> They’re meant to communicate some metric about the market.

Is that why people spend time, money and effort creating and maintaining them? They're just broadcasters? That seems dubious.

Once you have an index, you can offer all sorts of products around it.

-You can offer a return swap to an investor so he can "invest" in the index. You can alternatively build a whole list of derivatives and products around it and offer them to investors instead (think Itraxx,Vix,etc)

-A fund manager can use it as his benchmark and you get to see if he is good or not.

-If its a factor index you can now use it for risk management and return attribution.

The key thing today is that creating a new index that isn't a fad is very hard. There has also been a lot of consolidation of indices into few players (SP, MSCI, Bloomberg) as it's obviously an economies of scale business.

> Is that why people spend time, money and effort creating and maintaining them? They're just broadcasters?

Yes. There are more indices than there are stocks. Publishing an index is, business wise, a game of getting funds to license them.

I mean, they get paid for it, sometimes quite a lot, for this "broadcasting". $100mm of AUM gets you like $200k profit/yr. (Like $500k minus fees)