Bowie Bonds: Music Royalty & Music Royalties, A Visionary in Music and Finance

David Bowie, regarded as one of the most innovative and influential musicians of the 20th century, left an indelible mark on the artistic landscape. His career was characterized by perpetual reinvention, captivating visual presentations, and ground-breaking innovations in music and stagecraft. However, lesser known may be The Thin White Duke's pioneering endeavours in the financial realm.

In 1997, Bowie, alongside his advisors, embarked on a revolutionary venture, launching what famously became known as "Bowie Bonds." This financial innovation, a securitization of the royalties from his extensive catalogue of albums, was a first of its kind in the music industry.

The Bowie Bonds were a $55 million 10-year issuance of asset-backed securities secured against 20 albums Bowie released before 1990, a catalogue of around 280 songs. The bonds yielded around 7.9%, which at the time was 80 basis points above the 10-year Treasury yield. The bonds allowed the artist to receive an upfront sum from investors in exchange for the rights to future royalties from his albums, with rights reverting to Bowie at the expiry of the term. This ground-breaking financial instrument not only provided Bowie with immediate liquidity but also paved the way for other artists to explore alternative funding avenues.

Fast forward to today, and the same story is now playing out with private equity's growing appetite for music royalties as an alternative investment vehicle. It also underscores the evolving music industry landscape, where artists are increasingly choosing to monetize their royalty streams upfront rather than waiting for the gradual disbursements over time.

For interested investors today, the question is: where can one acquire these lucrative music royalties?

Private Equity: Firms such as Blackstone have acquired large portfolios of music royalties, most recently outbidding Concord's offer for Hipgnosis Songs Fund (LSE: SONG), tabling a $1.6 billion proposal that values the music royalties’ company at $1.30 per share . The fund owns valuable song writing catalogues from artists like Red Hot Chili Peppers, Shakira, and Neil Young.

Record Labels: Major record companies such as Universal Music Group and Sony manage extensive portfolios of music assets.

Listed Royalty Funds: Investors can also gain exposure through listed funds like Hipgnosis Songs Fund (SONG).

Royalty Exchange: For the highly motivated individual investor, royalties can be purchased on the US royalty marketplace website.

Beyond its financial implications, Bowie's move underscored his forward-thinking mindset and willingness to challenge convention, traits that defined his artistic journey. By securitizing his intellectual property, he effectively treated his music as a tangible asset, affording him greater control over his creative output and financial future.

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