Saving Sell-Side Research?

Lately we've been talking to customers and content partners about the dramatic changes occurring in the investment research arena, especially the embargoed research available to professional service firms and the corporate finance/M&A practices of investment banks.  There are changes to pricing models and distribution, coverage and content, and a rapidly growing independent research industry.  The changes that affect the embargoed market are really starting in the "real-time" market, where sell-side firms create and distribute their research to investment management ("buy-side") firms.  Roger Ehrenberg over at Information Arbitrage has an excellent post on this which highlights a Booz Allen Hamilton paper titled Saving Sell-Side Research. The Booz Allen paper opens with "The news on sell-side equity research could hardly be any worse...Industry experts forecast that sell-side research revenues of approximately $5 billion will fall by up to 50 percent in the next few years." Alacra's experience is that embargoed investment research usage is heavily skewed towards the brand-name (bulge-bracket) providers and, to date, there is little usage of independent providers.  As the sell-side makes changes to their business model to adjust to falling revenues from their core buy-side customers, consumers of embargoed research will likely need to branch out and give the smaller shops and independent providers more of a chance.