I’ll be moderating the MLS panels at Inman Connect NY in January, One of the sessions outlined so far is “Breaking Data Taboos for Fun and Profit.” The idea for this session stemmed from the Connect Create session at Inman SF this last summer, where developers from two companies built two applications in 48 hours and then showed them off at the end of the conference. One of those applications was an agent rating service built by Diverse Solutions using some data from SoCal MLS.
During the demo of that product, Diverse’s President Justin Lajoie commented that he wasn’t sure if the product would ever see the light of day because MLSs would have to grant permission to use the sold data in this way. Brian Boero asked the brokers and agents in the audience if this was a product they’d like to see become real, and the response was definite: Yes, they would.
The question raised was pretty clear: How can MLSs better leverage the kind of rapid innovation available today? One potential answer is to create an API for the MLS data that’s easy to use and understand, especially the terms of use. Currently, the only terms of use for MLS data that are widely adopted by MLSs are IDX and VOW policies. Are those enough? Or could brokers and MLSs create more innovation by developing a new terms of use targeted at specific data sets?
For example, two potential use cases come to mind: (1) syndication or advertising of listings; and (2) aggregate statistical reports. In the case of syndication, the terms of use would focus on the limited set of data needed for advertising the listing and would include an opt-in from the listing broker. Having a standard API for syndication could increase the quality of listing advertising on the web and increase competition among aggregation sites.
In the case of aggregate statistical reports, the terms of use could focus on limiting use of the data for analysis and reporting in the aggregate as opposed to disclosing individual listings. Would a more limited terms of use focused on the aggregate instead of specific listings make it less threatening to brokers to open up the data to new and innovative uses? Are there any terms of use that would be able to be widely adopted or will MLS data use always be limited to policies like IDX and VOW?
Of course, these discussions do not happen in a vacuum. Just yesterday, Google made it easier to see real estate listings on their maps and they’re encouraging real estate professionals to post their listings to Google. Of course, Google has their own terms of use for posting information to their site. We also know that companies like RealBird are using Google Base as an alternative source for listing data, using Google’s API as a round-about way to get at the MLS data.
Is it time for MLSs to leverage the rapid innovation cycle by creating their own API? I’d love to hear from you in the comments below and also at Inman Connect NY.
This week is known as “Summit Week” around FBS, because we’re hosting a bunch of our MLS clients for several days for our FBS Summit. We’re usually running around like crazy the few days before but this year has come together pretty smoothly, so far, and so I thought I’d take a few minutes to write a post that’s been rattling around in my head since I finished reading Wikinomics a week or so ago.
The main theme of Wikinomics centers on “mass collaboration,” or the idea expressed in Bill Joy’s (co-founder of Sun Microsystems) often-quoted statement that “innovation happens elsewhere,” because no matter how smart you and others at your company are there are always more smart people elsewhere. There are two off-shoots of this premise: (1) companies today need to make their products customizable by the consumer (e.g., application programming interfaces (APIs), use of standards, open source); and (2) companies should focus on their core competence and out-source or out-collaborate with others on non-core products.
Considering these ideas right before our client Summit is particularly valuable for me because the Summit is and has been a platform for our strategic thinking at FBS for the last decade or so. We’re trying to engage our customers on both the big picture industry trends we see and also learn from them where they see the industry going and how they hope we respond to help them navigate through the changes to better serve their members. In this regard, we are engaging in mass collaboration. In fact, I think one of our strengths as a company is listening to our customers and isolating what’s most important.
This latter point often requires significant choices. We cannot make every change every customer wants. We have to choose the projects we believe will have the most benefit for the most users. We call this process Net Results, always trying to remember that we’re helping our customers sell more real estate. The point of Wikinomics, however, is that by developing products in an open and collaborative way, the choices can be expanded beyond the limited resources of any one organization. Put another way, the role of the organization is to organize, but what needs organization today is not just inside the company but also outside it.
The theory that great ideas can come from outside just as likely as inside is one of the reasons FBS has engaged in the RETS/RESO process, hopefully to create standards around which innovation can occur on an industry scale. We also hope to augment those efforts with our own APIs to enable more mass customization of our specific systems. The idea that you can’t do it all and that others want control over their own systems while leveraging yours makes perfect sense to me. There simply are too many examples today of the open web driving hyper innovation to ignore.
At the same time, balance is required. FBS’s core competency (how we add value) is providing excellent response to our customers’ needs. One of the reasons we’re so good at this is because we control our code and our support team works closely with our development team to ensure prompt and effective responses. This is what I mean by “defining customer support” in the title of this post. When many hear the words “customer support” they think of the folks answering the phone. Certainly, that human interface is critical and our team is the best. At the same time, when it comes to new feature requests or bug fixes, access to the developers is equally critical and often the difference between a satisfied and unsatisfied customer response. The more a firm outsources and ends up with code outside their control, the more difficult supporting customers becomes. And when supporting your customers is your core competence, having control of your code (building in-house) becomes a strategic imperative.
The most prominent example of this balancing act is Apple. Traditionally, Apple has created closed systems they tightly control to ensure the end-user experience is up to their expectations. They control the entire stack, from the hardware to the software and everything in between. In many ways, Apple has been the poster-child of what the Wikinomics authors decry when they state in their conclusion that “the monolithic, self-contained, inwardly focused corporation is dying.” And yet Apple has been terrifically successful with just this approach with the iPod, iPhone and Macs over the last many years, earning unwavering loyalty from their customers.
But there’s more to the story. Just yesterday, Apple announced the opening of their API for the iPhone to outside developers. This is a significant change in philosophy for Apple and is further evidence of the unstoppable trend toward mass collaboration. Turning inward again, however, Apple is putting some pretty tight reins on the developer program, trying to balance the quality of the applications against open development, by providing robust tools for testing and debugging the code.
This sort of balance is exactly where FBS needs to head in its development. Our customers expect both rapid innovation and excellent support. We need to build core systems on which our customers and their developers can innovate. I think this same balance should be considered by MLS organizations themselves. There is a very real trend in MLS system development and deployment today where separation of the back-end (database) from the front-end (user interface) is being advocated on the theory that the core competence for the MLS is the data and the rest should be left to outside innovation. This often is called the front-end of choice.
In theory, front-end of choice is a great idea — the MLS should be focused on data quality and data access and open development of the user-interface to broad competition to foster innovation. At the same time, like FBS, MLSs add value by supporting their customers and having many front-ends nearly forces them to outsource that support to the many different companies providing the front-ends. When MLS members have problems, they expect answers, not being routed from one vendor to the next with all pointing fingers at each other. Organizing the many different efforts and the quality of the applications becomes critical, just as it is for Apple.
The conclusion here is that balance is required. The organizations that succeed in the coming years will be those that develop open applications while maintaining high levels of support for their customers. This is a big challenge and one we aim to meet.
I’ve had my first pass over the terms of the settlement of the NAR/DOJ litigation over VOWs (virtual office web sites). Though I was surprised by the announcement of the settlement, I’m not surprised by the fact the litigation finally settled. In fact, during a couple of different meetings in D.C. a week or so ago, I mentioned to people that I felt the litigation was, for practical purposes, irrelevant. As such, I don’t see the settlement as huge news (it won’t likely be a game changer), though it’s definitely interesting news.
The action on the web has shifted over the last few years from VOWs (authenticated access) to syndication (advertising oriented, non-authenticated sites), with everyone racing to get listings nearly everywhere instead of trying to figure out how to control where the listings are going to be shown. If anything, I think the settlement puts an arrow back in the quiver for brokers, MLSs, their vendors, and others to develop hybrid systems bridging the gap between syndication sites and client service oriented sites. In this regard, I definitely see the settlement as a win for everyone, as it clears away the last vestiges of this issue.
Though I think the settlement is a “good thing” and don’t believe the NAR gave up much of importance given the current reality of listing distribution on the web, the DOJ did get pretty much everything they wanted in the settlement. The primary issue in the VOW litigation was whether a participant could keep some VOWs from displaying their listings while allowing others. This was known in the litigation as the “selective opt-out” provision because it allowed participants to select which web sites could display their listings in a VOW and which could not. On that front, the DOJ clearly prevailed as there is no selective opt out in the new policy. In fact, the only opt-out available now is by the seller:
An MLS shall, if requested by a Participant, provide basic ‘downloading’ of all MLS non-confidential listing data . . . . Confidential data includes only that which Participants are prohibited from providing to customers orally and by all other delivery mechanisms. . . . If an MLS provides a VOW-specific feed, that feed must include all of the non-confidential data included in the feed described . . . above excpet for listings or property addresses of sellers who have elected not to have their listings or addresses displayed on the Internet.
Settlement Agreement Sections III(2) and III(4) (emphasis added).
Earlier, Section II(5) of the Agreement specifies that, in order to have their listing excluded from the VOW feed, a seller must “affirmatively direct their listings brokers to withhold their listing or property address from display on the Internent” by signing a document that says “I understand and acknowledge that . . . consumers who conduct searches for listings on the Internet will not see infomration about the listing property in response to their search.”
In other words, this seller exception is no back door way of getting a selective opt out. First, it’s not selective, it’s all or nothing. Second, very few sellers will want their listings completely off the web. The end result is that a VOW will be able to display all listings from all participants, with no blanket opt-outs allowed except by the seller. This is a clear departure from the selective opt-out fought for by NAR and even the IDX blanket opt-out.
I think this last point is important. Way back when, the impetus to VOWs was to get around the limitation in some IDX policies allowing participants to opt out or even requiring them to opt in to include their listings in the IDX feeds from the MLS. There were and are several markets where participants with significant market share were not participating in IDX, making that program ineffective, and so those who wanted to display all the MLS listings on the web argued that a VOW should be able to display all the listings just like they could show all the listings if a consumer came into their physical office. That’s where everything fell apart, because there were participants who didn’t want to be told what they had to with their listings. With this new VOW settlement, however, no opt outs are possible and everyone is opted in, which means the DOJ won this point decisively.
The DOJ also appears to have won the other major issue in the litigation: referral fees. Section III(11) of the Agreement says, “An MLS may not prohibit, restrict, or impede a Participant from referring Registrants to any person or from obtaining a fee for such referral.” This was the big argument raised by RE/MAX, Realogy and others, namely that they didn’t want to provide their data to a web company only to have it sold back to them in the form of a referral fee. As Dave Liniger is often quoted as saying, this is “like the guy who shows up at a pot-luck dinner bringing only a fork.” RE/MAX even went so far as to say that they’d advocate withdrawing from MLSs if selective opt-out was not allowed, and that ultimately gave rise to the ill-fated ILD policy and the DOJ litigation.
I suspect the reason the litgation was able to be settled was because no one really cares about this issue any more. The listings are flowing everywhere already, referral fees and other models are developing regardless and the main issue now is effectiveness and cost and not who is providing what service. Perhaps the litigation bought some time for a variety of competitors but I think the more likely conclusion is that the market just found the solutions around the litigation, making it irrelevant enough that a settlement could be crafted.
One of the more interesting provisions from an enforcement perspective is what I’ll call the “no outsourced call center” provision, which appears to be a requirement NAR sought to balance the referral fee provision won by DOJ:
A Participant’s VOW must prominently display an e-mail address, telephone number, or specific identification of another mode of communication (e.g., live chat) by which a consumer can contact the Participant to ask questions, or get more information, about properties displayed on the VOW. The Participant, or a non-principal broker or sales licensee licensed with the Participant, must be willing and able to respond knowledgeably to inquiries from Registrants about properties within the market area served by that Participant and displayed on the VOW.
Enforcing this provision is going to be interesting. What does knowledgeable mean in this context? What is the “market area” served? The provision definitely has the potential to thwart abuses of the referral fee provision by trying to require that VOWs be operated by “real” agents but it seems to open a huge can of worms for MLSs and others trying to figure out who the real agent is or isn’t.
There are all sorts of other interesting provisions that are different from the earlier ILD/VOW policies, such as the indirect recognition of Zillow and Trulia in Section II(5)(c) by allowing the seller to require removal of automated value estimates (zestimates) and comments or other discussion about the listings. I’ll likely cover these and other provisions in a separate post, as I want to get this posted first to see what others are finding before delving into more of the minutiae.
The main conclusion I have from the settlement is that it’s about time and doesn’t really change the game in a big way, but it clears the field for innovation in the space between the MLS system and listing portals.
Coverage elsewhere:
Inman has yet another article today on NAR’s recent rules trying to control use of the term MLS by their members in promoting their web sites. Here’s a not too hypothetical question: What if FBS were to create an IDX site that uses our domain and registered trademark flexmls® in the URL where agents or brokers could have domains like brokername.idx.flexmls.com? Would that violate NAR’s rules? I’m pretty sure it wouldn’t or shouldn’t but would love to hear what others think.
Follow-up: Even less hypothetical: How about portal.flexmls.com/agentname?
Whoa, check it out, our little niche hit the New York Times today. They call it M.L.S., which I find funny, but most likely is correct. Anyway, on to the article. I wonder if Bob Hale knew they would start the article like this:
The triple threat of a weak market, legal pressure and increasing competition has compelled real estate professionals to offer their information more freely online, putting cracks in a walled garden of data that stood strong while the industry enjoyed its breakaway growth. It also presages an end to the days when sellers must list their homes with a broker so buyers can see them.
I also find this quote interesting:
Tom Hurdlebrink, chief executive of Northwest M.L.S., said his service’s shift [in allowing Redfin and others to display FSBO's and non-MLS foreclosures intermingled with MLS listings] was meant to “create a balance of giving consumers what they want while promoting the best interest of our broker members.â€
Bob Hale concludes:
But Mr. Hale, of Houston’s M.L.S., suspects that resistance will wane. “Their attitude has been, ‘Just because the consumer wants it doesn’t mean we have to give it to them,’ †he said. “It’s the sure way to your demise.â€
Hmmm, at some levels, this seems like a “dead if you do, dead if you don’t” conundrum, but, at the least, it poses a very good prelude to the discussion we’ll be having at our FBS Summit June 12 regarding public-facing MLS sites. We’re assembling a panel with Brian Larson from Larson/Sobotka and Marilyn Wilson from WAV, who each have written papers recently on the issue of public-facing MLS sites and have somewhat different views. We’re also in the process of getting at least one MLS executive and one broker with differnt views. We’ll start with some presentations and a panel moderated by me and we’re going to then follow with a speed Q&A session that I think will be really interesting.
For example, Trulia and Realtor.com are mentioned in the article as well. R.com is against FSBO’s for data quality reasons and Trulia is against them because they offend brokers. Who has the better model here? Does it all come back to Google in the end? Are we in a battle for links and link love? Because here’s the deal: Links require public-facing sites. Does the MLS have a role to play in that battle? Or not?
Glenn Roberts of Inman News has a great article about MLS policy on short sales today that I expect many of our clients will find useful or at least interesting.
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On a completely separate note, posting has been light here at the FBS Blog lately, mostly because nothing has been piquing my interest. I’ve been busy, too, of course, but that usually helps me post more, not less. Anyway, I suspect posting frequency will pick up again soon. In the meantime, read the excellent Inman article and let me know if you have any comments.
