How does geolocation based on IP address work?

Posted by Martin on Super User See other posts from Super User or by Martin
Published on 2012-07-06T19:51:48Z Indexed on 2012/07/06 21:19 UTC
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As all Internet users, I've visited web sites which appear to know in which country and city I'm located. I understand that these web sites typically look up my IP address in a database which maps IP address to country / city which works fairly well. I've also seen companies selling this type of database.

How is this database, which maps an IP address to a country / city, created in the first place?

Is there a central database somewhere where each ISP registers the link between IP address and country/city? Or does the companies selling geolocation databases contact different ISP's and purchase the mapping information from them? Or is there some organization 'above' ISP's who keeps track of this?

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