For many furniture designers struggling to survive on two to five per cent royalties cheques, the recently departed David Bowie delivers a masterclass in ‘get rich or die at Salone’.
May 11th, 2018
Every industry has its in-joke. Ours? A designer’s bank balance. But as we reflect on our annual multibillion-dollar blowout – Salone del Mobile di Milano – the in-joke is beginning to enter the water supply.
This sheer inequity will no longer prompt its usual exasperated eye-rolling but, rather, substantial column inches under scandalised headlines. And I, for one, cannot help but agree with Ilse Crawford’s notorious quip for The Guardian: “Designers too often end up being voluntary workers for millionaires.”
That we’ve become an industry of over-enthusiastic debtors is no longer a point of contention. After all, many of the objects at Salone will be prototypes exhibited by designers in the hopes of snagging a royalty. Whether emerging or emeritus, most continue to chase manufacturers to license production of their lamp/table/et cetera on the standard two to five per cent factory cost return.
Yet, many will never see the fruits of manufacture through this brokering of intellectual property. Little wonder, then, that with each of its yearly iterations, Salone elicits fewer accolades and increasingly more qualms. Is this our industry’s most glittering achievement? Or, arguably more apt, is Salone’s half-million square metres of ‘stuff’ merely a wide paupers’ grave of stillborn furniture – a laundering front hiding the lack of earning being passed down the industrial relations pipeline from underpaid designers to their unpaid interns?
“I think there are other models to be explored,” Ross Gardam, one of Australia’s most active designers, tells me. “For instance, even crowd-sourcing has changed the way products can be funded or markets tested. Other models may offer better systems of transparency in the future.” He’s right, of course: there’s no cigar in an unsustainable remittance system, but it needn’t be our only system.
In 1996 David Bowie, of all people, realised this too. The tail end of the old millennium was not kind to the music industry. If video hadn’t killed the radio star, then vacuous IP protections, convoluted subsidies and slap-on-the-wrist licensing infringements certainly did. Chart cycles had shortened and consistently high-indexing bands and artists were beginning to sink into disregard under a flood of newer, nimbler choices. (Sound familiar?)
A handful of commercially unsuccessful (albeit technically dazzling) 1990s albums had left our once young Starman in a state of frustration and penury that even stints in a Swiss tax haven and a cocaine rehabilitation clinic couldn’t alleviate. In January 1997, news broke that he’d shorted the system and therewith invented the century’s final financial phenomenon: David Bowie became a tradable Wall Street commodity.
Annoyed by paltry royalties and masterpieces lost to the studio archives, Bowie sought the backing of The Pullman Group, Fahnstock United States Investment Bank and Prudential Insurance Company Of America. His intention? To consolidate over 287 of his standing copyrights and recordings into asset-backed securities (including Life On Mars?, Space Oddity, and Ashes To Ashes et al.).
The desire was simple – and supremely worthy of note in our case: raise a lump sum of cash rather than rely on capricious income flow from royalties. Outwitting a remunerations structure to be no longer variable but, finally, secured, he released The Bowie Bonds onto the trading floor. All were purchased before the NYSE bell rang out that afternoon.
The Bowie Bonds securitised the practice of innovation and creation, immediately rewarded its practitioner with USD$55 million, and dominated the market returns for broadcast fees, live performances, retail record sales, commercial usage, media licensing, merchandise… the list goes on. Right on the cusp of 30-year reissues and the compact disc revolution, investor returns mushroomed.
Finally securitised and no longer the subject of market whim, every fraction of every cent Bowie’s work generated was funnelled into an SPV (or Special Purpose Vehicle) that Moody’s Investor Services stamped with an impressive triple-A rating. In so doing, interest skyrocketed to 7.9 per cent, outstripping the American economy’s all-time record 6.37 per cent for USA Treasury Bonds. For the first time in human history, IP and innovation became the global economy’s strongest asset backing. The man who sold the world finally got to cash in.
“Say a product is projected to have a low turnover,” Gardam explains to me. “If so, even a five per cent royalty return might not even keep that designer in coffee money. On the flip side, if the designer is only supplying a sketch on a high volume product, then five per cent might not be equitable.”
Naturally, decision-makers in our industry will always adore such licensing agreements: through piecemeal recompense, the licensee is able to circumvent the potential financial risks involved in lump sum payments for products that may (or, critically, may not) enjoy commercial success.
And yet, Gardam is still right. A royalty is a financial reality for our industry. But non-secured and constantly variable, it needn’t be the only one, and the manufacturer needn’t be the only beneficiary.
“What I do know,” he continues, “is, as an industry, we need more camaraderie between designers on the subject. We need to be aware that our small actions have larger flow-on effects.” After all, the stars are looking very different today.
What else can design learn from? Take a look back through the archives.
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