in uncertain times, so it’s likely he thought it was gorgeous.
Twitter @phil_rosenthal
