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Source: Storyblocks
Following the rapid growth of the internet over the past decade, IP addresses have become a valuable commodity, which now many are looking to monetize. According to Paulius Judickas, Head of Sales at IPXO, while selling IP assets may bring a big one-time payoff, leasing IPs could unlock consistent long-term revenue.
In May, the price for an IPv4 address reached its all-time high at $36. With its value continuing to trend upward, companies are looking to cash in on the accumulated IP assets. Paulius Judickas, Head of Sales at IPXO, has shared why leasing, instead of selling, IPs could prove to be a more profitable strategy, bringing IP holders recurring streams of revenue all the while alleviating the IPv4 shortage problem and contributing to an overall more sustainable internet network.
A new industry standard
In the early days of the internet, no one had anticipated its growth potential; this led to IPs being shared rather freely throughout the market, without any thorough end-user tracking being done at the time.
“Leasing was considered a “grey zone” in the industry due to lack of established and secure intermediaries to help lease and manage IP resources, hence why companies were leaning towards selling owned assets,” Judickas commented.
Now, according to the expert, leasing is on its way to becoming the new industry standard as the process is swift, secure, and completely automated.
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“It all boils down to laying down precise and thorough procedures. For example, at IPXO, it takes up to 5 minutes for the IP owner to set the price and lease their subnets. The technical side of things, such as IP reputation and abuse management, finding reliable lessees, are all taken care of,” Judickas explained. “In the near future, we also plan to introduce full Resource Public Key Infrastructure (RPKI) support, which will limit the hassle of back-and-forths between IP holders and regional Internet registries. This will enable managing all of the resources via a single interface, streamlining the process even further.”
Leasing vs. Selling
While selling owned IPs may seem like a good way to bring a solid chunk of revenue, Judickas argues that the wish for quick profit can lead to missing out on significant opportunities, as companies could make nearly double by leasing IPv4s for as little as a year.
“Let’s take the /16 subnet as an example. With the average selling price of $30 per IP, we are looking at a $1,966,080 revenue, compared to leasing annual revenue of $353,894. However, people tend to forget to assess the global IP market yield gains, which average around 25%,” Judickas explained. “This means that if a company decides to lease, instead of sell, IPs for at least a year, they would be looking at approximately $2,811,494—that’s a 43% increase in revenue.”
Paving the way for network sustainability
The sudden shift to online, fueled by the pandemic, brought forth a newly-found demand of IPv4 addresses—an inherently limited resource—needed to support everything from remote desktop setups to VPNs and hosting services.
The increasing number of requests for IPv4 space allocation. Source: IPXO
Although the internet was able to withstand the pressure at the expense of leading streaming platforms restricting the video quality, which alleviated some of the stress, Judickas emphasized how IP leasing could help maintain a more pressure-resistant internet in the future.
“Leasing enables unused IP resources to reenter the market, alleviating the strain of the ever-growing number of devices connected to the network. Consequently, it creates the opportunity for businesses to suffice their IP needs and continue scaling operations without placing additional pressures on the market. This allows for deliberate resource allocation, leveling out some of the network stress and enabling more controlled internet expansion,” he explained.
As the world moves towards an IoT-driven future, leasing could be key in facilitating a smooth transition to the next internet era.
