The “Bowie bond”

David Bowie enriched the world in many ways, innovating in musical performance, film, theater, and dance.  How many of us are aware that one of his innovations was the securitized intellectual property right — the “Bowie bond”?  In 1997, David Bowie packaged up the future ten-year royalty streams of most of his copyright rights – including 300 songs that he had written — into a security.  He found a buyer for the security, Prudential Insurance Company.  Prudential paid him a lump sum of some $55 million, and this entitled it to receive bond payments tied to the royalties for the next ten years.

Before the Bowie bond, bankers and investors had “securitized” old-fashioned and easily understood assets like residential mortgages.  But no one had ever securitized something as amorphous as future copyright royalty rights, and no one had ever done so to the tune (sorry) of eight figures of money.

After bankers and investors got their minds wrapped around David Bowie’s “Bowie bond”, they were inspired to create dozens of new types of intellectual-property-backed securities, tied for example to portfolios of old movies, restaurant franchise band-name income streams, and families of patents.