We all know that David Bowie was a musical and artistic genius. What’s not as commonly known is that he was also a business genius.
In an interview in 2002, he identified the challenge faced by the music industry by the internet:
“The absolute transformation of everything that we ever thought about music will take place within 10 years, and nothing is going to be able to stop it. I see absolutely no point in pretending that it’s not going to happen. I’m fully confident that copyright, for instance, will no longer exist in 10 years, and authorship and intellectual property is in for such a bashing.
Music itself is going to become like running water or electricity…[so] 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.”
While a number of people may have foreseen this, Bowie actually did something about it.
Initially, he considered selling his back catalogue outright (like The Beatles). Instead, working with David Pullman, he issued a Bond.
The first step was negotiating a licencing deal for his entire catalogue from 1969 to 1990. This gave him 25% of all royalties from wholesale sales in the USA.
He then converted the future income from the royalties into the bond. Put simply, instead of getting the royalties, he received US$55m from investors. The investors then received 7.9% interest and repayment of the principal (funded through the royalties).
Other artists like Rod Steward and James Brown followed suit. The concept has since been applied to fund anything from motorways, to publishing companies to service stations.
David Bowie: The business genius.