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Transcript for Episode 6: The Man Who Sold Bowie Bonds


It's hard to imagine how completely bonkers this seemed in 1998.

AIMEE KEANE (00:11):

This is Robert Levine. He writes about the business of music for Billboard Magazine.


People weren't paying attention to the business of David Bowie. By 1998, he has seen for 25 years how popular some of his songs remained. The Ziggy Stardust album had been selling by that time for 25 years.

DAVID BOWIE (00:34):

I wanted, I wanted to define the archetype, uh, Messiah Rockstar. That's all I wanted to do. So Ziggy was, for me, a very simplistic thing. It was what it seemed to be an alien rockstar and, uh, for performance value, I dressed him and acted him out.


So the idea that he's doing this major deal, which is a lot more innovative than anything more modern pop stars did, people just thought it was he's, he's doing what? What the hell is he on now?

AIMEE KEANE (01:08):

What the hell is he on now?

Bowie was of course a trailblazer in the music industry and every now and then he'd launch a project or make a statement that got some people scratching their heads.


By the late eighties, Bowie had settled into being sort of an iconic part of classic rock, but I think he settled into that role much less comfortably. You know, Pink Floyd was touring in stadiums. The Rolling Stones were touring in stadiums and they were sort of settling into making an enormous amount of money and maybe not challenging themselves as much as they once had. Bowie fit awkwardly into that. He started the band Tin Machine.

AIMEE KEANE (01:48):

Tin Machine was a British American rock group that Bowie formed with three other musicians.

DAVID BOWIE (01:53):

We're a new band. The kind of material that we have, isn't the kind of material that everybody feels comfortable with. We're not a comfortable band. Um, our……


You know, you're one of the most famous people on earth and you decide, yeah, I'd like to stand in the background for a while. Not a thing that people usually do.

DAVID BOWIE (02:12):

Um, a general discontent with what we were involved in musically generally, I guess, drew us together.


You know, he always wanted a challenge himself. That's what made him interesting. By the late nineties, he was very interested in the internet.

DAVID BOWIE (02:26):

I think the potential of what the internet is going to do to society, both good and bad, is unimaginable.

AIMEE KEANE (02:36):

Here he is speaking to the BBC in 1999.

DAVID BOWIE (02:39):

I think we're actually on the cusp of something exhilarating and terrifying.


He made all sorts of predictions about what the music business would be like in the future.

AIMEE KEANE (02:50):

These predictions were a big part of Bowie's Edge. This ability to anticipate something in the future and then create or do things that seemed way ahead of their time.


He had also, like some of his contemporaries, learned a lot about the music business the hard way. They got ripped off really badly early in their careers and became very savvy as a result.

AIMEE KEANE (03:15):

Early in his career, Bowie was managed by a guy named Tony Defries.


He was a very powerful popular manager in the music business.

AIMEE KEANE (03:24):

Tony Defries saw the star potential in a young Bowie. Back in 1970, he negotiated an unusual arrangement with a record label


And he made this deal with RCA where he and Bowie would get back ownership of some of the master recordings.

AIMEE KEANE (03:40):

When the record deal ended, Drefries and Bowie would split the rights to the masters. We're talking about the official original recordings from which all future copies would be made. The person or people who owned the masters owned the right to make money from the recordings. This is through royalties and other licensing.


That's not typical in a label deal. It was visionary, but he would own them with Bowie. So it was good for Bowie in some ways, bad for Bowie in others cause he had had a very sort of contentious split with Tony Defries, didn't wanna really deal with him anymore.

AIMEE KEANE (04:17):

But by the late nineties, Bowie's in a different position,


Bowie's in a situation, I would like to buy back that part of my recordings that Tony Defries owns. How do I do that? I need to raise an enormous amount of money.

AIMEE KEANE (04:31):

Bowie was about to bring another innovation to the music business. This time, it would also involve the world of high finance.


I mean, people just thought it was completely bonkers and really time has shown us, like so much else David Bowie did that was a bit weird, he was ahead of his time. He really was.

AIMEE KEANE (04:55):

This is The Closer; the inside story of the deals that changed the world. I'm Aimee Keane.

This is the sixth and final episode of the first season of The Closer. We're already at work on our second season, which will be out in June, and we'll have bonus episodes and a lot more before then.

So while we're at work on more Closer episodes, we'd really like your help with something. Please follow or subscribe to the show wherever you listen, and please rate the show and leave us a review.

Lastly, we'd really appreciate it if you could share the show with at least one person who you think will enjoy it.

Now, back to today's episode. We know of David Bowie the pop star, the cultural icon, and the trailblazing artist. But what about David Bowie the financial deal maker? On this episode, what happened when he turned to the debt market in the nineties with Bowie Bonds? And how is the idea behind these bonds appearing in music deals today?

In the late nineties, David Bowie's trying to find a way to raise enough cash to buy out his former manager, Tony Defries. Meanwhile, there's an investment banker in New York dreaming up his next project.

PRODUCER (06:09):

So David, we have them on the on the line.


Good, great.


Just need you to put these earbuds in.






How are you?

AIMEE KEANE (06:14):

A banker named David Pullman.


I'm David Pullman, the founder and chairman and CEO of the Pullman Group LLC.

AIMEE KEANE (06:23):

David Pullman specializes in something called Structured Finance, which is a type of lending that's a little more complicated than a loan, like the mortgage on your house.

Often structured finance puts together the payments from lots of small loans that get paid regularly. Think of credit card bills or car loans and packages them into bonds that can be sold to investors.

This industry took off in the 1970s with mortgage backed securities. These are a type of investment made up of a bundle of home loan payments that a bank sells to investors. And those investors are then paid regularly by the stream of cash from the homeowner's mortgage payments.

David Pullman got his start on Wall Street trading these mortgage backed securities on the secondary market, but pretty soon he was thinking about what other assets he could apply the same treatment to.


I liked doing new asset classes and I always thought music entertainment intellectual property, intellectual property would be the biggest asset class.

It was underserved. So it was an ideal market for me.

AIMEE KEANE (07:23):

Fast forward a few years and one day, Pullman finds himself in a meeting with a client and a friend of the clients.


Usually, when you're in my position, people come to you with ideas and say, the opening intro is usually, you're on Wall Street and then can you do this? My initial gut reaction is this is gonna be something that is gonna be some crackpot idea, something we can't do, and I will mmm summarily dismiss <laugh> like no.

AIMEE KEANE (07:51):

So the friend says, can you do something with the royalties from music licenses? Then he learns that these aren't just any old music licenses. These are for none other than David Bowie, who's considering selling the rights to his music.


These were his babies…. and they needed another idea as what they could do now.

AIMEE KEANE (08:11):

It turns out Pullman speaking to Bowie's business manager and accountant and all round music industry authority Bill Zysblat. What he and the artist are looking for is a way to borrow on the back of Bowie's own intellectual property.


David Bowie is very savvy and it's, to me it's special. Like, you know, I wouldn't say that about someone else.

AIMEE KEANE (08:31):

What Pullman finds so savvy about Bowie is the fact that he and his former manager, Tony Defries, managed to retain the ownership of his masters.


Now we're in 1996, and all these rights are reverting back to David. These years have passed and everything's come back to him. Nothing's licensed out, no publishing deal, no record licensing deal. Everything is in David's possession coming back and he's looking to sell.

AIMEE KEANE (08:55):

Soon after Pullman's initial meeting with Zysblat, he then meets with Bowie himself. Pullman has three questions for the artist and his business manager.


How much does it make a year? So they tell me how much it makes, which is as, as much as a company would make in terms of, uh, large company. So that's one.

Two, do you have a history, five year history of the earnings? They do have that. I said, is it audited? They say yes. And to which I said I could securitize that. To which they said what securitization?

AIMEE KEANE (09:28):

Bowie might not have known how this financial engineering worked. But then just a few seconds later, according to Pullman, Bowie says,


Why haven't we started yet?

AIMEE KEANE (09:39):

If Bowie’s Ziggy was Messiah, maybe Pullman's an apostle?

Here's what Pullman's devising; the income and artist gets from royalties is usually uneven and unpredictable. But by this point, Bowie's had 25 years of seeing how popular his music had remained, and he has the financial statements to prove that the rights to this music generate a reliable stream of sizable income.

Pullman figures he can sell bonds backed by these royalty payments just as another banker might do with mortgage or car loan payments. And if he does sell the bonds, Bowie gets the lump sum financing upfront and the income from his royalty payments pays the bond holder for the principal investment and the interest.

Meanwhile, Bowie and Zysblat are working on another deal that becomes crucial for these bonds. The artist agrees to license his back catalog to record label EMI for 15 years.

What this means is that any potential investor now knows that there's a guaranteed sum coming from a record label. It's called a credit enhancement, and it reduces the risk you might be asking an investor to take on.

Now Pullman just has to figure out how to get the deal done.


And we did the deal in this warp speed. Mm-hmm <affirmative>, which is like two months in terms, and it involved corporate finance, family law, estate law, tax law, bankruptcy law, copyright law, international law, which treaties between different countries.

It'd never been done before.

AIMEE KEANE (11:10):

Pullman negotiated a deal to sell 55 million in Bowie Bonds. The buyer, the Prudential Insurance Company of America, the bond pays a 7.9% coupon or interest and they mature in 10 years.

And as with any other debt, the Bowie Bonds get a credit rating. The rating agency Moody's labels it investment grade, meaning they were at low risk of defaulting. And by most accounts, it's the first ever bond backed by musician's intellectual property.


So now what happens is it's the fall of 1996, and I've gotten to the point where the deal is rated, structured it, doing the deal documents and the deal is going to go through and it's a private placement, so there's no public offering. The documents are all private, they're confidential.

So what happens next is… the Wall Street Journal breaks on the cover that we're doing this deal. That I'm doing this deal with David Bowie.


David Bowie, better known for making music than making money. Has just sold 34 million pounds worth of bonds on Wall Street. They're guaranteed by future royalty payments on his old hits. So will you ever be able to own a share in your favorite band? Our economics editor, Mark Webster investigates.


So they talk to, interview, people that invest in municipal bonds, that don't invest in asset back securities. And they get these quotes like, “are you kidding me?” Like in in the paper from these investors, “you're not serious” or you know, they can't imagine this is happening from the people they interview. That's one side of it. What's in the paper on the cover of the Wall Street Journal about the deal.

What's really happening is the phones are ringing off the hook by the biggest investors in the world. By the most sophisticated investors, by the biggest insurance companies, by the biggest funds, by the biggest sovereign investors. They all wanna buy the bonds and now they'd already been sold, the deal would've been placed. But it was fascinating to me that now it struck a vein of gold. I immediately realized that when I came in, what was happening by their reaction. So because they got it and these were huge investors and for them it was like, well, you know, this is a 55 million deal. It's backed by the assets of David Bowie's record masters, his publishing and his writer's share.

AIMEE KEANE (13:26):

The assets of David Bowie's record masters… Something Pullman likens to a piece of art or other masterpiece that just so happens to have its own cash flow.


And the idea that, you know, going to a museum and seeing paintings like, well these are masterpieces, his songs, they're iconic and he was an iconic legend. And then you have like, well picture these, you know, paintings on the wall of these masterpieces when you go to a great museum and then imagine 'em having income streams <laugh>, it’s exactly what this deal was.

AIMEE KEANE (13:56):

For just about everyone involved. The Bowie Bond experiment is a success. Bowie raises the money he needs in the form of a loan.

Here's Robert Levine from Billboard again.


You know, this is like one of those great things. Like I can make almost as much money as I would've made by selling it, by loaning it out. And then he gets the stuff back after 15 years and what does he do? He uses that money on a fantastic investment, which is buying back the share of his work that he doesn't own.

AIMEE KEANE (14:28):

The bonds they're paid off in full and Pullman tours the media circuit, captivating audiences with the story of just how he pulled off this brand new type of securitization.


He gave me this gift that I didn't even know.

AIMEE KEANE (14:41):

Pullman's talking about Bowie again here and how working with the artist on this revolutionary deal elevated his own platform.


Because I didn't understand it, but he did. He gave me fame.


David Pullman, uh, you are the founder and CEO of the Pullman Group. Tell me about the James Brown Bond and how does the program work?

AIMEE KEANE (15:01):

He goes on to do similar deals for other musicians' back catalogs; James Brown, Ashford and Simpson, The Isley Brothers… and he builds his profile as the architect of a brand new kind of financial product for the music industry.

In the years that follow the launch of the Bowie Bonds, the relationship between Pullman and Prudential and Zysblat sours over the course of several legal disputes. But there's a massive disruption coming for the music business and the innovation of the Bowie Bonds isn't gonna be enough to get other artists paid for owning the copyright to their music.

We'll be right back.

The Bowie Bonds were a financial innovation. The artist and investment banker, David Pullman brought a highly specialized corner of Wall Street into the mainstream. Up until this point, the idea of securitizing the future cash flow of record royalty payments was unheard of. But now, bankers and artists alike were rethinking music royalties.

That is until the internet completely disrupted the economics of music.


Criticism as Napster, that it fosters and encourages illegal copying of music. The Napster is already hugely popular among music fans across the country.

It's night fall and if college campuses seem quiet, that's because all the students are in their dorm rooms turning the record industry on its ear.

AIMEE KEANE (16:22):

With the internet comes online file sharing and a company formed in a college dorm called Napster has tens of millions of users downloading millions of songs without paying.

Here's Robert Levine again,


The mood in the recorded music business was dire. You know, it, it was an existential crisis. You're in the business of selling something and people are taking it and they're telling you that that's the future.

AIMEE KEANE (16:52):

As fans ditch CDs and turn to online streaming for their music, that steady stream of cash that artists like David Bowie had come to expect from royalties, shrinks, even the Bowie Bonds lose some of their shine. Moody's downgrades the debt citing weaker recorded music sales, but then something else makes the concept of the Bowie Bond much less viable for any other artist looking to raise money off of their intellectual property. The global financial crisis.


1.7% here, loss of 37 points or so. Apple shares are just getting hammered this morning.


We're down by between 3 and 4.5 percent generally across these markets.


Let's talk about the speed with which we are watching this market deteriorate.

AIMEE KEANE (17:32):

The 2008 financial crisis is triggered by the fallout in the mortgage and mortgage backed securities market. And as the meltdown spreads throughout the entire financial system, securitization of all kinds grinds to a halt.


Everything shuts down. There is no securitization going on, much less securitization’s for new asset classes. So that whole period…. nothing's happened. People are waiting.

AIMEE KEANE (17:54):

But there was something about this moment that Bowie had predicted a few years earlier… in a 2002 interview with the New York Times.


And his quote was that music would flow like water and electricity. Mm-hmm <affirmative> because most people listen to music where there in a, in a cab backseat of a, a taxi, whether they're on a plane, whether they're in a pub, whether they're in a a, a mall listening to music, they're a movie, they're watching a movie, they're watching tv, they hear music, but they're not paying for it. But they don't realize that someone's paying for it.

AIMEE KEANE (18:21):

Maybe music wouldn't become a utility like water or electricity, but the mass use of smartphones and then the growth of streaming platforms would change the way many of us listen to it.


And what was interesting was out of this financial worldwide collapse comes people listening to more music than ever because the thought that music only came from one source, which was buying a record, was not true.


Bowie said that music would be like water or you would get an electricity bill and, and I think he was sort of half right. When you talk about water, you mean a predictable utility. And there are ways in which Spotify and Apple Music, you know, you pay your music bill just like you pay your cable bill now.

On the other hand, he also gave people the impression that music might be less valuable and actually it's more valuable than ever. If you think about streaming, you know, people spend a lot of time thinking about all the ways in which streaming falls short. But if you had gone to me in 1998 and said, Hey, at the end of 2022 you're gonna be able to listen to any recording you want for like 10 bucks a month. I would've been like, what? I can't wait. Are you kidding? That sounds like a dream!

AIMEE KEANE (19:46):

A dream for fans and for the industry. Streaming has helped turn recorded music into a nearly 30 billion business.


We have reached the point where we're dividing an enormous amount of money and labels and publishers can continue to invest in new artists and new songwriters. And that is really wonderful. If you think about where we were even 10 years ago when the music business was on its knees, what a wonderful problem to have arguing over pools of money instead of wondering if there's ever gonna be any to argue over.

AIMEE KEANE (20:19):

And just as David Pullman discovered nearly 30 years ago, all of that music money has caught Wall Street's attention once again. Now, some of the biggest private equity firms are looking at music royalty payments as an asset class.


And that's why you're seeing these, these supersized deals that are happening around the world for music catalogs.


American history. Now Bob Dylan is selling his entire song catalog to Universal for a reported 9 figures. That makes it one of the biggest music publishing right deals to date.


Justin Bieber just sold his music catalog of an estimated measly $200 million. He made the deal with an……


Bruce Springsteen sold both his master recordings and the music publishing side of his collection for a deal that's worth 500 million. That's right…..

AIMEE KEANE (21:12):

Bob Dylan, Justin Bieber, Bruce Springsteen, and many more musicians have sold their back catalogs to music labels, private equity and other investment groups. Blackstone backed a company called Hypnosis to invest in music rights and catalogs, and Investment group KKR picked up a portfolio of royalties and is securitizing the future cash flow from this music. Meanwhile, other musicians are paying attention to their masters. Taylor Swift famously re-recorded her studio albums. De La Soul reportedly just won back the rights to their masters. Even Paperboy from the FX show Atlanta was talking about owning his masters in season three.

It's hard not to see a glimmer of David Bowie and even the Bowie Bonds in each of these stories.


At the time when Bowie Bonds came out, people first thought it was a joke, right? The idea of bonds on David Bowie, at first people were like, oh, is it like Disney dollars? Is it for fans?

I mean, David Bowie is profoundly important in all sorts of ways, but he was very savvy about the industry and this deal was really a big part of that. He became one of the artists who was really able to control his own destiny, both financially and artistically. He could choose who he worked with next. You know, he licensed the master recordings to EMI for 15 years. When those 15 years were up, he can license them again and he could license his publishing again.

AIMEE KEANE (22:43):

Bowie died in 2016, but the legacy of his artistry, and even of this bond deal, live on. His estate retained ownership of those master recordings. And last year it sold his entire publishing catalog to a subsidiary of Warner Music for about 250 million dollars.


It's a deal in 1998 that worked from the perspective of 1998. It worked from the perspective of 2008. It worked from the perspective of 2018. And I think by 2028, people are still gonna look back and say, oh my God, what a great deal. It was visionary….

AIMEE KEANE (23:23):

Visionary deal making by an unconventional businessman.


He's on the cover of the Financial Times, the cover, with a giant picture of David for having done a landmark financial transaction.

His work is on these walls and that's what is unique about David in terms of the way he sees things in the future that are coming and then he acts them out. So this $55 million that he's thinking about money that he gets at that time, fast forward to the deals paid off and he's done all the estate planning. So he is passed it on to his heirs, they benefit from it. To parlays it into, from $55 million the money up upfront, pays all that off, and then later exits at $250 million for the music publishing writers. He, he didn't get to enjoy that right, money at the end, but he certainly, he got to plan for it and do every step to create that value that was at the end.

AIMEE KEANE (24:20):

The last single Bowie released was a song called Lazarus. The music video features Bowie himself in what looks like a hospital bed with a bandage around his eyes. At one point his body levitates later he sort of dances in front of a half open wardrobe.

It's haunting. And in true Bowie fashion, it got some fans thinking about how it might have foreshadowed his own passing.


When I hear that song, that song is chilling. He's writing about his life experience.

AIMEE KEANE (24:51):

And Pullman brings it up when I ask about his first meeting with the artist….
 What was Bowie looking for when you met?


So in the song, he answers your question and the answer to the question is…… when I came to New York……


I lived like a king……


And by the nineties all the money was gone. Right?

AIMEE KEANE (25:22):

And then he met, and then he met David Pullman.


You got it!

AIMEE KEANE (25:28):

That's it for this episode and for the first season of The Closer. We have seriously enjoyed bringing you inside some of the most incredible deal stories over the past six episodes. And as I said at the beginning, we're well into working on our next season.

The best way to keep in touch with The Closer is to subscribe to our newsletter, written by the great Ben Walsh. Just go to The Closer . F M. That's where you'll find his regular musings on deals and deal makers in the news and where we'll post updates about bonus episodes and other fun stuff.

Thank you so much for listening. It's a real pleasure to have you here.


The Closer is a production of Project Brazen in partnership with PRX. Our show is produced by Isabelle Kerby-McGowan and Ben Walsh. Siddhartha Mahanta is our editor. Mariangel Gonzalez is our project manager, and Lucy Woods is our fact checker and head of research. Golda Arthur is our showrunner. And Bradley Hope and Tom Wright are executive producers at Project Brazen. Francesca Gilardi Quadrio Curzio, and Nour Abdel Latif are podcast strategists. Megan Dean is programming manager. And Ryan Ho is Design Lead. Thanks to Eric Gomez for audio engineering and sound design. Our composer is Alex García Amat.

I'm Aimee Keane. Thanks for listening.