God, the Guardian just doesn’t understand money, does it?

Bowie sold 140m records during a career spanning more than half a century, and also made an estimated $55m from selling so-called “Bowie bonds” – basically turning his royalties into financial instruments.

You don’t “make money” by issuing bonds. You’re borrowing money. That statement is akin to saying that taking out an overdraft is you making money. Just nonsense.

It’s worrying when one of the major newspapers in the country is so ignorant, isn’t it?

18 thoughts on “God, the Guardian just doesn’t understand money, does it?”

  1. I’ve heard of a couple of bands/musicians doing something similar. A few years back Robbie Williams was trying to raise cash against his potential future earnings.

    What are they spending all their money on, gold-plated coke?

  2. Worrying but hardly surprising. If you look at the fantastic success the Guardian is making of its own finances, you can see why you should heed its every word on other company’s or people’s.

    And do exactly the opposite to what it advises.

  3. To be pendantic, I’d imagine Bowie did “make money”. Or why would he have done it? Shifting those royalty payments from some indefinite time in the future to the then present must have been perceived as raising their value to him. Reduced his risk by selling it to others. He must have thought there were better investments than David Bowie futures.
    Presumably there were tax benefits, as well?

  4. Come to think of it, a very good move. Somewhere along the line he’s benefited from the discounting of the inevitable spike in record sales following his own death.

  5. What he actually did was use the $55 million to purchase the recording and publishing rights (formerly owned by his record company and publisher) to those songs. Meaning that instead of getting, say, 50% or whatever of the radio play money (substantial sums in the UK, BBC pays about £55 per play on Radio 1 to the songwriter via the publisher) he gets 100% of it. And also secures that income stream to be the security against those bonds. Effectively it was a bet on the longevity of his back catalogue on the radio (well, not just radio, but you get the point).

    But it’s still true that it was his deployment of the money, not his borrowing of it, that made him money.

  6. The interview with Paxman in 99 suggested that Bowie was well ahead of the pack in understanding what the internet was going to do to music. He maybe also figured that everyone that wanted Let’s Dance or Low on CD will have bought it. From what I saw on Wiki, they didn’t even make their money back.

    Steve,
    “A few years back Robbie Williams was trying to raise cash against his potential future earnings. What are they spending all their money on, gold-plated coke?”

    The thing with Robbie Williams – he wasn’t going to have a long career. He isn’t much of a songwriter and he doesn’t have a great voice. Boyish charm doesn’t last.

  7. “It’s worrying when one of the major newspapers in the country is so ignorant, isn’t it?” Its own style of ignorance is the Tox Dadger’s USP.

  8. Did he issue a redeemable bond or just sell the rights to an income stream for a defined period, that second eould make him money a the time, of course over time offset against the loss of those royalties to him.

    Interesting that they said his estate is £70m split amongst the wife and kids. They didn’t mention death duties, is HMRC giving him a sweat heart deal, we should get 40% of the gross, after all he was born here so that’s how it works, yes?

  9. Bowie’s deal was unusual – the standard practice is just to sell your future earnings stream in return for a one-off payment. The article’s mistake was to describe the typical case, not Bowie’s different one.

  10. “They didn’t mention death duties, is HMRC giving him a sweat heart deal, we should get 40% of the gross, after all he was born here so that’s how it works, yes?”

    I know HRMC would love to gouge anyone as hard as they can, but I’d very much like to see them try collecting anything over Stuff that isn’t even in the jursisdiction of their mandate, nor has ever been for most of it.

    Tim writes articles about that kind of stuff, y’know…

  11. @ I sneeze in threes
    Death Duties depend on domicile, so if David Bowie had formally redomiciled (one criterion is “where do you want to die” – and he died in New York and wanted his ashes scattered in Bali) then UK death duties would not apply.

  12. Arnster:

    He certainly had a good team around him.

    And that last album is excellent.

    This isn’t really the place to be doodling and dreaming up your own epitaph!

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