Finger in the dike....

In this absurd piece on Merrill Lynch, we learn that the greatest minds on Wall Street plan to stop the free flow of information over the internet in a brilliant strategy aimed at justifying the hopelessly outdated economic model which continues to keep the absurd salaries of analysts paid by the dim witted sell side.

It is blindingly true that the value of investment research dissipates as quickly as the information in the report is disseminated. Therefore, the logical conclusion would be to keep the dissemination of that information as small as possible. In any logical model, the consumer of the research (the buy side) would pay for the creation of that research, and not allow it to be distributed. In the upside down world of Wall Street, though, the sell side foots the bill for the creation of the product, and then attempts to distribute it only to those who will pay for the information with commission dollars, all the while realizing that as it is distributed, it becomes less and less valuable.

So, Merrill will therefore take this approach:

Candace Browning, head of global securities research and economics at the Wall Street firm, said in a memo to clients the measures would include restrictions and delays on media access to select content and limiting access to research on Merrill's proprietary site and external-vendor platforms.

Ms. Browning said "much like the music and film industries before us, Merrill Lynch research is in the throes of being Napsterized," as it was too broadly available.

...and, like the music and film industries, Merrill is floundering around attempting to find a way to prop up the existing model, rather than innovating to deal with the inescapable reality that information will continue to flow freer and freer.

The buy side will not pay for the salaries of research analysts until the sell side stops doing so. It's heading inexorably in that direction, and Ms. Browning should figure that out.