The bond market is crooning along to a familiar tune of financial engineering. Last week, the Financial Times reported that securitized music catalogues were going “mainstream,” as large investors including Blackstone and the state of Michigan’s pension fund seek new avenues for returns. The bonds aren’t exactly new-fangled. They’ve existed in some form since the 1990s. But they’re becoming normalized, now treated as a mainstream option by major investment firms and funds. And in a thoroughly memeified, chasing-the-latest-thing culture, it’s a safe bet that the model will get plenty of uptake.
David Bowie launched what became the eponymous “Bowie Bond” in 1997 along with his financial manager Bill Zysblat, celebrated by a credulous press as a market “innovation.” The bonds were meant to extract investment returns from the singer’s back catalogue by way of securitizing future royalties at a healthy rate of 7.9 percent annually.
The idea of packaging up assets and selling them as securities is, to say the least, one that we’re all too familiar with. For most, especially those who lived through the global financial crisis, housing debt stands out as the prototypical bundle. But as today’s music-rights salesmen are demonstrating, just about anything with a revenue stream can be wrapped up, sliced, and sold.
It’s worth asking why Bowie launched the bonds in the first place. In 2016, the BBC reported that the late musician used some of the capital raised to “buy out his former manager” as he sought greater control over his work. The deal also seems to have left him with a healthy boost to his wealth, too. But it’s complicated. Musicians are, after all, workers whose creative output is routinely extracted and exploited by music labels, financial intermediaries, and, today, streaming services. It’s hard to fault them for trying to regain control of their own work, as Van Morrison and Taylor Swift have famously attempted.
That the musicians are wealthy and powerful is notable, of course, but it doesn’t negate a principle long held on the Left: that exploiting labor, creative or otherwise, and depriving workers of their output is anathema to a socially solidaristic society. But then so is leveraging the endless securitization of creativity, or anything else, to make bank. And yet, the model works.
The contemporary “resurgence” of securitized music catalogues includes deals involving The Beatles, Justin Bieber, and Lady Gaga, artists who are as much brands and commodities as they are performers. Their ability — and that of their peers — to generate steady returns is real. As Michelle Gasaway, David Eisman, and Blake Bainou wrote for Reuters last year, the issuances between 2020 and 2024 surpassed $8 billion. They explain the appeal this way:
The consistent cash flows and long-term duration of music copyrights and royalty streams are increasingly being viewed as stable, long-term investments with diversification potential. This shift, particularly evident since 2020, is driven by several converging factors: the rise of streaming platforms, improved data transparency and expanded monetization channels.
At its core, selling securitized music catalogues is just another form of selling intellectual property — property embedded in cultural, economic, and legal regimes that turn artistic output into exchangeable assets. The resemblance to NFTs is obvious enough that crypto enthusiasts have already asked, “Bowie bonds hit the mainstream; can crypto leverage the tokenized IP model?” The difference is that these bonds are tethered to more tangible streams of revenue than digital Beanie Babies or jumped-up JPEGs.
Ultimately, their growing popularity is a reminder that finance doesn’t really innovate so much as it colonizes. Once technologies make royalties measurable and regular, they become collateral like mortgages or car loans. The Bowie bond was once an oddity, but today it is an ordinary instrument. This is perhaps the part we find the most unsettling — the market will commodify and, if necessary, securitize anything that yields a return. And in the absence of regulatory limits, it will securitize everything.
As Gasaway, Eisman, and Bainou put it, “One of the primary drivers behind institutional interest in music securitization is the nature of music royalties as long-duration, annuity-like assets. Streaming platforms such as Spotify, Apple Music, and YouTube provide consistent, recurring income streams.” Music lasts, and in the digital era it lasts in measurable, trackable form: streams are counted, royalties flow, and metrics are logged. “Classic tracks from decades past,” they write, “often continue to generate royalties through streaming, synchronization licensing and public performance.” Songs are, moreover, more or less recession-proof. “Consumers continue to engage with music regardless of economic conditions, defensively positioning its cash-flow profile.”
The initial shock one gets from the concept of a Bowie bond should fade quickly — not because the notion isn’t disconcerting, but because it’s ultimately mundane. A bond is a loan with a rate of return and principal repayment date; a Bowie bond is merely a securitized bond backed by an asset — which in this case simply happens to be a music catalogue that yields royalties. It could just as easily have been mortgages or consumer debt or the economic reputation of a sovereign state or god knows what else. What’s remarkable is only that the products of creative labor have joined the lists of assets ripe for securitization. The headline, as dispiriting as it may be, could read “dog bites man.”
To think of musical artists as both commodities and producers of commodities is simply to acknowledge the logic of the day — one in which the Great Game of the Cold War has been replaced by the tank tread of finance, relentlessly securitizing everything in its path. Perhaps the catalogs market will crash, or at least dip, as it did around the turn of the century, and as so many markets do. Perhaps it will be memeified into absurdity like GameStop stock or collapse like the flower market of Holland’s seventeenth century Tulip Mania.
But whether it inflates or implodes, the underlying lesson is the same: finance will chase profit wherever it can and in the process will strip art of any pretense of autonomy. What once passed for “underground” has already been monetized and recycled — whether in meme stocks, securitized catalogues, or the edgelord aesthetics of the New Right. Ziggy Stardust was a beacon for multiple underground luminaries; today he’s the pioneer of a securities model that Wall Street types are rushing to embrace in search of maximized returns — the man who sold the world.
Great Job David Moscrop & the Team @ Jacobin Source link for sharing this story.
