The ironic thing is that while research has proven to be valuable, individual investors do not seem to want to pay for it. This may be because, under the traditional system, brokerage houses provided research in order to gain and keep clients. Investors just had to ask their brokers for a report and retained it at no charge. What seems to have gone unrealized is that the commissions pay for that research.
A good indicator of the value of research is the amount institutional investors are willing to pay for it. Institutional investors hire their own analysts to gain a competitive edge over other investors. They also pay (often handsomely) independent research firms for additional research. Institutions also pay for the sell-side research they receive (either with dollars or by giving the supplying brokerage firm trades to execute). All this amounts to big money, but the institutions realize that research is integral to making successful investment decisions.
If investors are reluctant to buy research how will the market correct the discrepancy caused by the lack of coverage? The solution may be found by looking at the issue a slightly different way.
(Wayman)
Wayman, R. (n.d.). Who Pays for Research? Big Investors Do! Retrieved May 20, 2010, from www.investopedia.com: www.investopedia.com/articles