Blog-based Research Model

James Enck of Daiwa Securities suggests that bloggers like Andy, Om and Martin are providing a disruptive alternative to sell-side research.

Investment banks: you have competition, whether you know/believe it or not. It behaves differently from you, uses different tools, and takes no prisoners. More importantly, its mindshare is growing, and you ought to be scared. What happens when one day your client base wakes up and feels confident enough to say they don't want your research?

Om Malik points out strengths and weaknesses:

As reporters, you are essentially doing the job of an analyst, foraging out exclusive information, or opining with smart option - without building financial models....What blogs have done is basically given many of us the ability to do this in real time...Regardless, the model, however is still evolving. Why? First, the tools are basically not-friendly to us writers and information foragers. I think connecting the dots, or should I say posts, is still difficult. We cannot produce a coherent and perhaps meta-linked research & analysis report using blogs for now.

Last week I presented at KM & Intranet World alongside Mike from Techdirt -- which not only delivers public analysis, but custom corporate intelligence via private blogs. They have hit upon the beginnings of a cost effective method of delivering post-by-post analysis that engages the research client in conversation. We see a similar model arising with consultants using Socialtext with shared client spaces.

Overall, the model decreases transaction costs for publishing and client interaction. The client service shifts from the end analysis product (.pdf) to the open process of research. Some of this process can be shared for free on public blogs, some of it is a private value added service.