Goldman Sachs Group Inc has given up trying to sell research from independent analysts to its institutional clients, after spending millions of dollars on distribution only to find that big money managers had little interest.

The bank has laid off or reassigned the dozen or so employees at its Hudson Street Services unit, which offered data and independent research to investors. Goldman also sold its minority stakes in most firms that were producing the research, generating an overall profit in the process.

Hudson Street’s failure is the latest sign of how difficult it is for smaller research houses to thrive in a market where everyone from the big Wall Street banks to major mutual fund firms are seeking to cut costs.

It is also a sign that major investors may no longer be prepared to pay for a diversity of opinion about the markets.

It wasn’t always that way. Independent research was all the rage on Wall Street after a $1.4 billion settlement in 2003 between Wall Street banks and regulators led by then-New York Attorney General Eliot Spitzer concerning allegedly tainted research.

“It was like a big gold rush when everybody wanted to be an independent research provider,” said Sanford Bragg, chief executive of Integrity Research, which tracks the independent research industry. “But all the hoopla around independent research in 2003-2004 has died down.”

The settlement followed accusations by Mr Spitzer and other regulators that securities analysts at some major banks were glorified shills for companies’ shares, instead of providing the objective advice they claimed to offer. Analysts often got bigger bonuses if their positive ratings, or help on sales calls, allowed a bank to win investment banking business.

As part of the agreement, a dozen banks had to spend $460 million to furnish clients with independent research for a five-year period that ended in 2009 for most banks.

As that requirement fell away, independent firms had less revenue to rely on. Spending on such research will be down 24 per cent this year compared with 2008, according to Integrity Research.

Hudson Street was not created to comply with the settlement’s independent-research requirement, but because of industry trends that were sparked by the settlement.

In the end, customers did not want to buy what Goldman was selling. Research firms said they gained just a handful of clients from the platform. In a statement Goldman said: “Hudson Street no longer exists for the simple reason that weak demand from our clients did not warrant continuing the effort”.

Mr Spitzer compared the independent research industry’s current dilemma with that of media companies battling against free news articles on the web. “People want the content, they don’t want to pay for it,” he said.