Felix Salmon

The news of the day in the media world is that Jeff Bezos has led a $5 million Series E funding round for Business Insider. Here’s the story, according to CEO Henry Blodget:

Jeff’s investment grew out of a dinner he and I had about a year ago. We talked about the business, and he was excited about it. (He sees some parallels with Amazon). A few months later, he expressed an interest in investing. My reaction was basically “Hell, yeah!”

Blodget has now articulated a simple public goal: “to become the best digital business publication on the planet”. It’s a conscious echo of Bloomberg’s stated aim to be “the world’s most influential news organization”. If he needs to invest millions of dollars of other people’s money to get there, that’s fine.

Blodget goes on to say that he’s obsessed with his customers — both readers and advertisers — and that his customer focus is the main thing he shares with Bezos. (Well, that and his famous Amazon call, of course.) He also says that Bezos’s money “will allow us to continue to invest in our editorial, technology, and client teams” — which almost certainly means that there’s no chance, now, of Business Insider being profitable in 2013. Six years after it was launched, the site is still in growth mode.

And frankly, there are quite a lot of things that Blodget could use the money for, if he is really focused on the reader experience — indeed, there are so many things that he could probably spend all that money quite a few times over, if he wanted. The site could use a redesign, for starters, to make stories pop more for readers and to provide more attractive opportunities for advertisers. On top of that, the architecture of the site should reflect the way that stories are covered. Here’s how BI’s editorial chiefs see the way that they work:

“We don’t really think of things we put up as ‘an article,’” said Carlson. “It’s a bit of information conveyed to people. One of my old colleagues used to say that the last sentence of your last post is the first sentence of your next post. Because by the time you reach the end you sort of come to a cliff, ‘Oh I have another thought on this and I’m just going to put it in the next post.’ In a way, it does sort of become a narrative. For sure, I think [that's] the attraction of reading something at Business Insider … It’s a live medium where the narrative is always coming out with the next thing.”

Weisenthal is often reminded how differently digital outlets such as BI work when it comes time to submit content for awards.

“They have the journalism competitions where they invite people to apply and they always say, ‘Submit your top three posts for consideration that you’re most proud of’ or something like that,” he said. “And I can never come up with the stuff. I don’t think I have a single great post last year that I’m really proud of. Everything I write is part of this bigger stream.”

He pointed to his real-time blanket coverage of the monthly U.S. jobs report as an example. “If you follow me on Jobs Day, within like 20 minutes of the report coming out, I have a summary posted,” he said. “Then I have another post singling out one detail I thought was interesting. I have another post saying what it might mean for interest rates and fed policy. I have another post talking about the political dimensions and so forth. I’m proud of the fact that it’s this whole suite of stories.”

I’m an admirer of this form of journalism, and I think that many media organizations, including Reuters, are going to move in this direction. But right now, if you go to one of Joe’s payrolls posts, it’s not easy to find all the other ones — to have them all in one place, together giving the bigger picture. In order to be able to allow that, Blodget will need to make some serious technology investments.

What’s more, a re-engineered website might well result in a website with significantly fewer pageviews. If you can see all of Joe’s payrolls posts on one page, then that means fewer pageviews for BI than if you call up all ten of them individually. For most of its existence, BI has been in an uncomfortable race, trying to increase the number of pageviews it serves up faster than its CPMs are falling. Investors are generally OK with losses, which reportedly reached $3 million last year, only so long as revenues are growing. And they are growing: Blodget tells me they were more than $10 million in 2012, up from about $7.5 million in 2011 and $4.7 million in 2010.

The problem is that in the chase for revenue growth, Blodget is sacrificing a pleasant user experience. He installs ugly automatic links under certain phrases, for instance, which when you mouse over them start playing video ads. Or he sells a lot of interstitial ads which force you to click another time before reaching the story you want to read. Quartz points out that there’s a good chance Business Insider is worth less than the much younger BuzzFeed, where CEO Jonah Peretti is adamant that he’ll never run a BI-style slideshow, or even “crappy display ads”, just because readers clearly prefer everything on one page and don’t get value from those ads.

The problem is that if Blodget decides to pare back on artificial revenue juicers which readers dislike, that hurts revenue growth as well as profits — even as BI is saying that it intends to accelerate revenues this year to something in the $15 million range. In order to keep revenues growing even as he re-engineers his site to make it sleeker and less optimized towards pageview maximization, Blodget would have to invest not only in technology, but also in sales — paying big money for expensive staffers to build relationships with brands. BI gets too much of its revenue from banner ads right now: it needs to diversify its ad revenue, and start finding more ways for brands to reach BI’s coveted readership. One of those new channels is conference sponsorship, and I expect that BI will use a bunch of its new money to invest aggressively in conferences. But one of the big hidden costs behind building a new kind of website is the fact that you need to build a new kind of sales team, too, selling the kind of products which are often referred to as “native”, whatever that’s supposed to mean.

Business Insider has always been run on something of a shoestring; it made the entirely understandable decision, for instance, to hold onto a large chunk of the capital it raised in the past, rather than blowing through it and then suddenly being forced to cut back for the sake of profitability. This new round allows BI to increase the amount it’s investing while still retaining a reassuring cushion. But $5 million is not remotely enough money to allow Blodget to pivot to a very different business model, even if he wanted to do so, which he probably doesn’t. For better or for worse, he’s stuck in a world of banner ads and CPMs, and although he’s done well in that world to date, the future of that world looks pretty bleak.

There are many sites, Gawker Media’s foremost among them, which have gone to great lengths to wean themselves off their addiction to banner ads. And in general it seems to me self-evident that “the best digital business publication on the planet” is not going to be one which aggressively chases pageviews and ad revenues at the expense of the user experience. By thinking of stories as streams, Joe Weisenthal found a great way of juicing pageviews, since every element of that stream, under the current architecture, is a new story and a new page. But he’s also stumbled upon a powerful and addictive new form of journalism, which is Blodget’s best hope for achieving his ambition. The question is: will Blodget be willing to give up his current business model, in order to let Weisenthal follow his editorial vision to its logical conclusion?

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The International Consortium of Investigative Journalists has quantified the size of the offshore tax haven bubble, and is doing its darndest to burst it.

The group, led by Gerard Ryle, and working with 38 media outlets, has amassed 2.5 million documents containing details of more than 120,000 offshore companies and trusts, as well as the identities of almost 130,000 individuals.

The documents implicate a wide-ranging and sleazy set of the global elite: politicians, despots, and their aides and associates; the oldest daughter of former Philippine dictator Ferdinand Marcos; a wealthy Spanish art collector; arms dealers. Also mentioned is Denise Rich, the wife of the controversially pardoned oil-trader Marc Rich.

Der Speigel writes that the details in the documents go back nearly 30 years. The 200 gigabyte leak, the German paper writes, is 160 times larger than the cables released by Wikileaks in 2010. Gawker has a good run-down of the important details that have been released so far.

A former chief economist for McKinsey estimates there could be as much as $32 trillion in offshore taxhavens.  Creating sham corporations in offshore locations, and stocking their boards with phony directors, is a lucrative cottage industry. One British couple on the the island of Nevis served as directors for 2,000 companies.

Individuals aren’t alone in seeking fairer climates for their assets to winter in. The biggest US companies increased their untaxed offshore cash piles by  $183 billion, or 14.4%, in 2012. Victor Fleischer, a tax law professor, details the arcane mechanisms companies use to get and keep that money in low-tax jurisdictions. Some of the more common strategies include alternating short-term loans between foreign and domestic subsidiaries, and transferring intellectual property abroad. Starbucks, like Google and Microsoft, is among the companies that use these techniques.

Ending these practices may involve more data dumps like today’s. Last year, both the European Union and the UK announced their intention to crack down on tax havens. A key tactic? Naming and shaming companies and individuals that use legal tax-avoidance schemes. — Ben Walsh

On to today’s links:

Long Reads
The cost of building Apple’s new headquarters has ballooned to $5 billion – Businessweek

Bold Moves
Japan embarks on “monetary easing in an entirely new dimension” – NYT

Regulations
Can a judge really block the SEC’s $600 million settlement with Steven Cohen? – Theodoric Meyer
A “quintessential captured regulator” is leaving the SEC – Gary Weiss

Housing
Foreclosure reviews created a “bureaucratic maze that delayed relief” and enriched consultants – DealBook
What the GAO found: “complexity… overly broad guidance, and limited monitoring” – GAO

EU Mess
“The ECB’s main preoccupation has become the playing of chicken with governments” – Economist

RIP
Roger Ebert is dead at 70 – Chicago Sun-Times

Wonks
What happened to the Internet productivity miracle? – John Cassidy
Central banks have “virtually no influence over long-term real (inflation-adjusted) rates” – Ken Rogoff

Alpha
Carlyle, KKR, and Blackstone want a piece of your 401(k) – Bloomberg
Workers are getting misleading information about their 401(k) options when they switch jobs – WaPo

Oxpeckers
“Can I make the semicolon interesting to people who used to be into the kind of stuff I did at Vice?” – NYT

Best Practices
The top risk managers run spy networks that rely on human intel, not models – Jesse Eisinger

Interesting
“Rents are flat or falling in markets where investors are most active” – Trulia

Remuneration
Physically and verbally abusive ex-Rutgers coach is due a $100,000 bonus – AP

Advanced Strategy
The laundry detergent business is almost too innovative – WSJ

Regulations
Activist courts are hobbling Dodd-Frank – Mike Konczal

Compelling
The death of peak oil – James Hamilton

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Rising demand for cars is manifesting itself at both ends of the auto spectrum.

Carrick Mollenkamp has a great long read today detailing the recent surge in subprime auto loans across the country. 6.6 million borrowers took out subprime auto loans from car dealers in 2012, an 18% increase from the prior year. More and more of those loans are being bundled, sliced and sold to yield-hungry fixed-income investors: so far this year, lenders have sold $5.7 billion in securities backed by subprime auto loans, up 13% over the same period in 2012.

It’s not just the school-bus drivers and local cooks that Mollenkamp interviewed who are behind the auto boom. Electric carmaker Tesla Motors — whose marquee customers include Matt Damon, George Clooney, and Leonardo DiCaprio — announced on Tuesday that it’s rolling out a “revolutionary new finance product” that the company says will turn the “true net out of pocket cost” for one of its mid-range Model S sedans to less than $500 per month. It was an initiative that Tesla CEO Elon Musk had been teasing on Twitter for days, calling it “really exciting.”

Investors found Musk’s announcement to be a bit wanting; as the Wall Street Journal said it in a headline: “Tweets Lift Tesla’s Shares; Lease Offer Deflates Them.” Part of the tepid reaction had to do with what Joe Weisenthal said were the “ridiculous assumptions” underpinning that under $500/month estimate. To get monthly payments down that low, you must:

• Reside in one of six states (e.g., California, West Virginia) that offers a generous incentive for buying an electric car
• Be able to deduct your Tesla as a business expense
• Assume that the hour that you would have spent going to the gas station each month is worth $100

Absent those conditions, the effective monthly cost of the car more than doubles to $940 per month.

The episode also highlights Musk’s proclivity for making bold but ultimately underwhelming proclamations. To paraphrase Musk’s PayPal co-founder Peter Thiel: We wanted a colony on Mars. Instead, we got the option to receive the same trade-in value as a Mercedes-Benz S-class sedan after 36 months. — Peter Rudegeair

On to today’s links:

Oxpeckers
The decade long decline of publishing, visualized in less than a minute – HBR

Felix
“Bitcoin is based on mistrust rather than trust, it refuses to take any responsibility onto itself” – Medium

China
Apple’s learns that in China, customer satisfaction isn’t enough – Bloomberg

Regulations
Re-activate your Friendster account: the SEC approves corporate announcements on social media – Reuters

Your Daily Outrage
A 25-year sentence for a nonviolent, first-time drug offender – Conor Friedersdorf
“Marijuana possession arrests are a scandal, like Love Canal and the Ford Pinto were scandals” – New Inquiry

Housing
Wells Fargo issues almost 30% of all US mortgages — and it holds most of them on its balance sheet – WSJ

Real Talk
“An acquisition is always a failure” – Jake Lodwick

Alpha
Bill Gross admits that he, Buffett, and Soros may just have had impeccable generation timing – Reuters

Servicey
Are you old enough to legally read online news? – Atlantic Wire

Wonks
Criminal-justice and education reform: our “most powerful anti-inequality weapons” – Evan Soltas

Masters Of Their Domain
“Seinfeld” has generated $3.1 billion in syndication income since 1998 – FT

Data Points
NYU traffic-injury study has more fun fact than analysis – Streets Blog

EU Mess
The IMF is will contribute €1 billion to the Cyprus bailout – NYT

New Normal
Yelp reviews for prisons – Yelp

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Last week, I hypothesized that the publishing industry was going to informally settle on a single management-consultancy company to ask for paywall advice from. That consultancy, having seen everybody’s internal figures, could then tell everybody else what “industry best practice” was. It’s the time-honored management-consultancy m.o., reselling other clients’ confidential information, suitably anonymized, of course, so that everybody learns from everybody else’s successes and failures.

This is a winner-takes-all business: it works best if everybody hires the same consultancy. And now it’s pretty clear which consultancy is going to win: Mather Economics. They say they’ve worked for pretty much everybody, at some point, and that they directly manage some $2 billion of subscription revenues for their clients. And today, fresh off a $1.75 million funding round, the paywall provider MediaPass has announced that it’s going to bake all that Mather knowledge into its own product. Given all the data being generated and analyzed by Mather and MediaPass, it looks like they have a pretty unassailable position in this particular niche.*

So, what do Mather and MediaPass see as the future of paywalls? What is best practice in the industry? Interestingly, as Anthony Ha reports, they’re not particularly enamored with the meter system, despite its high-profile successes at the FT and the NYT.

Although MediaPass supports “metered” systems, [MediaPass president Matt] Mitchell says he sees more potential in creating a specific mix of free and paywalled content, although that mix will differ from site-to-site.

Publishers should think of their free readers as leads who might eventually become paying subscriptions, he says. For example, for a long time Mitchell read ESPN.com for free, but a year ago, he stumbled on a paywalled article that he really wanted to see, and since then he’s been a subscriber.

“What a meter does is give you 10 views free, and on the eleventh you’re asked to subscribe,” Mitchell says. “That’s rolling the dice and gambling that the article I see on the eleventh view is the one I’m willing to pay for.”

It’s worth noting, here, that even the FT and the NYT don’t have “pure” metered systems, where every pageview counts towards the meter. In the early days of paywalls, some content was free, while other content you needed to pay for; the meter, in theory, replaced that system with one where the determination as to whether an article was free or not was a function of how many other articles the reader had read, rather than being a function of the content of the article itself.

There’s always a trade-off, however, and there are certain areas of the FT and NYT websites which are always free and don’t count towards the meter. Finance, interestingly, is one: you can read as much Dealbook and Alphaville as you like without a subscription. And Mather’s Matt Lindsay said that the NYT quietly does the same thing for its entertainment section, during peak season in the fall: there’s a huge amount of advertising demand, and it doesn’t want to put any obstacles in the way of tourists looking to the NYT to work out what shows they want to see.

Talking to Mather and MediaPass, it’s clear that their idea of “best practice” doesn’t rely much on meters at all. They have the numbers, remember: they know what kind of walls are best at maximizing revenues, and what kind of walls just end up turning readers away. And crucially, one of the biggest lessons they’ve learned is that it’s a mistake — at least from a purely financial perspective — to treat all readers equally. Some readers have a much greater propensity to pay than others; ideally, you want to extract a lot of money from those readers, while also allowing the vast majority of your visitors — the ones who will never pay you anything — to still consume your content and view the associated ads.

For instance, it’s often easier to persuade people to subscribe to sports content than to entertainment content, even as it’s easier to sell ads against entertainment content than it is against sports content. So it does make sense to keep entertainment free, and put some kind of paywall around sports.

And although readers hate the kind of extreme opacity practiced by the FT, where there’s basically no rack rate and nobody knows what anybody else is paying, from a revenue prospective it makes a lot of sense. The FT knows quite a lot about its registered readers, so it can be quite effective at charging the highest prices to people with the greatest willingness to pay, while charging much lower rates to readers in, say, India.

That kind of thing can be dangerous, from a PR perspective. Amazon, for instance, got into trouble when it was caught selling the same products at different prices to different customers. But there are other ways of achieving much the same end: you can set a relatively high official price, for instance, and then start showing various special offers to people whom you think might be willing to subscribe if you offer them a discount. No one really minds that.

And certainly it seems to be a good idea to offer a range of subscription lengths, priced so that there’s a strong incentive to go for the longer-dated annual subscription, even if again that means a substantially lower rate on a per-month basis.

I’s not all that hard to tell who’s likely to be willing to subscribe, and who isn’t. Print subscribers, for instance, are much more likely to be willing to pay for a digital subscription than a reader who doesn’t already pay for the print version. And people who visit frequently, and who read a lot of local news, or sports news, are also more likely to subscribe.

In general, the trick is to get as many subscribers as you can — because once a person subscribes, they generally turn out to be surprisingly loyal and price-inelastic. You can keep on charging their credit card, even at steadily-rising rates, and they’re not going to unsubscribe. And then, for the 90% of readers who don’t subscribe, it’s a good idea to find content for them, too. The paywall shouldn’t just be a “pay here or get nothing” option: the “no thanks” button should take you to valuable free content.

That’s why, as NYT spokeswoman Eileen Murphy confirmed to me, the NYT is looking at rolling out a new digital subscription product, priced below the current cheapest option of $3.75 per week. Most NYT readers are understandably reluctant to spend $195 a year on access to a single site, so the NYT might well offer something cheaper, without the full unlimited range of content that subscribers get with the current digital package.

What’s impossible to calculate, of course, is the long-term opportunity cost of driving away people who want to read your content but aren’t willing to pay. MediaPass’s Mitchell told me that in most cases, the act of putting up a paywall is the act of “essentially harvesting revenue from a loyal long-term audience” — people who have been reading the publication for years, and have turned it into a habit they don’t want to give up. That’s fine, as a short-term means of maximizing revenues. But it’s dangerous in terms of getting new loyal readers. Which is one reason why online media startups almost never have paywalls: they want as many people as possible to discover them.

My expectation, then, is that newspaper paywalls will become both increasingly sophisticated and increasingly expensive over time — but that paywalls are not going to migrate very quickly out of the newspaper world and onto the rest of the internet. In a dying industry, the sensible thing to do is to maximize your revenues before you die. Paywalls might well make money for newspapers. But that doesn’t mean that newspapers aren’t dying. Quite the opposite.

*Update: So this is embarrassing. The public press release notwithstanding, it seems that Mather got cold feet about the deal with MediaPass, and is not going to go ahead with it after all. I think Mather still has its longstanding relationship with Press+, the newspaper paywall company, but I’ll look into it and find out.

Update 2: This seems at heart to be a spat between Press+ and MediaPass, with Mather being enjoined from working with both.

I’ve posted a very long piece on bitcoin over at Medium. Obviously, I’d love for you to go over there and read the whole thing — or at least save it somehow for reading later. But here’s the heart of the article:

Volatility is a serious problem, if you’re trying to put together a currency, rather than a vehicle for financial speculation. If the currency of a country ever fluctuated as much as bitcoins did, it would never be taken seriously as a medium of exchange: how are you meant to do business in a place where an item costing one unit of currency is worth $10 one day and $20 the next? Currencies need a modicum of stability; indeed, one of the main selling points of bitcoin was that it couldn’t be destabilized by government institutions. But that comes as scant comfort to people watching the value of a bitcoin behave like some kind of demented internet stock during the dot-com bubble.

In reality, then, bitcoin doesn’t really behave like a currency at all. In terms of its market value, it looks much more like a highly-volatile commodity. That’s by design: bitcoins were created to be the most fungible commodity the world had ever seen – to the point at which they would effectively erase the distinction between a commodity and a currency.

But is that a good idea?

The answer, of course, is no. It’s a bad idea to turn a currency into a commodity, because if the price of the commodity goes up, then everybody using the currency suffers from enormous deflation. Imagine a sucker who took out a loan in bitcoins a few weeks ago — she’d never be able to pay it back today. That’s a pretty good sign that bitcoins don’t work as a currency.

More profoundly, it’s incredibly corrosive to try to build a currency on mistrust, as bitcoin has attempted.

It’s because we place so much trust in banks, after all, that they are forced to take on a great deal of responsibility. Banks and central banks are given an important job to do, are regulated and scrutinized, and can be held responsible for their actions. The population of the entire country, as represented by the government, stands behind bank deposits and promises to honor them even if the bank goes bust. Money, in other words, is a key ingredient in the glue which keeps the social compact together. (What we’re seeing in Cyprus is in large part a demonstration of what happens when that compact starts becoming unglued.)

Bitcoin, in that sense, is anti democratic. It’s based on mistrust rather than trust, it refuses to take any responsibility onto itself – indeed, it doesn’t even have a self to take responsibility onto. It’s nihilistic.

It’s fun to watch the bitcoin bubble, but it’s also important to understand that almost no one actually wants to live in the kind of world that bitcoin enthusiasts are looking forward to. Thankfully, the rising price of bitcoins is not some kind of market signal telling us that we’re closer to that world. But at the same time, it’s certainly not something to celebrate.

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If you’re looking for evidence of just how far the housing market has come since its implosion triggered the financial crisis, consider Fannie Mae. The housing giant seized by US government five years ago reported a record profit of $17 billion for 2012, after a roughly equal loss in 2011. It’s Fannie’s first annual profit since 2006; as  Clea Benson notes, the profit eclipsed that of companies like Wal-Mart, GE and Berkshire Hathaway.

Drilling down into Fannie’s filing gives you a snapshot of the American housing market. The company set aside less to cover future losses on loans it guaranteed ($62 billion, compared to $76 billion in 2011); suffered lower delinquency rates; had higher loan volume and higher fees; and saw the value of its derivatives positions improve. Bill McBride at Calculated Risk pulls out another bright spot: Fannie says that there was a “4.7% increase in home prices in 2012 compared with a home price decline of 3.7% in 2011.”

Fannie’s earnings could have been $59 billion higher, Benson adds. Due to an agreement with Treasury, any net worth beyond $3 billion cannot be retained by Fannie and instead must be paid back to taxpayers. As soon as the first quarter of this year, Fannie could be required to report $59 billion in assets that had previously been written off, and most of that would have to be shipped to the US government to stay under the cap. David Reilly notes that that payment, along with $31.4 billion in dividends already paid to government, would mean Fannie will have paid the Treasury a total of $90 billion. That may look like a large chunk of the $116 billion pumped in by the US taxpayer, but in fact that $116 billion is still going to be outstanding: Fannie’s just paying dividends, here, rather than repaying debt.

It may also be hard for Fannie to repeat the successes of 2012. Matthew Klein notices that Fannie isn’t as hedged as it could be, and wonders how much of this year’s “record profits can be attributed to excessive interest-rate risk”.

Fannie’s current success may keep it in government hands that much longer. Why would the US relinquish control of what Peter Eavis notes is the most profitable insurance company in the country, just as its massive bailout was close to turning a (slight) profit? There’s also the small problem that no one has a real plan for extricating Fannie and Freddie from government control.

Instead, Shahien Nasiripour reports, the rough plan is to create a new public utility to compete with the two companies. That “single securitisation platform” will still be taxpayer-backed. — Ryan McCarthy and Ben Walsh

On to today’s links:

Right On
How paid paternity leave could stimulate the economy – Catherine Rampell

Takedown of a takedown
The problem with David Stockman – Neil Irwin

China
The annual toll of Chinese air pollution: 1.2 million premature deaths – NYT

EU Mess
Ireland: where delinquent mortgages are common, but evictions are rare – Matt Phillips
Cyprus’s finance minister has resigned – Bloomberg

Revolving Door
Former SEC chief Mary Schapiro declares revolving door dead, joins shadow regulator – WSJ
A thorough guide to Promontory, DC’s “shadow regulator” firm – American Banker

Regulators
Why do bank capital rules treat loans as riskier than derivatives? – Sheila Bair

Wonks
What you don’t know about poverty – Lant Pritchett

Contrarian
Is the demand for high-skilled workers actually falling? – Arnold Kling

Says Science
Shakespeare was a tax-dodging grain hoarder – Telegraph

Oxpeckers
You can’t stop ESPN’s economic success, you can only hope to contain it – Economist

Billionaire Whimsy
The London neighborhood so exclusive, it’s empty – NYT

Dubious Milestones
Forget Dow 36,000 — we’ve just hit Bitcoin $1 billion – Verge

Data Points
The benefits of being a philosophy major, and of not being a communications major – Pleas and Excuses

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Of the 27 million Americans working part-time jobs, very few land positions that pay $488,709. That’s the average annual pay for a director at Goldman Sachs, Susanne Craig writes:

Some of the firm’s 13 directors make more than $500,000 because they have extra responsibilities… Goldman’s board is the best compensated of any big American bank and the fifth-highest paid of any company in the country… Some of its rivals are not that far behind. The nation’s biggest banks paid their directors over $95,000 a year more on average in 2011 than what other large corporations paid.

A Goldman spokesman notes that director compensation is increasing because of the firm’s rising share price, but that fails to address the size of the initial equity award. As Felix has noted, the best way to pay directors is to emulate how Warren Buffett does it, giving them “a modest four-figure sum”.

Despite (or because of) their exorbitant compensation, oversight from directors at US banks was largely nonexistent in the run-up to the financial crisis. Now banks insist that because of increased legal risks and time requirements, largely resulting from the financial crisis their boards did little to mitigate, they have to pay top dollar to attract qualified directors. But the caliber of bank board members is hardly awe-inspiring. Take JP Morgan: none of the directors on the board’s risk committee has worked at a bank or as a financial risk manager.

It’s not just bank boards that have problems. James Stewart details just how hard it is to get rid of directors, even after they’ve made boneheaded decisions. Despite running the company like a “tawdry reality TV show”, with disastrous financial results, each member of the HP board was re-elected last month. HP isn’t an isolated case, either. Stewart cites statistics from Institutional Shareholder Services showing that of 17,081 director nominees at US companies, only 61, or 0.36%, failed to get support from a majority of shareholders last year.

Barclays’ new chairman, David Walker, is trying to make his pay more defensible: he’ll be working at least four days a week to overhaul the board he leads, albeit on a $1.17 million annual salary. Walker is at least committing to do more than dial-in to the odd conference call, and show up to vote yes on management’s decisions once a quarter. Working more is the other way to make your work-to-pay ratio more defensible. — Ben Walsh

On to today’s links:

The Fed
Why we should thank the Fed for crushing savers – James Surowiecki

EU Mess
Why the Euro is doomed in four steps – Matthew O’Brien

Popular Myths
“There’s simply no statistical evidence of a broader renaissance” in US manufacturing – WSJ

Inequities
Annals of gender diversity, Pimco edition – Felix

Alpha
5 dumb mistakes for investing in the QE era – WSJ
Only 30% of SAC’s AUM comes from outside the firm – Katie Benner

Takedowns
The “meme hustler”: A lengthy attack of one of the web’s most prominent evangelists – Evgeny Morozov

Charts
The simple, boring reason why disability insurance has exploded: demographics – Brad Plumer
Why you should care about a divergence in two main inflation indicators – Greg Ip
The remarkable persistence of US economic growth, 1790-present – Conversable Economist

Housing
The housing market is coming back — but it’s still hard to get a new mortgage – Nick Timiraos

Oxpeckers
Online journalism “a bad business so far”, say slideshow manufacturers – Choire Sicha

Wonks
Oliver Blanchard’s 5 lessons for economists from the financial crisis – WSJ

Corporate Largesse
Regulatory filing of the day: Wynn pays for an execs’ $9.3 million house renovation – Footnoted

Leaders
Board members spending more time being board members, board members report – WSJ

Apple
Steve Jobs’ first boss: “Very few companies would hire Steve, even today” – Mercury News

New Normal
There are 284,000 American college graduates working in minimum-wage jobs – WSJ

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Over the past three years or so, Pimco has been making a concerted effort with respect to gender equality and women’s empowerment. And this effort is being led from the very top: check out CEO Mohamed El-Erian’s speech to USAID last year, or his more recent rave review of Sheryl Sandberg’s book. El-Erian is clearly committed to overcoming institutional biases at Pimco and to ensuring that his company “employs, enables, develops, stimulates, and retains” the very best workforce it can — including, of course, the very best women.

So, how’s that working out for him? Google “Pimco leadership”, and you end up at this page, which lists the firm’s “Global Executive Leadership” as well as all of its managing directors. The former list has six names on it; all of them are men. The latter list is longer — some 58 names. And if you look closely, you should be able to find 7 women there, alongside 51 men.

This is the face that Pimco shows to the rest of the world, and it’s incredibly male-dominated. Internally, the numbers aren’t much better. The two most important committees at Pimco are the investment committee and the executive committee; neither of them has more than one woman. And if you look at Pimco’s professionals more generally, everybody with a job title of “vice president” or above, the total proportion of women is 23% — which is exactly the same as it was three years ago, when the current diversity exercise began.

This doesn’t, in and of itself, mean that Pimco hasn’t changed. But if you look at the literature, the tipping point seems to come when make up more than 25% to 30% of senior management — that’s when the culture really changes, with all the attendant benefits for all employees and for the business as a whole.

I’ve obtained the numbers, however, and the proportion of women at Pimco shrinks, unhelpfully, the higher up you draw the line. They’re 35% of Pimco as a whole, including administrative and support staff. They’re 23% of VPs and above; 19% of SVPs; 17% of EVPs; 12% of MDs; and 0% of the executive leadership.*

It’s easy to come up with reasons for this. In the wake of the financial crisis, for instance, business-school graduates in general have been much less inclined to go into finance — but the decline has been significantly greater among women than among men, which means that it’s harder for Pimco to find female applicants for its new jobs. And once people arrive in a senior position at Pimco, they tend to stay there: turnover is low, which means relatively few opportunities for women to advance into the senior executive ranks.

But at some point, stasis has to become unacceptable, and someone has to be held responsible for ending it. El-Erian is genuinely committed to creating a more woman-friendly work environment. Doing so is good for its own sake, it’s good for his daughter’s future, and it’s good for Pimco — not least because women tend to make better investors, and are much less likely to blow up than men are. El-Erian might even have succeeded in changing parts of the internal Pimco culture, although such things are incredibly hard to measure or disprove.

But at the same time, there’s a demonstrated syndrome where companies with a small number of women in senior management get stuck at that small number. A recent study shows something quite surprising:

We theorize that the presence of a woman on a top management team may reduce rather than increase the probability that another top management position in the same firm will be occupied by a woman. Using twenty years of panel data on the top management teams of S&P 1,500 firms, we find robust evidence for such negative spillovers, which are especially strong for women chief executive officers and within similar job categories.

Pimco has a very high-profile hire to make right now: the departure of Neel Kashkari means that El-Erian is soon going to announce a new global head of equities. The opportunity to appoint a woman to such a senior position doesn’t come along very often. Kashkari did very well in the position, but he’s also as macho as they come. Pimco doesn’t answer to any public shareholders, and cares less about optics than most public companies do. But as El-Erian continues to preach the equality gospel, people are increasingly going to start looking for hard evidence that his noble rhetoric is being matched by quantifiable real-world change.

*Update: I tweaked the numbers a bit, in light of more granular information; also, I got the progression wrong. At Pimco, SVPs are lower down the totem pole than EVPs.

And talking of SVPs, it turns out that CasualSophist, in the comments, is spot-on here: “I’d hazard to guess that the majority of the women with VP titles are client facing and not actively involved in investment selection / strategy.” While 19% of Pimco’s SVPs are women, only 11% of SVP portfolio managers are women.

Finally, I’m assured that while right now only one woman (Wendy Cupps) is a member of the Executive Committee, there was a point in the past during which there were two female MDs on the committee.

Argentina has done as the Second Circuit Court of Appeals ordered, and has now formally put forward its proposal for paying off Elliott Associates and the other bondholders suing it in New York court.

You could be excused for not entirely understanding what Argentina is proposing, in this 22-page filing: it’s not particularly easy to understand. But the upshot is simple, and pretty much as everybody expected: Argentina is offering to give Elliott pretty much exactly the same deal as it gave all the other holders of its defaulted bonds. In practice, that means that Elliott would swap into new Discount bonds with a present market value of roughly $120 million; if settling the case in that way helped Argentina’s bonds to rally back to where they were trading in October, then the market value would rise to about $176 million.

Argentina is at pains to point out that “this proposal is a voluntary option”: they’re not proposing that the court force Elliott to accept the deal. But at the same time, Argentina knows full well that the chances of Elliott voluntarily accepting this deal are exactly zero. Elliott is suing for a total of $720 million, and while it might be willing to settle at a modest discount to that sum, there’s no way it’s going to accept the same kind of 70% haircut that it has consistently rejected all along.

Indeed, it’s entirely improbable that any of the current plaintiffs, having rejected two previous exchange offers and having spent many millions of dollars in legal fees, would be remotely inclined to accept this offer were it put to them. Which makes it really hard for the court to accept this proposal as a good-faith attempt to pay the plaintiffs what they’re owed.

The court specifically asked Argentina how it was going to make current the obligations of the original bonds; and/or how it might repay those original obligations going forwards. Argentina, in response, has proposed doing neither. Instead, it is proposing to give the plaintiffs the 70% haircut, on those original bonds, which they have consistently rejected.

The AP’s Michael Warren says that Argentina’s proposal is “creative”, but I don’t see much evidence of creativity here: instead, I see a lot of the failed rhetoric which helped bring Argentina to this fraught position in the first place. “Plaintiffs cannot use the pari passu clause,” writes Argentina’s lawyer, Jonathan Blackman, “to compel payment on terms better than those received by the vast majority of creditors who experienced precisely the same default as plaintiffs”. But of course they can do that, or at least they’re trying to, and so far, New York’s courts have ruled quite consistently that they have every right to do so.

There are signs of real desperation in Argentina’s filing: it spends a lot of time, for instance, talking about the price at which Elliott bought its debt, and the profit that Elliott would make if it got the full $720 million it’s asking for. It’s an incredibly weak argument: for one thing, there’s no law against making money in the markets, and for another, it ignores all the judgment debt that Elliott holds, and isn’t getting paid on, and isn’t litigating in this case.

Indeed, it’s far from obvious whether Argentina is extending this offer to judgment creditors, who make up the vast majority of the country’s holdouts. But one thing is clear: everything in this filing is entirely consistent with the behavior which has already been found to be “contumacious”. Argentina is a sovereign nation, and it’s staring down the court, here, daring it to go through with its dangerous plan. And frankly it’s very hard to imagine that at this point, because of this filing, the court is finally going to blink.

I’ve been largely sympathetic to Argentina’s position in this case all along, but in the wake of the various rulings which have already been handed down, Argentina doesn’t really have a legal leg to stand on any more. That’s why it’s resorting to desperate measures like saying that Elliott is going to make an unconscionable amount of money if it wins: where legal reasoning has failed, all that’s left is an attempt to bypass the law and attempt to scramble onto the moral high ground. The problem, of course, is that it’s really hard for the contumacious Argentines to occupy any kind of moral high ground at all, even when their opponent is a notorious vulture fund.

As far as I know, Argentina has not hired any kind of bankers to run this proposed exchange offer. Which is further evidence, if any were needed, that it will never see the light of day. You’ve heard of giving someone an offer they can’t refuse: this is an offer the plaintiffs can’t accept, and Argentina knows it. I find it extremely hard to believe that the New York courts, having come as far as they have, will consider it a remotely adequate remedy.

A small country which has adopted a major global currency finds itself with massive debts and insolvent banks. Its only real hope is that it controls areas rich in hydrocarbons; the problem is that it has neither the wealth nor the expertise to exploit those hydrocarbons on its own. The result: it ends up essentially selling itself to an omnivorous global superpower which is interested only in access to resources rather than in domestic economic growth and prosperity.

This is the narrative which might well end up playing out in Cyprus. The local population is so unhappy with the euro that they’re seriously looking to bitcoins as an alternative, despite the fact that there is no real bitcoin economy, and insofar as there is one, it’s inherently deflationary. Much of the country’s political, economic, and religious elite is seriously talking about leaving the euro. If they decided to do that, Cyprus would probably become even more controlled by Russia than it is already — especially given that Gazprom is by far the most obvious candidate when it comes to finding a partner which can exploit Cyprus’s natural gas reserves.

If you want to see an example of what this story looks like in practice, just take a look at Ecuador, which adopted the dollar as its national currency back in 2000. Since then, it has had a brutal debt restructuring, causing most foreigners to give up on putting their money into the country. Predictably, China stepped into the vacuum, and is now by far Ecuador’s largest source of funds.

The latest development is that Ecuador is probably going to sell about three million hectares of pristine Amazonian rainforest — that’s about 12% of the total area of Ecuador — to Chinese oil companies. Ecuador might not be drilling in Yasuni — yet — but this new parcel is right next door, and if the Chinese come in to drill for oil there, the effects on Yasuni can’t possibly be positive.

Ecuador’s indigenous population is up in arms, but is effectively powerless in the face of China’s tsunami of cash. For its part, China has no real interest in Ecuadorean economic growth or the wellbeing of its people; it just wants to control Ecuador’s natural resources, and is willing to pay many billions of dollars to do so.

If Cyprus once again restructures its debt and/or leaves the euro, could we end up in a world where Russia controls Cyprus to anywhere near the degree that China controls Ecuador? The answer to that has to be yes, given Russia’s imperial ambitions and the degree to which Russia’s wealth dwarfs anything in Cyprus right now. Cyprus has already announced that its harsh capital controls are going to be in place for at least a month; realistically, they’re likely to stay much longer than that. So long as they remain in place as the Cypriot economy suffers the deepest recession in the history of the eurozone, it’s going to be very difficult to persuade Cypriot voters to accept the status quo.

The EU, then, should be thinking very hard about how it can bring Cyprus back into the European fold. There are as many differences between Cyprus and Ecuador as there are similarities — but still, Ecuador is a sobering reminder that rich, resource-hungry powers really can end up essentially taking over a nominally sovereign democratic nation. For many years, the EU looked down at emerging-market countries suffering major crises, with an attitude of “it could never happen here”. Well, we’ve now learned, the hard way, that big crises can happen in the EU. The lesson must surely be that nothing is unthinkable.

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Because even algorithms need a break, markets are closed today. We’re cutting straight to the good stuff: today’s somewhat truncated collection of links. We trust you’ll find additional ways to enjoy your Easter weekend. — Counterparties

Alpha
Steve Cohen’s week gets worse: SAC fund manager arrested by the FBI – Bloomberg
SAC fund manager pleads not guilty; will be released on $3 million bond – WSJ
Did the SEC and the DOJ allow Steve Cohen to “buy off the US government”? – John Cassidy

Takedowns
Time magazine’s terrible and terribly cover on cancer – Seth Mnookin

New Normal
“The future that the bond market sees for America: a slack and depressed economy” – Brad DeLong

Long Reads
How Samsung became the biggest smartphone maker in the world – Businessweek

Oxpeckers
“Westeros Playbook: Mike Allyn’s must-read briefing on what’s driving the day in King’s Landing” – Free Beacon

Wonks
A great, in-depth look at the intrinsic value of the US stock market – Aswath Damodaran

Politicking
Interest rates for subsidized student loans are set to double unless Congress acts – AP

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Simon Johnson has a rather startling claim in his NYT column today: “the decision to cap the size of the largest banks has been made. All that remains is to work out the details.”

It’s worth reading the entire piece, but Johnson makes a few key points about why the conversation about America’s big banks has changed. First, the world is beginning to learn from Cyprus, which, Peter Gumbel says, proves that Europe has entered a “brave new world where nobody is too big to fail.” This should have come as little surprise: the European Commission last year all but declared that taxpayers wouldn’t be put on the hook for bank rescues. In other words, Gumbel writes, European officials have made it clear that nothing like this will ever happen again:

The Commission has calculated that between October 2008 and October 2011, it approved a staggering $5.75 trillion, the equivalent of 37% of the EU’s GDP, in state aid measures to financial institutions. Of that, about $2.05 trillion was actually used between 2008 and 2010, as banks in countries from Ireland to Greece teetered on the brink of collapse and had to be rescued.

In America, Johnson says, a similar change is happening: “Opinion on Capitol Hill has now moved in a way that will continue to reinforce itself.” Ben Bernanke told Congress earlier this month that too big to fail is “still here” — though Bernanke also said policy on this is “moving in the right direction”. The break-up-the-big-banks crowd now includes liberals, conservatives, ex-bankers, and Mormons. Last week, the Senate unanimously passed a non-binding (and possibly entirely symbolic) amendment that would end any market subsidy for banks with over $500 billion assets. A bipartisan too-big-to-fail bill from Senators Sherrod Brown and David Vitter is currently being written, Johnson says.

So what could actually happen in Congress? Not much, says Ben White: “There is virtually no chance any significant piece of legislation will pass Congress that would meaningfully reduce the size of the nation’s biggest banks or restrict their activities.” But, as one industry source told the American Banker, it may not take a single bill to break up America’s banking giants: “I just think they will make it so damn hard, burdensome and expensive to be big, eventually some may decide it’s not worth it.” — Ryan McCarthy

On to today’s links:

EU Mess
Cypriot banks gorged on Greek bonds yet somehow passed EU stress tests – WSJ
“The last thing the Eurozone needs right now is uninsured depositors thinking hard about the prudence of their investments” – Pawel Morski
Austerity is threatening Europe’s envied infrastructure – Reuters
Pictures of lonely, expectant journalists waiting for a Cypriot bank run that isn’t happening – New Statesman

New Normal
What the “sharing economy” means to Wal-Mart: you work for them, for free – Reuters
How the food-stamp program evolved to become a “more permanent feature” of the US economic landscape – WSJ
Is job polarization holding back the labor market? – Liberty Street Economics
Student loan default rates are so high, the Department of Education’s collection system can’t keep up – CNBC

Interesting
Gamblers bet twice as much money on the NCAA Tournament as the Super Bowl – NYT
It costs more to live near a stadium of an elite Major League Baseball team – Trulia
The top four zip codes for credit card complaints are on the Upper West Side and South Florida – Bloomberg

Oxpeckers
The internet apocalypse, a story manufactured by an internet security company – Sam Biddle

Servicey
“Access to clean drinking water and sanitation”, and 9 other tips to improve your startup success – Anil Dash

Real Talk
The biggest threat to national security: wars – Spencer Ackerman

Says Science
Like journalists, gang members’ main online activities are “self-promotion and braggadocio” – BetaBeat

Alpha
The Yale Model of endowment investing is past its prime – Pragmatic Capitalism

Missed Opportunities
Salman Rushdie, Julian Schnabel, and Lou Reed were asked to appear together in Talladega Nights – The Talks

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John Kemp might just have delivered the perfect John Kemp column yesterday: 1,700 words on an obscure commodity you probably didn’t even realize was a commodity. In this case, it’s a noble gas: the Federal Helium Reserve (yes, there’s a Federal Helium Reserve) is at risk of imminent shutdown, which in turn threatens everything from the semiconductor industry to MRI scanners. Already, at least one particle accelerator had to delay operations “because of problems obtaining fresh supplies of helium.”

Kemp’s column is based in large part on a 17-page GAO report which includes this chart, showing the seemingly inexorable rise in the price of refined helium. (Another thing you didn’t know: helium comes in both “crude” and “grade A refined” versions.)

As you can see from the chart, the problem here isn’t finding crude helium, so much as it is refining the stuff into something usable. Reports Kemp:

Problems at helium refineries in Texas, Oklahoma and Kansas, as well as start up delays with new refining facilities in Qatar in 2006, led to shortages and rationing, as well as price spikes for some customers.

Reliable and affordable supplies are essential. But around half of the helium used in the United States, and roughly a third of the gas consumed worldwide, is sourced from a stockpile in northern Texas left over from the Cold War.

At the moment, the only way that helium can be sold from that stockpile is in order to pay down the debt which was run up in 1960 building the Texas facility. But thanks in large part to the soaring helium price, there’s virtually none of that debt left — and when it’s all gone, the government can’t sell any helium any more. As a result, it’s pretty urgent that Congress put in place some kind of mechanism to keep the sales going. The alternative would be devastating to many industries including the medical profession.

It also turns out that the US government’s role in the helium market is not dissimilar, in some ways, from its role in the mortgage market. Here’s Kemp:

The cost-recovery pricing formula ensured BLM was originally charging much more for its helium than other suppliers, minimizing the market impact.

But BLM has become such an enormous seller, in a market with few other competitors and substantial barriers to entry, that other suppliers have taken it as a benchmark, and moved their own prices higher to match it.

Essentially, when you’re the US government and you’re a major participant in a market, you can’t help but become the marginal price-setter. Whatever Frannie pays for mortgages becomes the market price for mortgages; whatever the government asks for helium becomes the market price for helium.

In both markets, the government wants out and wants the private sector to take over. But in both markets, the process of disentangling the government from the market is extremely difficult, because it can’t just shut down its operations and leave the market to its own devices.

Because Congress has left the helium problem to the last possible minute, it’s unlikely they’re going to be able to come up with an elegant solution here. Instead, they’ll just kick the can down the road by allowing the stockpile to continue to sell helium for another year or so. But over that time, someone is going to have to work out how to extricate the US government from the global helium market. If and when that happens, I hope that mortgage-minded legislators are paying attention. Because it’s long past time that the government stopped underwriting the vast majority of home loans in this country, and they could use all the ideas they can find.

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Today, Cyprus announced it will impose capital controls restricting where, when, and how depositors can access and use their money. Here are some of the things depositors won’t be able to do when the banks open in Cyprus tomorrow:

• cash a check
• withdraw more than €300 a day
• take more than €3000 in cash per person in any currency out of the country
• purchase more than €5000 in foreign goods and services with a credit card each month
• Make non-cash payments outside Cyprus without documentation showing they are paying for imports

These restrictions are intended to last for seven days, but Hugo Dixon doubts they’ll be that short-lived. In Iceland, capital controls have been in effect for seven years, and will stay in place for at least another two.

We’ll know for sure what an economy under these restrictions looks like when banks open tomorrow for the first time in ten days, but it’s pretty far from a modern, functioning economy. As far as the euro goes, David Keohane says the clear-headed thing: capital controls obviously “make a mockery of the idea of a currency union”.

Cardiff Garcia looks at at a meta-study on capital controls and finds that only once — in Malaysia — were they effective. In that case, the controls were “accompanied by aggressive counter-cyclical spending, bans on short-selling the currency and trading it offshore, and defending the ringgit against speculators by fixing it to the dollar”. Those things aren’t happening in Cyprus and won’t be.

Paul Krugman thinks the only way forward for Cyprus is a euro exit. Unfortunately for its citizens and economy, he doesn’t think it will come anytime soon.

All of which means that in Cyprus, a cash-stuffed mattress is once again the ultimate safety net. — Ben Walsh

On to today’s links:

EU Mess
Cyprus’s economy could shrink by as much as 20% from 2013-2015 – Institute for International Finance
Greece’s growth forecasts are again looking too rosy – FT Alphaville

Real Talk
Why a country is not a household: “The fed is much better off when it is short on cash” – Helaine Olen

Investigations
At least eight federal agencies are investigating JP Morgan – DealBook

Wonks
How the London Whale trade could have been stopped: Liquidity provisions – Rhymes With Cars & Girls
Global banking’s post-crisis legal tab will soon surpass $100 billion – WSJ

Talking Your Book
High-speed trading totally fine, says Columbia researcher financed by high-speed trading firm – HuffPo

Long Reads
“What are foundations for?” – Rob Reich

Tough Choices
Faster smartphones, or better battery life? – Farhad Manjoo

For the Record
Wells Fargo: The Harlem Shake is inconsistent with our image – Channel 11, Atlanta

Fiscally Speaking
Gay marriage could save the Federal government $450 million a year – Josh Barro

Says Science
Organic food extends the lifespan and fertility of the fruit flies – Atlantic

Negative Indicators
Companies that favor bullish analysts on earnings calls are more likely to restate earnings – WSJ

Servicey
“Syncing to paper is no more complicated than it sounds” – Robert Grerner

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It’s paywall season right now: the Washington Post, the San Francisco Chronicle, the Telegraph, the Sun — all have recently announced plans to erect paywalls in an attempt to extract subscription revenues from their most loyal online readers. And other paywalls are being tweaked: the NYT paywall is getting less porous, while Andrew Sullivan’s is being tightened up, with a new $2/month option to complement the existing $20/year price point.

The trend here is clear. There is now only one major US newspaper without a paywall of some description, although others have free spin-off sites, like Boston.com or SFGate.com, which act a bit like the outside-the-paywall content on other sites.

There are three big drivers of these decisions. The first is that there’s no hope that online ad revenues will ever grow to replace print ad revenues. They’re barely growing any more, even as they’re still only a small fraction of total ad revenues. The second is that for various reasons, newspapers need to “cling to the mantle of quality at near insane costs”, as Sarah Lacy puts it. If costs are stubbornly high while revenues are shrinking, then the only possible solution is to try to raise new revenues by any means necessary — or go bust.

Finally, there’s the behavioral aspect: newspapers in general, and the NYT in particular, are quite deliberately habituating readers to the idea of paying for content. This was an obvious strategy even before most of the paywalls launched, back in 2010: first get people used to the idea of paying at all, and then, slowly, raise the amount that you ask them to pay over time.

There are an infinite number of points on the spectrum between tip jar and paywall, but there does seem to be a clear move to the right over time, towards less porous and more expensive paywalls. Some paywalls, like the FT’s, are what you might call Metropolitan Museum paywalls, porous in name only. While in theory the FT works on a meter system, giving people a certain number of free articles before asking them to pay, in practice if you want to read an FT article you’re going to be asked to pay — even, annoyingly, if you’re already a subscriber. (I would dearly love a subscription which authenticates based on device rather than on an easy-to-forget and hard-to-enter username/password combo: can’t the FT just see that it’s my phone accessing the site, and let me read anything I want if I’m a subscriber?)

And in general, the more you’re asking for, the more coercive you need to be. At a buck or two a month, loyal readers are happy to support you. At $15 or $20 per month, you need to break out the sticks as well as the carrots.

One of the problems with paywalls is that everybody wants their paywall to be simple and transparent and easy for everybody to understand. But if you do that, you can’t A/B test; you can’t work out empirically what the optimum price is or what the best place to set the meter is. Which is where the raft of different paywalls out there comes in handy.

Here’s my prediction: At some point, the industry is going to informally settle on a single management-consultancy company to ask for paywall advice from. Everybody’s going to use the same company, with the result that the consultancy in question is going to see real internal figures from lots of different newspaper publishers, with lots of different models. The consultancy will then — for a price — tell its clients what “best practice” is in the industry, which is code for “this is the way that the most successful newspapers are doing it”. No one site can easily do A/B testing on its own. But put them all together in the head of a well-connected management consultant, and it becomes much easier to see what’s working and what isn’t.

But all of the paywalls and consultants in the world won’t change the fact that the amount of information freely available on the internet continues to grow very fast, and that the number of people willing to pay for any kind of news online is always going to be a small fraction of the total online news-reading population. As Lacy says, there’s an exciting future for online news — even if the prospects for legacy-burdened newspapers are dim. The paywalls might help with newspapers’ finances. But they’re certainly not going to help make them any more relevant.