Thread by @bauhiniacapital

Why are so many people selling subscriptions?

Why are so many people working in finance?

The difference? One group of people works for and gets paid by a single entity. The other group gets paid by lots of people.

Interestingly, a fund - regular or HF - often has many customers who pay a "subscription fee" by investing in the newsletter writer's ideas.

Of course, those particular newsletter writers front-run their own newsletters by investing realtime but only releasing newsletters

once a month, at best.

Those newsletter businesses have a higher cost base so they charge more, and they also often charge performance fees - sometimes for alpha, often for beta.

But there are LOTS of subscription-based financial services out there.

My data sub costs a certain amount. My newspaper costs me a certain amount. My ETF manager charges me 4bp a year.

And lots of RIAs charge asset-based account (subscription) fees rather than transaction fees.

The difference between a subscription advisory business and a fund management business is that the subscription business shows everything. The fund management business newsletters I see rarely talk ex-post about the positions which were tried, then failed, then booted

from the portfolio.

Perhaps people look down on those who sell their service by subscription because they don't understand it's all the same business, just packaged differently.

It used to be that a bulge bracket broker, or even a second or third-tier broker had a large research team.

Those teams are a lot smaller than they were 20yrs ago. To some extent, the people needing input on single stocks has declined (they buy ETFs).

To some extent that effort has become more concentrated. AAPL has more owners now than it did 25yrs ago, but most now "do their own research" by reading the newspaper, getting some data, reading the 10k, and maybe making a model with straight line growth.

There are a lot more investors in AMC now too, though having gone down that rabbithole recently, I am not sure what most of them are smoking, but they too will tell you to do your own research.

Many brokers now provide research by subscription (MiFID2 anyone?) but beyond that, there are analysts who have broken out of the BBBs to start their own boutique, and they charge a subscription for their research too, sometimes paid by cheque, but often by CSA.

I am constantly surprised by the professionals in the buyside (i.e. investing - whether HFs, large active LOs, or even passive managers and RIAs) who do not "subscribe" to independent external research because they look down on it.

I can suggest there is a community of people out there "selling subscriptions" (i.e. providing fee-based services to multiple payers, not tied to AUM or performance) whose job basically boils down to taking advantage of the people out there who 'don't need help'.

Heh-heh.

And... I have had four convos in the last four hours suggesting...

it me.