Equity Analysts Have Only One Way to Get Paid

It was in London, in 1995, when Jim Barksdale, chief executive officer of Netscape, famously remarked that there are only two ways to make money: bundling and unbundling. The internet pioneer’s point might have been focused on software but it resonates across numerous other industries — with the apparent exception of equity research.

Investors at Barksdale’s roadshow at the Savoy Hotel would have returned to office desks overflowing with investment research, dispatched daily from brokerage firms. Such research never came with an explicit price tag – it was simply bundled into the cost of trading. In the US, that’s still broadly the way the market works.