4 ms·

Please note that Verisign has a profit margin of 50%. Ie, 50% of their revenue becomes pure profit. This is an insane level. Apple is at 23%. Facebook at 35%.

Please note that Verisign has a profit margin of 50%. Ie, 50% of their revenue becomes pure profit. This is an insane level. Apple is at 23%. Facebook at 35%. Profit margins that high only come from rent seeking backed by the full force of the law.

Loic 5y ago
Elsevier had/has also a profit margin at about 35%. As a small structure you can achieve that but at a very large scale, this is effectively the sign that natural competition is not working as expected.
- tux3 5y ago
  I'm curious what the business expenses of a digital publisher like Elsevier look like. Peer review is not their purview, right? And I don't believe they pay the original authors a portion of each sale. Or that they need much of an advertising budget. What's the cost structure look like for a company like this one? With all due cynicism, has their been public research on the sort of clever accounting tricks a company with Elsevier's business model must surely be using to keep their profit margin as low as 35% ..?
  - suprfsat 5y ago
    Lobbying against open access, suing SciHub, threatening authors for self-publishing, yachts,
  - jpeloquin 5y ago
    > I'm curious what the business expenses of a digital publisher like Elsevier look like. Me too. Their investor relations report [0] is the best source I know of, but it's pretty vague. I only see breakdowns of revenue, no details regarding operating costs. PLOS One is transparent regarding their costs though [1]: - 46% publishing, editorial - 18% publishing, production - 15% publishing, technology - 16% general & admin - 5% publication fee rebates [0] https://www.relx.com/~/media/Files/R/RELX-Group/documents/results/results-presentations/2020-results-presentation.pdf https://www.relx.com/~/media/Files/R/RELX-Group/documents/re... [1] https://plos.org/financial-overview/ https://plos.org/financial-overview/
- therealEleix 5y ago
  "Natural Competition" in this space can never be. What you're seeing is exactly how this space turns out. Verisign controls the registry for the .com TLD. They run the centralized authority that ultimately says if a .com domain is "legit" or not. The Registrars like Namecheap and friends are just the messengers authorized to register .com domains into this larger database and they pay Verisign for the privilege to do so. While it's possible for anyone to go out and stand up their own .COM zone in DNS, any domains created by that registrar don't actually exist in the eyes of the larger Internet and will not work.
shadilay 5y ago
Profit is after expenses so they are incentivized to pay themselves ridiculous salaries to appear less profitable.
- polyterative 5y ago
  wow
mbesto 5y ago
How do you decide what profit margin is acceptable? Is it okay for a company to have 3%? 76%?
- tryptophan 5y ago
  I look at the average, which is about 10% for the sp500. https://insight.factset.com/sp-500-reporting-net-profit-margin-above-10-for-second-straight-quarter https://insight.factset.com/sp-500-reporting-net-profit-marg...
  - lotsofpulp 5y ago
    What is the relationship between the mean average net profit margin of the 500 companies in the SP500 index at this point in time and an "acceptable profit margin"? It seems like an arbitrary metric to use. I would think focusing on barriers to entry, economies of scale, and legislative barriers to be more relevant factors in determining whether or not a profit margin is "acceptable".
  - France_is_bacon 5y ago
    Yes, that is correct, but that is only an average, of course. There are many ways to break things down. When you look at industries, we find that in 2016, for example, beverage manufacturing has a .8% profit margin, grocery stores have 2.5%, auto dealers are 3.2%. Beer wine and liquor store industry is 3.4%. On the other hand, we have high profit industries: accounting, tax prep, bookkeeping is 18.3%, legal is 17.4%, leasing real estate is 17.4%. And again, that's average. You can have one CPA charging $50/hour, and another charging $500 per hour. Costs are pretty much the same, if they both are sole proprietors, but the one charging $500/hour is probably 500% plus profit margin, or whatever it is.
- deleted 5y ago
  [deleted]
- Aperocky 5y ago
  It's fine with 3%, 76% or 1000%, as long as competition is allowed. I don't see that for Verisign, they're just rent seeking off domain. Their profit should probably be capped AT&T style back in their monopoly days with heavy regulation.

Loic 5y ago

Elsevier had/has also a profit margin at about 35%. As a small structure you can achieve that but at a very large scale, this is effectively the sign that natural competition is not working as expected.

tux3 5y ago
I'm curious what the business expenses of a digital publisher like Elsevier look like. Peer review is not their purview, right? And I don't believe they pay the original authors a portion of each sale. Or that they need much of an advertising budget. What's the cost structure look like for a company like this one? With all due cynicism, has their been public research on the sort of clever accounting tricks a company with Elsevier's business model must surely be using to keep their profit margin as low as 35% ..?
- suprfsat 5y ago
  Lobbying against open access, suing SciHub, threatening authors for self-publishing, yachts,
- jpeloquin 5y ago
  > I'm curious what the business expenses of a digital publisher like Elsevier look like. Me too. Their investor relations report [0] is the best source I know of, but it's pretty vague. I only see breakdowns of revenue, no details regarding operating costs. PLOS One is transparent regarding their costs though [1]: - 46% publishing, editorial - 18% publishing, production - 15% publishing, technology - 16% general & admin - 5% publication fee rebates [0] https://www.relx.com/~/media/Files/R/RELX-Group/documents/results/results-presentations/2020-results-presentation.pdf https://www.relx.com/~/media/Files/R/RELX-Group/documents/re... [1] https://plos.org/financial-overview/ https://plos.org/financial-overview/
therealEleix 5y ago
"Natural Competition" in this space can never be. What you're seeing is exactly how this space turns out. Verisign controls the registry for the .com TLD. They run the centralized authority that ultimately says if a .com domain is "legit" or not. The Registrars like Namecheap and friends are just the messengers authorized to register .com domains into this larger database and they pay Verisign for the privilege to do so. While it's possible for anyone to go out and stand up their own .COM zone in DNS, any domains created by that registrar don't actually exist in the eyes of the larger Internet and will not work.

shadilay 5y ago

Profit is after expenses so they are incentivized to pay themselves ridiculous salaries to appear less profitable.

polyterative 5y ago
wow

mbesto 5y ago

How do you decide what profit margin is acceptable? Is it okay for a company to have 3%? 76%?

tryptophan 5y ago
I look at the average, which is about 10% for the sp500. https://insight.factset.com/sp-500-reporting-net-profit-margin-above-10-for-second-straight-quarter https://insight.factset.com/sp-500-reporting-net-profit-marg...
- lotsofpulp 5y ago
  What is the relationship between the mean average net profit margin of the 500 companies in the SP500 index at this point in time and an "acceptable profit margin"? It seems like an arbitrary metric to use. I would think focusing on barriers to entry, economies of scale, and legislative barriers to be more relevant factors in determining whether or not a profit margin is "acceptable".
- France_is_bacon 5y ago
  Yes, that is correct, but that is only an average, of course. There are many ways to break things down. When you look at industries, we find that in 2016, for example, beverage manufacturing has a .8% profit margin, grocery stores have 2.5%, auto dealers are 3.2%. Beer wine and liquor store industry is 3.4%. On the other hand, we have high profit industries: accounting, tax prep, bookkeeping is 18.3%, legal is 17.4%, leasing real estate is 17.4%. And again, that's average. You can have one CPA charging $50/hour, and another charging $500 per hour. Costs are pretty much the same, if they both are sole proprietors, but the one charging $500/hour is probably 500% plus profit margin, or whatever it is.
deleted 5y ago
[deleted]
Aperocky 5y ago
It's fine with 3%, 76% or 1000%, as long as competition is allowed. I don't see that for Verisign, they're just rent seeking off domain. Their profit should probably be capped AT&T style back in their monopoly days with heavy regulation.