In Bowie We Trust... again?

August 23, 2005 8:41 AM

An unexpected side effect of iTunes.Remember Bowie Bonds? Introduced in 1997, bonds tied to future profits of music artists (besides Bowie, James Brown and the Isley Brothers offered them) tanked with the advent of online filesharing. Thanks to iTunes, some on Wall Street are betting that the Bowie Bond is a concept with a future.
posted by me3dia (16 comments total)

Yeah, that was a crappy idea then and it's not going to work now either.
posted by baphomet at 8:46 AM on August 23, 2005

What was he trying to raise money for?
posted by jikel_morten at 8:58 AM on August 23, 2005

A Gold plated swimming pool with encrusted jewels, to replace his crappy, old, non-jewel-encrusted, gold swimming pool?
posted by Balisong at 9:00 AM on August 23, 2005

Botox
posted by angry modem at 9:44 AM on August 23, 2005

me3dia: "... tanked with the advent of online filesharing."

I'm sorry, but what's your source for this nugget of wisdom?
posted by signal at 9:45 AM on August 23, 2005

I'm sorry, but what's your source for this nugget of wisdom?

From the article: "Then the recording industry skidded into an extended downturn, and the Bowie bond structure lost much of its glam."

Extrapolating from that, basically. The recording industry blames its downturn on illegal filesharing, do they not?
posted by me3dia at 9:54 AM on August 23, 2005

The recording industry can blame it on little green men from mars, I'm asking why you assume that Bowie bonds lost their value due to online filesharing.
posted by signal at 9:56 AM on August 23, 2005

I think you're assuming a little too much. I was simply summarizing the story, and apparently paraphrasing a little too broadly for your tastes. Back down, bulldog.
posted by me3dia at 10:15 AM on August 23, 2005

I'm not assuming anything. You say: bonds tied to future profits of music artists... tanked with the advent of online filesharing.
The article nowhere links the value of the bonds with filesharing. Paraphrasing != slipping in your own preconspetions.
And cute little animal-related ad hominems don't exactly strengthen your position.
posted by signal at 10:23 AM on August 23, 2005

I was under the impression that the 'downturn' in the music distribution industry was actually just a bit of creative accounting. The idea was, suppose Warner records ships 1000 backstreet boys albums to stores, and 100 are sold. The next year, Warner sends 2000 albums to stores and 100 sell. "Oh noes! Sales are down 50%!"

Am I smoking crack here?
posted by mullingitover at 10:32 AM on August 23, 2005

We can't really talk about a signal to noise ratio in this thread because signal = noise.
posted by sciurus at 11:27 AM on August 23, 2005

Yeah, I think the downturn was a bit of creative accounting; but the general worry in the industry HAS beeen that online filesharing will disrupt existing business models.

And this is of course true.

While it's not bad for the music industry in the long run, it is still bad for securities based on expected earnings - where the predictability of income is paramount.

(Right?)
posted by metaculpa at 11:43 AM on August 23, 2005

Yes, metaculpa, the value of a bond is simply the present value of its cash flows. The cash flows are generated by underlying assets (whether it's an actual business or a portfolio of IP). So the value of bond today will become volatile to the extent that the underlying future cash flows are in doubt. If the market is convinced that online filesharing will eat away at royalties then the bond price will fall. Whether or not this fear is reasonable is irrelevant.
posted by mullacc at 12:08 PM on August 23, 2005

Exactly right.
posted by me3dia at 12:21 PM on August 23, 2005

Signal,

And cute little animal-related ad hominems don't exactly strengthen your position.

Whatever, you one-eyed panda!
posted by ryanissuper at 12:34 PM on August 23, 2005

The International Federation of the Phonographic Industry estimates about 870 million music files are offered illegally online, costing the music industry more than $2 billion a year in lost revenue.

I estimate that's bullshit.
posted by mrgrimm at 2:39 PM on August 23, 2005