David Bowie will be remembered for his music and style, but the late singer is also responsible for an important, but lesser known, contribution in another area: finance.
In 1997, Bowie, along with his business manager and a banker named David Pullman, created an asset-backed security whose value was backed up by the future royalties he earned from his music—they were dubbed “Bowie bonds.” It worked like this: For a reported price of $55 million, Bowie sold away 10 years’ worth of the royalties for music he’d produced between 1969 and 1990. Prudential, bought the entire issue, which paid an interest rate of 7.9 percent over that 10-year period.
While Bowie bonds were notable at the time for their money-making potential (“Billions of dollars of royalties a year are collected from songs like ‘Heroes’ and ‘Fame,’” Pullman told Bloomberg News in 2013) and the curious celebrity behind them, the bonds are are also one of the first examples of an artist using securitization to monetize his or her work while retaining control over the intellectual property. This is something that continues to be a challenge for many in creative industries and is generally much easier for those who have achieved household-name status.