A New Fly Swatter


New York – TheMarkets.com, the research distribution platform owned by ten of the largest providers of proprietary research, has released a new research digest product, TheMarkets In Brief.  The new product is another facet of the bulge bracket response to the ‘napsterization’ of research.  While limited in its initial scope, the product is intended to send a signal to firms which provide unauthorized distribution of street research.

In its current guise, TheMarkets In Brief consists of two emails sent before market open and close listing the upgrades, downgrades, initiations and drops.  The emails include links to the research reports, for clients that are entitled to view the research.  In addition to the links, each email lists the stock, the analyst, the analyst’s firm, the sector, the ratings action, and the headline of the report.

The breakthrough for TheMarkets.com was getting all the brokers in the consortium to agree that non-clients can view this summary level of information.  A typical subscriber to TheMarkets.com might be entitled to research from 5 or 6 of the firms included in the consortium, but not all 10.  Product development took about 7 months, including the conceptual approval from the members of the consortium.

The more interesting question is what is next.  According to David Kim, VP of Product Management at TheMarkets.com, the service is a “first shot over the bow” of unauthorized distributors such as theflyonthewall.  The Fly in particular has attracted the ire of TheMarkets.com and the various brokers in the consortium.  In June 2006, Merrill Lynch, Morgan Stanley and Lehman sued theflyonthewall.com for copyright infringement, seeking $150,000 in damages for each report infringed.  In March of last year Merrill reduced the redistribution of its research, concurrent with a letter from Candace Browning coining the enduring phrase “napsterization of research”.  The problem isn’t limited to sell side research.  Independent small cap research firm Sidoti & Company stopped distributing its research through Bloomberg in an attempt to reduce unauthorized distribution.

The current offering from TheMarkets.com will not challenge the products offered by digest services such as StreetAccount, Briefing.com or the infamous Fly.  However, the threat is that TheMarkets will develop more competitive products.  This is a logical response, and one that the research digests have to take seriously.  It does, however, raise the issue of pricing.  Addressing napsterization requires more flexible pricing regimes than the bulge bracket research firms have been willing to embrace so far.  The most effective product would require an e-commerce solution incorporating unbundled pricing of research services, a step that bulge firms have avoided to date.  So perhaps the Fly will live on…for now.


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  1. Any readers considering spending client soft dollars to purchase such research might want to do a key word search on the term “efficient market hypothsis”

  2. Maybe these large research departments should look for funding from the treasury to support their existence..The fact is the internet has democratized information and it travels in milliseconds rather than minutes… Research is hanging on to whatever vestiges they can before they are extinct. They should know better than anyone that technology wins overtime, all you have to do is to look at commission structures…

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