BOND ... JAMES BROWN BOND

A new financial deal revs up the moneymakin' "Sex Machine"
and paves the way for hip hip's future earnings

By Tomika Anderson

Papa's got a brand-new bag.  And it's stuffed with more dollars than Donald Trump's tight-whities.

This June, James Brown, the Godfather of Soul, closed a deal for $50 million with New York-based investment bank The Pullman Group.  Through a process called securitization, Brown relinquishes the rights to his future song-generated royalties in exchange for the money up front, which comes from investors snapping up bonds that will pay dividends for years to come.  (After the bonds mature, the rights go back to the artist.)  But the average funk fan shouldn't expect to buy JB Bonds; they will be sold in minimum increments of $500,000, and one currently unannounced company is expected to buy the whole lot.  So far, similar deals of so-called Bowie Bonds (named after rocker David Bowie, who signed the first music securitization deal for $55 million in 1997) have benefited time-tested song-writers such as Ashford & Simpson ("Ain't No Mountain High Enough"), Holland-Dozier-Holland ("Ain't Too Proud To Beg"), and resilient rockers like Rod Stewart and Iron Maiden.  Bowie Bonds, which are basically investments in entertainment assets with strong earning histories, allow artists to get paid quickly for song-based royalties they would otherwise wait for years to receive.

"Hip hop artists sample the heck out of James Brown," says David Pullman, the deal-clinching creator of Bowie Bonds and head of The Pullman Group.  "It seems only fitting that he gets paid now for his future royalties."

But does hip hop itself have a future in securitization?  It all depends on market longetivity.  Lately, it's been common for hip hop to represent close to one third of the albums in the Billboard 200, but the only rap album consistently lodged in the Billboard Top Pop Catalog Album Top 50 is the Beastie Boys' 1986 album, Licensed to Ill (Def Jam).  "[Hip hop] might now have the [long-term] mass appeal of pop or rock music," says Jim Cochran, senior associate with Dewey Ballentine, LLP, a New York-based law firm specializing in securitization, "but it definitely has potential."

David Pullman, whose bond packages have included revenue rights to Tupac's "Hit 'Em Up" and Biggie's "Gettin' Money (Remix)," says that "hip hop deals might become the classic securitization deals."

If the rap fans of today are the major investors of tomorrow, the answer to "Jigga, What?" just might be "Money, Cash, Bonds."

VIBE, September 1999, p. 112