by Harry Browne
It was no surprise when, two years later, Bono’s (RED) featured an Apple iPod as one of the early products carrying the conscientious new brand.
WEALTH: DEFENDING PROPERTY
Bono and U2 were fully entitled to enter into commercial partnerships of their own choosing, and it was merely part of their ingenious capacity to read and manipulate the media environment that they (mostly) managed to enhance their credibility rather than attract disdain for doing so as profitably as they did.
U2 is in fact one of the few rock bands whose trajectory is taught affectionately in business schools. Manager Paul McGuinness has always been the focal point of the depiction of the band as hard-nosed commercial players. The portrait of his and their general acumen may be somewhat exaggerated – an Irish magazine was noting two decades ago that while U2 constituted ‘a licence to print money, their boss [sic] has found it surprisingly difficult to make a penny anywhere else’.14 (See pp. 119–23 for consideration of Bono’s own more recent investment profile.) But McGuinness and the band members, as equal partners, took care of their own business very well indeed; from the early days the model whereby they partnered with a big player rather than taking risks by striking out on their own was firmly established. Their 1984 contract with Island Records gave them not only some of the biggest upfront payments (£2 million per album) in the business, but also a 10 per cent stake in the company and control of their own publishing. When Polygram bought Island in 1989, U2’s shares netted them more than £20 million, and further tens of millions were guaranteed throughout the 1990s.15
The partnership with Apple, the industry’s last best hope against illegal file-sharers, was in keeping with their earlier pattern of behaviour in another way, too. U2 had long cultivated a reputation for being tough operators when it came to their exclusive right to profit from their intellectual property and to decide who else would. The British Performing Rights Society (PRS) ‘found themselves on the wrong end of a lawsuit over not letting U2 collect their own live-performance royalties’, according to an Irish magazine report.16 (The PRS normally takes it upon itself to collect money on behalf of songwriters from venues where any music covered by copyright is played; U2 reckoned they were getting a raw deal, and fought the PRS for improved terms.) American DJ Carter Alan, an early friend and champion of the band, found his efforts to publish a book of reminiscences of his time with them vigorously opposed, especially by McGuinness and Larry Mullen Jr – he was cast out of their favour for some time as a result of pressing ahead with his work.17
And, perhaps most notoriously, in 1991 an obscure American art-music band called Negativland came under legal attack for producing a record that appeared to be called ‘U2’: it featured a U-2 spy plane on its sleeve, and aurally it consisted of barely recognisable bits of ‘I Still Haven’t Found What I’m Looking For’, including some snatches on kazoo, plus various speech recordings, including profane out-takes (from a tape that had circulated for years among radio insiders) of famed US presenter Casey Kasem losing his cool. The U2 connection came in a snippet in which the velvet-voiced Kasem was first introducing the young band to his American Top Forty audience: ‘That’s the letter U and the numeral 2 …’ Kasem proceeded to read from a script that required him to name all the band members, including those annoying nicknames, and he suddenly blew up at his production team: ‘This is bullshit! Nobody cares – these guys are from England and who gives a shit? It’s a lot of wasted names that don’t mean diddly-shit!’18
The audience for Negativland’s audio collage of Kasem, U2 and who-knows-what-else couldn’t have been large, but it quickly came to include the lawyers at Island and Warner-Chappell Music, the music publisher that managed U2’s copyrights for the band. Ten days after the record was released, they issued a 180-page lawsuit.19 They initially got a temporary restraining order from a federal judge against the record, and, ‘preferring retreat to total annihilation’, Negativland and its tiny label SST complied with all their demands, which were couched in scary legalese about turning over every single copy of the record and all the material used to produce it to Island for immediate destruction, as well as assigning their copyright to Island.20
In an extraordinary postscript, a trendy California culture magazine, Mondo, assigned Negativland to interview The Edge in 1992 when he wanted to talk about the technology U2 were using on their Zoo TV tour. Not realising to whom he was talking, Edge happily discussed all the video-sampling U2’s techies were doing, using random satellite-feed material, some of it with copyrights that clearly belonged to someone else, that was then mashed-up in different ways for their live audience – he explained that it was all perfectly legal in copyright terms because the collage effect made it essentially a new work. He was taken aback when Negativland took that assertion as a cue to introduce themselves, but nonetheless entered into a long and fascinating conversation, admitting that he and other members of U2 had gone along with the lawsuit because they were persuaded that Negativland had tried to present the record as though it were by U2 – and by the time they had a clearer picture, he said, it was too late to intervene. He added: ‘I know you’ve really taken a kicking and I’m really sorry about how it’s all come out. Island Records hasn’t been affected, but we have gotten so much shit in the media about all this, and it’s really annoying.’21 Negativland have said on their website that they obtained information in 2003 that the case didn’t in fact originate with Island but with Paul McGuinness, who got the Negativland record from a friend in the US and sent it on to Island’s legal department, though Negativland’s evidence for some elements of this claim appears to be second-hand at best.22
McGuinness has, in any case, been probably the music industry’s most consistent copyright hawk in recent years, denouncing peer-to-peer file-sharing and music piracy at every opportunity. Bono has occasionally joined in. Even as No Line on the Horizon hit number one on the US album charts, Bono spoke to USA Today about how file-sharing was spoiling the sacredness of music – which is apparently measured in units sold – and he was offended:
Piracy grates on Bono, yet he’s reluctant to lead a rebellion ‘because people think people like me are overpaid and overnourished, and they’re not wrong’, the U2 singer says. ‘What they’re missing is, how does a songwriter get paid? There’s no space for a Cole Porter in the modern age.
‘It’s not the place for rich rock stars to ask for more money, but somebody should fight for fellow artists, because this is madness. Music has become tap water, a utility, where for me it’s a sacred thing, so I’m a little offended.’
The Internet has emasculated rather than liberated artists, he says, noting that the record industry has lost billions in value.
‘From punk rock to hip-hop, from heavy metal to country, musicians walk along with a smile and jump like lemmings into the abyss’, he says. ‘The music business has been thrown to the dogs legislatively.’
That indifference will vanish once ‘file-sharing of TV shows and movies becomes as easy as songs’, Bono says. ‘Somebody is going to call the cops.’23
Bono wasn’t wrong about how the crackdown against piracy was to escalate as the sharing of video – already easy by 2009 – became more widespread. But he might have acknowledged how shrilly his own industry, and his manager in particular, had already been calling the cops for many years. His suggestion that the solution to the file-sharing problem would have to come ‘legislatively’ is also an interesting guide to his priorities.
Bono’s concern with what states and law-enforcement agencies could do to protect the record industry was echoed in a January 2010 editorial he wrote for the New York Times. This was his particularly dreadful, almost unreadable preview article about the next decade, replete with plugs for his pals in Apple and elsewhere in America’s corporate and state elite, and including the famous line from his perch high above the greatest economic and financial crisis in more than seventy years: ‘Trust in capitalism – we’ll find a way’, by which he ap
pears to identify himself (‘we’) with capitalism (which was at least honest). In the 2010s, Bono said, he wanted states to get serious about file-sharing: ‘[W]e know from America’s noble effort to stop child pornography, not to mention China’s ignoble effort to suppress online dissent, that it’s perfectly possible to track content.’24 Leaving aside his assessment of either the success or nobility of these Chinese and American efforts, Bono really appeared to believe that a massive government-led effort to identify, and presumably prosecute, individuals who share music was justified by what he called ‘the lost receipts of the music industry’25 (typically, of course, he skirts the US authorities’ tracking of ‘online dissent’ in the name of fighting terrorism).
Bono even jokes in the column that he and his rich pals may not be the best people to lead the cavalry charge on the piracy issue. ‘Note to self: Don’t get over-rewarded rock stars on this bully pulpit [sic], or famous actors; find the next Cole Porter, if he/she hasn’t already left to write jingles.’26 He is quite fond of deploying Cole Porter metaphorically, but how likely is it really that the ‘next’ anyone would be happy to front for a campaign to protect an industry that has ensured that its rewards are increasingly restricted to a tiny minority of established artists, and executives, enjoying life up at its pinnacle?
Perhaps Bono’s imagined invitation to such an imagined credible musical figure would be more persuasive if he shared, say, some financial advice with the next Cole Porter. U2’s own finances, as discussed in Chapter 1, are notoriously difficult to read with the naked eye, but it was touching to see in an Irish magazine a few years ago that one U2 company, Not Us Ltd, had made ‘pension contributions’ on behalf of another, the then otherwise quiet Eventcorp Ltd, of more than €3.8 million. Another entity, the Princus Investment Trust, was recorded as having a pension surplus of a similar amount.27
ELEVATION: BUILDING A PORTFOLIO
Perhaps Bono reckoned he needed a better pension plan than that. For whatever reason, since 2004 Bono has not been content merely to leave his cash-pile in the care of investment managers. He has been for most of the last decade a co-founding managing director of a New York-based private-equity firm, Elevation Partners, a company with no visible ethical strings attached.
Although it is named after a U2 song, Bono is not especially noisy about Elevation. It didn’t, for example, figure in the otherwise quite comprehensive introduction of himself and his organisations in Vanity Fair. But nor is he secretive about his involvement – there’s a nice potted bio of him, complete with photo and an emphasis on U2’s intellectual-property record, at elevation.com. And through his involvement Elevation has garnered enormous amounts of publicity, most of it undesirable, either because of the ostensibly unBono-like nature of its investments, or because of their poor performance. In 2010, for example, a Wall Street website gained a lot of publicity when it named Bono (personally, not his company, which wouldn’t have got nearly as much publicity) as ‘Worst Investor in America’ because of flops including Palm and Forbes.28 The tune changed somewhat in 2012, when the Facebook IPO appeared initially to earn Bono, and Elevation, a billion-dollar fortune in shares; but the tanking of Facebook stock in the subsequent weeks and months (when old shareholders like Bono were prohibited by agreement from unloading their fast-devaluing shares) again cast Bono in a bad light, both as an investor whose shares were rapidly losing worth, and as a party to an overpriced share flotation that seemed to offer exceptionally poor value to new entrants.
But hey, it’s Bono’s money, earned because millions of people love his music, and he is entitled to use it as he pleases. (Indeed, many people would be inclined to cut him some slack on the assumption that much of his personal fortune ends up going to ‘good causes’, though the evidence for that proposition is scant: we know plenty about the causes to which he lends his presence, but next to no information is publicly available about where he gives his money.) In any case, it seems churlish to mock any investor’s ‘failure’ over a turbulent period of history when, for example, bank shares became the most dangerous investment imaginable: Elevation’s assets, as of mid 2012, appeared to be ahead of where they had started roughly seven years earlier – that is, in the region of $2 billion, largely thanks to Facebook, and that scarcely sounds like failure.
Failure or success is not our reason for looking at Elevation. It’s simply that it’s part of Bono’s public record. Over the years he has invested a great deal of his valuable time in many enterprises and causes, from U2 to Greenpeace, from Jubilee 2000 to (RED), but nothing else has ever appeared to have so much of his valuable money. ‘Appeared’ because, again, the fund’s internal arrangements are opaque: Bono has, for most of its history, been one of six partners – at the last count it was five main men – and most commentators assume his stake is one-fifth of its $2 billion capital, but he himself has said: ‘In Elevation, we invest other people’s money, endowments, pension funds.’29
Like U2, another collective entity, all of Elevation’s activities cannot be ascribed to Bono’s desires, but it does help to complete the picture. Given his profile and the company’s Bono-derived name, he can scarcely complain at any association between him and its investments.
Before Facebook, the one that raised most eyebrows was Elevation’s 2006 investment in Forbes Media Inc., the company behind the magazine of the same name. That magazine’s long-time advertising slogan was ‘Capitalist Tool’, and it remains an apt description of the contents of the publication and its website, which project themselves as useful instruments for the information and opinion-forming needs of the rich. Forbes also looks after their need for flattery, with its lists and profiles of the super-wealthy. Known historically as a family affair – the editor-in-chief was Steve Forbes, a right-wing flat-tax enthusiast and Fox News pundit who had chased the Republican presidential nomination in the 1990s – Forbes Media was in some financial difficulty by 2006, and happy for Elevation to buy what was reported to be a forty-something per cent stake for something over $250 million, an investment that was said to focus on the online side.30 According to his Elevation partner Roger McNamee, Bono was drawn to Forbes precisely because it had a ‘point of view’; Bono, he said, ‘drove this part of the discussion and likes the fact that there has been a consistent philosophy throughout its history’.31
To praise Forbes publicly for being consistently reactionary seemed, at least, somewhat superfluous. McNamee and Bono could have just said they thought it would eventually make money. By 2006 it was abundantly clear, especially in the US, that print media were in a parlous state, and beginning to become clear that some of the best prospects for profitable online survival were available to any company that could take a trusted brand on to the web and bring along an audience that was willing, and could afford, to pay for its contents. Business people with significant assets and expense accounts looked like the best candidates to constitute such an audience. Forbes might not be the most promising business brand – that lofty title was shared by the Wall Street Journal and Financial Times – but it was not far behind, and it was affordable. There was a straightforward business case for Elevation, which had media among its investment priorities, getting into Forbes (though the company continued to perform poorly), but no sensible reason to endorse its politics, which did not perceptibly change after Bono took an interest. Of course some sort of flattery is de rigueur in these situations, especially when the investment might be regarded as somewhat publicly embarrassing for the company on its receiving end; but surely the matter of the Forbes ‘philosophy’ could have been left quietly unattended.
Unless of course Bono really did like it, its consistency and its politics – a possibility that at this stage it would be extremely foolish to rule out. The investment in Forbes came, after all, within weeks of U2’s tax move from Ireland to the Netherlands becoming public knowledge. Not long after Elevation got in, Forbes reportedly drastically curtailed its employee pension plan – right before the holiday season, as an
anonymous employee noted in a message to the website Gawker: ‘[H]ey, Bono! Merry Christmas, you faux liberal asshole. Go buy some presents with our pension money.’32 Three years later, Forbes began a programme of lay-offs of the sort that were becoming very familiar for journalists, including the closure of its London and Los Angeles bureaux.33 The ‘philosophy’ looks all too consistent.
Elevation and Bono also chose to ignore protests from peace and global-solidarity campaigners about another of its investments – the $300 million it had sunk into a new partnership of California video-game makers, Pandemic and Bioware Studios. Again, electronic gaming was initially central to Elevation’s self-image, and it didn’t seem to matter when newspapers reported in 2006 on the development by Pandemic of Mercenaries 2: World in Flames, in which part of the complicated and very violent game-play action involved players becoming mercenaries in the pay of an oil company attempting to overthrow a Venezuelan ‘tyrant’. Any resemblance to a coup attempt against Hugo Chavez’s government was more than coincidental.34