While asset-securitization has been around since the early 1980’s, prior to the now widely known structuring of musician David Bowie’s music catalogue into saleable bonds in 1997, music royalties and copyrights were never before used in a securitization. At the time, Bowie’s catalogue had a proven royalty track record; however, the valuation of the actual bonds remained untested in the illegal music-downloading era of today. This comment explores the benefits of intellectual property-based securitizations and their common valuation approaches. In addition, it is argued that appropriate credit enhancements should be employed to protect future Bowie bond style deals against the potential loss of revenue to bondholders from the effects of illegal music downloading and peer-topeer file sharing. Properly approached, copyright royalty-backed securitization is still a very feasible form of alternative financing.
John M. Gabala, Jr., “Intellectual Alchemy”: Securitization of Intellectual Property as an Innovative Form of Alternative Financing, 3 J. Marshall Rev. Intell. Prop. L. 307 (2004)