Japanese musicians offered securitization opportunity

Japan''s budding musicians are being offered the chance to release CDs by securitizing their copyrights.

The Japanese music industry could be the latest sector to embrace the joys of securitization, following the establishment of a finance company that wants to encourage recording artists to securitize their copyrights, and then use the proceeds to create CDs.

Music Securities Ltd believes that budding musicians will exploit this possibility as it removes the need for them to find a record company for distribution.

Instead, bands and singers will be invited to send demo tapes to the company, which will then work with the artist on a structured funding programme, using proceeds from the sale of copyright-backed bonds.

If an artist's bond sales prove successful, they can then work on putting their music on CD and selling it through Music Securities' web site, musicsecurities.com, or through selected retail artists.

So far, the company has managed to secure funds to issue a limited edition maxi-single - to feature one track from a small number of acts - from the issue of 86 bonds, valued at Ñ10,000 ($82.2) each.

Yet although this is a new way for musical acts to fund themselves, it is by no means the first time recording artists have used securitization methods. In 1997, David Bowie famously sold $55 million of ‘Bowiebonds’, backed by future revenues from 25 LPs in his back-catalogue, through a 10-year deal arranged by the David Pullman Group.

This type of securitization became, somewhat pretentiously, known as intellectual property rights ABS, and other leading figures in the entertainment industry followed suit.

The Pullman Group has also brought to market transactions for the Isley Brothers, Motown songwriters Holland, Dozier and Holland, as well as one for the original “Godfather of Soul” James Brown.

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