Conversations about the MLS industry, creating software, and employee ownership.

Last Friday, following the burst of rumors that NAR had purchased Cyberhomes to power its RPR (Real Property Resource) and  HouseLogic web sites, the cries of the death of the MLS have risen to a fevered pitch again.

Rob Hahn, founder of 7DS Associates, thinks MLSs need to be very concerned with RPR and that a war is coming between NAR and the MLSs.  Brian Boero, from 1000Watt, doesn’t use such stark language, but he, too, thinks RPR will be a “a significant shock to a system that needs it” and asks: “Will MLSs play ball?”  He then answers with uncertainty: “As with most things in this space, the outlook is unclear.”  As an agent and one of the members of the original NAR PAG that envisioned the RPR, Jim Duncan is excited by the possibilities of RPR and HouseLogic and asks some important questions, namely what will agents be able to do with the information and who will have access to it.  The comments to all three of the above posts focus in on the impact the RPR will have on MLSs.

Though I was initially going to wait for an official press release from NAR (I hear it’s coming Monday), the more I thought about it, the more it seemed appropriate to weigh in on some of the speculation about RPR’s impact on MLSs.  I’ve already written at length about both the death of the MLS and RPR (RPR or Ready?).  In fact, most of the posts on the FBS Blog have been about these same issues in one way or another.

For example, I wrote some time ago that MLS is about more than technology.  This crucial point — that MLSs enable competitors to cooperate — is where I think Rob Hahn goes awry in his post.  He assumes that the MLS is only about the software.  What Rob ignores is that the software merely implements a wide variety of business rules that were carefully crafted by the local MLS or Association in order to create the compromise that makes it possible for the competitors to aggregate their data in the first instance.  NAR understands this, though, which is why they’ve been saying that RPR is not intended to replace local MLSs and, to my knowledge, has no listing input or maintenance functions so far.  In other words, the data is going to come from the local MLSs and not brokers or agents directly.

NAR and its leadership knows how “local” MLSs really are.  The local Boards and Associations and their respective MLSs (some independently owned, others not) are run by brokers and agents competing in the local marker and who have cooperated together just enough to make aggregation of their listings possible.  Often, this cooperation results in a complex set of business rules.

This set of business rules is the heart of the MLS today and so talking about the death of the MLS means killing these local business rules in favor of business rules established by RPR.  NAR knows this is a tough challenge, and so they’re just not going there, yet.  As this issue (death of the local MLS business rules) is debated again in the coming years, I believe there are few core questions:

• Is cooperation at the local level (agents and brokers deciding how they want to work together) necessary to aggregate the listing data or is aggregating listings now a given (a commodity, if you will) such that it can more easily be established at a national level?
• Is a single national MLS a good thing?
• Are there alternatives?

If you’ve read my earlier posts on these topics, you already know that my answers to these questions are:

• Yes – local control is needed;
• No – monopolies are not good; and
• Yes – standards are the alternative.

All three of these issues are related to each other.  FBS serves over 100 different MLSs across the country.  We know how important our system is to our customers and that it’s important to have lots of cool features.  More importantly, however, we believe responding to each of our MLS customers’ needs is what differentiates us over the long term.  We provide value by implementing their business rules, which makes the cooperation central to MLS possible.  Responding to these local needs is critical.

At the same time, the lack of standards created by local control of MLSs causes pain for many bigger brokers, franchises and others dealing with multiple MLSs.  This is where standards could be of great benefit.  Creating standards, however, is very, very difficult, especially at a national level.  Of course, one way to create a national standard is to create one MLS.  The problem with that result, however, is that you create a monopoly.  I’m pretty sure what online real estate needs is more competition, not less.  Standards enable competition, monopolies do not.

Accordingly, I applaud NAR buying Cyberhomes and using it to power RPR.  As an MLS vendor, FBS loves competition and looks forward to learning more about RPR and how their tools can help our customers.  We’d love to see RPR help create a universal property ID.  We’d love to leverage data from RPR if it can in any way help improve accuracy of the MLS data.  We’re excited about the possibilities of RPR but also strongly believe that those possibilities should not be used to create a monopoly that squelches competition in the MLS software space.

For those of you interested in these issues, join me at the NAR meetings next week in San Diego for the Future of MLS panel.  The RPR and related issues should be a hot topic.

The Gateway/TREC/TBD discussions are heating up again, sort of.  Re-visiting the topic seems timely with the latest iteration of the NAR PAG report recently “released” and the trimester RETS meetings in Philadelphia next week.

My take is this: The NAR may well have the cart before the horse.  So far, the NAR’s PAG seems to have focused on defining a “system” for aggregation but the TREC documents avoid the fundamental question of the terms of use on which brokers and MLSs will agree to share data.  Here’s a quote from the document:

Existing MLSs are encouraged, but not required to, participate in TREC.

Those MLSs that participate agree that the information they provide will be available to all REALTORS® and MLS participants and subscribers.

Then, further down, the document says:

Using TREC will not require REALTORS, MLS participants or subscribers, or MLSs to relinquish any of their intellectual property rights.

These two statements seem inconsistent, because an MLS or broker submitting data to TREC will be required to license that data to all other TREC subscribers and such a license is a transfer of intellectual property rights.  This apparent conflict is just one of many key questions, however, regarding the terms of use for the data submitted to TREC.

The document also stresses that the data will not be publicly accessible.  Yet, at the same time, the “Statement of Inevitability” at the beginning of the document lists the proliferation of “[c]onsumer-focused real estate websites” as one of the reasons TREC is necessary — to keep Realtors “at the center of the real estate transaction.” At this level, not only does the concept feel like the cart before the horse but also like trying to put the horse back in the barn, just as they’ve started to run free.

This brings us back to the core issue: What are the terms of use on which brokers and MLSs will allow others to use their data? TREC tries answering this question only in the most narrow terms (broker/agent to broker/agent, in private, behind a walled garden) but the web insists on asking a much bigger question involving not just brokers and agents but consumers and third-party aggregators and so many others. As the links above show, brokers are already answering these questions for themselves by sending listing data here and there but not yet everywhere, which creates the very real likelihood that TREC will be too late to the party.

Of course, NAR is hamstrung in fostering the necessary dialog about usage of listing data on the web by the DOJ litigation. Also, in spite of the insistence that it isn’t any such thing, TREC very well may be the first gingerly step in the direction of addressing the question of how listing data should be used on the web. Rather than being the cart before the horse, an actual implementation of a national aggregation may be exactly what is needed — and all NAR can do for now — to incubate the discussion. For this, I applaud the work of the PAG.

Like the NAR PAG, I believe this is a defining moment for real estate data on the web and I encourage the NAR to consider how it can re-visit the big issue of sharing listing data on the web. That’s what the consumers want, not having to go through an agent to access the data. For example, one of the best uses of TREC data would be for an agent or broker to create a publicly accessible web site to engage their customers. Yet, that seems off the table. I’m pretty certain the NAR PAG would have loved to create a more sweeping plan involving both public and private access, but felt it wasn’t possible. The result is the proposal focuses on implementing a closed system instead of creating a foundation on which others can build systems.

What I think would be useful is for NAR to foster a discussion among brokers, agents and MLSs regarding the Open Web and what that means for real estate. This same discussion is occurring right now with regard to the web as a whole, and Brad Neuberg recently suggested: “If we take the long term view, how can we give the web an open enough infrastructure to evolve over time and meet each generations needs, while maintaining its structure enough to actually mean something and stay true to its promise, similar to the U.S. Constitution?” He emphasizes that this isn’t so much about specific technology but rather the general philosophy: “if we define the Open Web in terms of [specific] technologies, then we risk losing sight of what makes the web special and being able to have the intellectual nimbleness to evolve the infrastructure of the web. . . . We will be fighting yesterdays battle while allowing new, proprietary technologies to take over if we focus on technologies rather than philosophy.”

This is where I think NAR can provide leadership, by fostering discussions around how aggregated real estate data can be made most valuable in an ever changing world. IDX has been and remains one of the best tools available to agents and brokers for engage with customers on the web today. Is it time to revisit the IDX policies of old? Are the same questions and controversies that arose over VOWs in the DOJ litigation still a concern? Or is it now possible to redefine IDX in a way to make it even more useful? These questions are left unanswered by TREC, for good reason no doubt, but I think they remain the core questions.

I’ll be in Scottsdale this week for the Clareity MLS Workshop.  The agenda for the workshop includes this: “Gateway Update – is it already quietly under construction? How might RETS based systems ‘plug and play’ to form a national Gateway faster than one might think?”  I’m looking forward to hearing more.  

Over on AgentGenius, Mariana Wagner has a post called A National MLS Will NOT Work And Here Are Three Reasons Why . . .” I commented on Mariana’s post but included only one link for fear of getting caught by Akismet if I included more, and so I’ll also post some additional thoughts and links here to try to expand the conversation.

Further to Mariana’s point that “A National MLS is a HUGE pile of mess to throw under one umbrella with one ringmaster”, check out my post Good Standards Break Monopolies, Not Make Them. To summarize, you don’t need a national MLS to gain the benefits of standards, like RETS, and, in fact, an effective standard will foster competition instead of limit it.

To further Mariana’s point that a national MLS isn’t necessary because her “MLS rocks”, check out my post Are Competitive MLSs Possible or Desireable? To summarize, competition among MLSs can be encouraged by a national repository with right of mutual download, but tricky questions about IDX and other “terms of use” would remain. This is where expanding the conversation as Mariana is doing becomes so valuable. These are not easy issues and yet they are being debated, and that debate can produce effective solutions. If the issues are not debated here in the blogosphere, in the open, then they will be debated in the back rooms at NAR or wherever and the “solutions” very well may be what you don’t want. For example, the NAR clearly is pursuing a “Gateway” and spending REALTOR money to do so. Yet, there remains very little information available regarding the actual plans. Hmmmm.

Finally, to further Mariana’s point that “If Real Estate is Local, why should the MLS be National?”, check out my posts Raging Regionals, Regionals, Part II, and, more recently, Why RETS?. To summarize, real inefficiencies (pain) are being experienced as a result of brokerages growing across multiple MLS service areas. The question is how to solve these problems while preserving competition and the benefits of the local MLS Mariana extols. I believe the solution lies in data standards but there is much more required. Nothing less than the constitution — the very fabric — of MLSs is at stake here.

I’ve suggested before that the future of MLS is now, and so I’m very excited to see these issues being discussed out in the open. We need more participants for broad and intensive debate. Perhaps a track on these issues can be developed for REbarcamp. As I said in Is there or could there be a TED for real estate?

A few or several days of “broad and intensive debate“, with the best minds in the industry, about the interconnectedness of competition and cooperation in real estate, including offers of compensation, data sharing, data quality, data ownership, syndication, consumer engagement, MLS competition, consolidation, lead generation, and so much more. As Chris Anderson says in his video below, what’s exciting for him is how mind-blowing it is to see how interconnected so many issues are. Those interconnections are where learning occurs.

Maybe the interconnections can occur here, on blogs, if we get enough participants in the discussion. To that end, thanks, Mariana, for your post!

Jonathon Miller discusses it on his Soapbox. You just gotta love the spectacle of big bureaucratic attempts to solve problems.

I was contacted recently by the Virginia Association of REALTORS to speak at their Legislative and Education Conference in February. (I’ll be in Richmond on Valentine’s Day, if you’re in the area.) The Association representative who contacted me asked if I could speak on listing syndication but said I wasn’t restricted to that, and so now I’m trying to figure out what I’m going to talk about. I know that listing syndication will be a key part of the discussion, but I want to give a broader context to the syndication discussion, too.

I have this theory I’ve been batting around for about a year that the MLS industry is approaching what I’ve been calling a perfect storm. I described the perfect storm early on in the FBS Blog as having three fronts: (1) brokerage consolidation pushing MLS consolidation; (2) the web 2.0 movement, both inside and outside of real estate, is engaging consumers like never before; and (3) the Department of Justice lawsuit against the NAR, claiming NAR’s policies regarding use of MLS data on the web are anti-competitive and harming consumers. My theory is that each of these forces are coming together at the same time and could produce a perfect storm that will change the MLS industry forever.

In my post a few days ago called Attention!, I mentioned Andrew Groves’ book Only The Paranoid Survive and what Groves describes as “10x inflection points”, which I think is another way of describing my “perfect storm.” Importantly, Mr. Groves asks, “How do we know whether a change signals a strategic inflection point? The only way is through the process of clarification that comes from broad and intensive debate.” Mr. Groves is talking about strategy within a company, but I think the same approach is valuable on a broader scale, too.

And that leads me back to the question of whether we’re rushing along so fast in our lives, putting out multi-tasking fires, that we don’t have time, energy or patience for serious contemplation or “broad and intensive debate.” Are we listening for the signals or just hearing the noise? Without a doubt, the RE.net is one place where intense and well-articulated debate occurs, but is that really a “broad” debate? I have a strong feeling that many who should be a part of this conversation are not. Whether the industry is facing a 10x inflection point is an open question, but I believe it is a question well worth considering seriously.

But here’s a preliminary question: When do we have time for this debate to happen? Conferences are great, but an hour here and an hour there rarely produces anything new. When do we stop long enough to listen to each other and expand our vision of the future? When do we have the broad and intensive debate that seems necessary? I’ve written previously that the future of MLS is now and I’m wondering who will be the designers of that future?

As I consider that question, a pattern I’ve noticed here at FBS comes to mind. The pattern is this: (1) hire new programmer; (2) new programmer is super productive; (3) super productive programmer gets more responsibility; (4) super productive programmer gets bogged down with a whole bunch of super important things. This is what I was trying to say in my post the other day about paying attention. The new guy can pay attention so much easier because he’s new and doesn’t have an inbox crammed full. This is why upstarts often come in and blow people away with innovation, because they can form a small group in a far away place and take the time to think fresh.

So, my question as I look forward to the VAR leadership conference is whether the leaders of MLSs and Associations today will take the time to seriously contemplate the potential for a 10x inflection point or perfect storm brewing on their horizon. How will these forces effect the future? Can we design our own future?

At long last, the NAR’s Gateway concept is out in the open for discussion. I’ve been asking about more details for some time and want to thank Jim Duncan for making it happen.

Here are some of my initial observations on the PAG Report on the Gateway (PDF):

I’m not going to offer a purported answer now, I’m just asking questions, specifically: Why is real estate immune from the ideas being debated in other industries?  Doc Searls wrote some time ago:

To really take advantage of open source, he explained, you need to value ubiquity in your marketplace at least as much as you value scarcity in your product portfolio. In fact, your smartest move may be to take some of the products you’re selling, and make them ubiquitous by moving them from proprietary/closed to open/public domain — literally, from scarcity to ubiquity:

This same theme is picked up by Alex Iksold at Read/Write Web in an analysis of how Google’s OpenSocial initiative could impact FaceBook:

Open Social paves a way to a potentially new kind of web culture. In that culture, companies would recognize that users are entitled to their information. It should be importable and exportable. It should not be locked in.

Why is real estate sales through the MLS excepted from this general idea?  I’m not asking this rhetorically, I honestly don’t know and wonder about the answer.  Interestingly enough, the idea that data should not be locked in applies just as much to companies like Zillow as it does to MLSs, maybe more so.  So, what do you think is the answer?  Where is MLS data on the curve towards ubiquity and commoditization?

Facebook is the darling of nearly everyone, it seems, especially after the site “opened up” to allow outsiders to develop software for use inside Facebook. Notice especially that last phrase, though, “inside Facebook.” The idea is that Facebook has all these people (you, me, etc.) adding personal data to the site, making friends, poking each other, etc., and all that data about us (what Facebook likes to call the “social graph”) is Facebook’s; it’s on their servers and it’s their “platform” to be made available to others as long as you’re on Facebook.

Recently, however, some pretty prominent companies and developers have been calling for “opening up the social graph” and giving users control over their data instead of having it stuck in Facebook’s silo. (I like silo better than platform; it seems more descriptive somehow.) For example, just last week, Brad Fitzpatrick (Google) and David Recordon (SixApart) gave a speech at O’Reilly’s Web2Summit about their efforts to create social network portability. Brad and David also are co-creators of OpenID, which aims to be “a free and easy way [for people] to use a single identity across the Internet.”

This speech followed Brad Fitzpatrick’s post a few months ago on the same topic, not long before or after which, Brad joined Google. And not long after that, Google announced that on November 5 (just a few weeks away now) it would be making a major announcement regarding Google’s plans for social networking, i.e., competing with Facebook. The basic idea is that, whereas Facebook is a silo for your data, Google is expected to create a way for you to control your data and make it transportable to other networks more easily.

At the same Web2Summit last week, Jeff Huber from Google was quoted on TechCrunch, in the post “The Web Is The Platform”, as proclaiming:

What we see is applications fundamentally changing. Just like the model for content changed from monolithic sites, now applications are going to be feeds and containers. A lot that you have heard here is about platforms and who is going to win. That is Paleolithic thinking. The Web has already won. The web is the Platform. So let’s go build the programmable Web.

A good question at this point is how this relates to MLS? In two ways: (1) Facebook, despite being the darling of the web today, is a data silo, just like MLS systems are accused of being; and (2) the future of data management and control is changing significantly, right now. Let me state these points again, differently, because I think they are important.

First, I’m speaking for myself here, but I think MLSs and MLS vendors are too defensive and too used to outsider carping about how backward and old-school and far-removed from the openness of the web they and their clients supposedly are. That’s just not true, and we only need to look at the Facebook silo, the darling of the web, for proof. If anything, MLSs are far ahead of Facebook in terms of web technology, because MLSs have a pretty well established API for retrieving data from the MLS system.

Second, the future of MLS today is being debated on whether to centralize data collections or not, with the strong move being towards centralization. Yet Google’s work in social networking portability is pointing the way toward decentralized data collections, using the “web as the platform.” What does that mean, exactly? It means people follow standard ways to create their data (in the case of real estate listings, hopefully RETS) and then also provide a standard way for others to access and interact with it, all of which means the creators retain control of their own data, which is very much at the heart of the debates in MLS today.

I’ve written before that I believe one of the single most important steps NAR could and should take to benefit their members would be to develop a leadership position around a national or worldwide property identification system based on web addresses. I can’t claim to have the technical skill to have thought through this every step of the way, but my basic idea is the same as what Google and SixApart and others are saying about the web being the platform. More data is being created today by more people than ever before. You can have all the silos you want, but the reality is that the full data about any thing is going to be distributed everywhere. What’s much more important than trying to silo data is trying to link data, and that’s why I think it’s so important to develop an easy and concrete method of identifying properties, so that all the disparate data can be linked together.

The great appeal of this approach is that it’s relatively easy technologically (any URL will do) and just requires popularity (prevalent use) to make it successful. (Importantly, it may also require, at least transitionally, a central repository to establish the identity.) That’s where NAR can help by coordinating with county governments and recorders and title companies to develop consensus around a new microformat for identifying properties. With such a basic piece in place, so much more can be built on top of it without having silos. Or put differently, creating many and more comprehensive and even competitive silos will be made easier because there will be a uniform way to tie together the data.

Is this idea too far out? Is it crazy? Or is Google just spreading fear, uncertainty and doubt in Facebook’s direction to try to lower their valuation so Google can acquire them? Maybe. Yet the same concepts have been articulated by two Yahoo! researchers as well in a paper called Toward A PeopleWeb (unfortunately, a pay site, unless you’re an IEEE member). The abstract of the article says it with techno-speak but well enough:

Important properties of users and objects will move from being tied to individual Web sites to being globally available. The conjunction of a global object model with portable user context will lead to a richer content structure and introduce significant shifts in online communities and information discovery.

In English, no silos. In the paper, the writers state that, with a global object model, “Users will be able to reference broad range of objects from anywhere on the Web, and they will do so based on a common identity for both objects and individuals.”

RETS is one part of defining this global object model and a key to that is a common identity. Other efforts on other “objects” are happening all over the world. This is what I was writing about in The Future of MLS Is Now. Just like other industries and social concerns, the real estate industry is being modeled for the web. This is happening now, it hasn’t run past us. Yet.

The technical blogs are buzzing about Six Apart’s call to use open standards for social networks and Google’s leaked announcement that it will be creating new APIs opening up access to the “social graph” data in their system. Through all this, the most interesting comment I found was on the TechCrunch post, with the parts I found most interesting highlighted:

What everyone still seems to not understand is that Facebook is becoming the new Internet. Consider the general trends:

1. Nerds create web to share info with one another
2. Businesses create content to attract non-nerds
3. Penetration and adoption rates skyrocket; web becomes messy

Right now, the web is over-run. It’s just simply ugly and the value of each additional bit of content is constantly decreasing as is the chance that that bit of content (or application) will be able to attract a user’s attention.

4. Social networks pop up, offer walled experiences
5. Users rely on aliases to articulate identity, interact
6. Social networks not sticky; offer limited data to businesses

So at this point a user has multiple online homes and also touches multiple vendors through separate accounts. They are still going outwards to businesses and outwards to find information (on this increasingly ugly web).

7. Sites like Mahalo spring up to re-organize the web
8. Facebook stays closed, but allows the outside web to come in
9. Users must selectively choose which elements of the outside web they let in to facebook.

Ultimately it appears that Facebook is simply building out a cleansed version of the Internet. And yes, many of the applications are annoying and wonky, but look a bit more down the road –> they have the guys who were going to launch Parakey and eventually they’ll likely have a majority of the web-savvy world on their application, which doesn’t look kindly on aliases and fights spam with a really big sword.

So all of this said, I’m not sure that what Google is coming up with can beat this unless

a) they give each person/user an individual public and private web presence (think google people pages…we can’t assume wink, peekyou, spock will make it) or

b) they let people interact with different levels of a “cleansed” web.

One can only assume that whatever move they make will ultimately be to the benefit of Ad partners, as well, by giving more targeted info.

So either way, exciting times it seems like. Just wish Google would acquire facebook and make the world an easier place to interact with.

Isn’t this highly relevant to the Future of MLS?