Over ten years ago, I recall being in a presentation at NAR’s mid-year conference and hearing Gregg Larson from Clareity Consulting predict that MLS services would soon be “free”. I don’t recall all the details, but I believe Gregg was predicting that advertising would replace the per member per month revenue model pervasive in most MLSs at the time.
Ten years later, “free” may finally be here. First, of course, we have RPR, which is offering software to members for “free” in exchange for a license to the MLS data. RPR insists that it’s not an MLS but I think the point is still valid. RPR stands for the basic proposition of “free” software with the right to earn revenue from the MLS listings.
Another example of software for “free” is Listing Book. Instead of charging MLSs or users a license fee, Listing Book has an advertising supported revenue model and they also have some upsell products. This really isn’t too different than RPR in that both are using the listing content to generate revenue.
Both of these business models stand in stark contrast to that proposed by traditional MLS or other real estate software vendors, which typically license the software for a monthly fee. This shift in revenue or business model for real estate software poses some interesting questions:
What I am sure about is that the shift in business model posed by RPR and ListingBook make it harder than ever for MLSs and brokers to evaluate the value of the transactions being proposed, because “free” is very attractive and can blind you to the real costs. At the same time, as mentioned above, I wonder if the real revolution being wrought here is in the way brokers and agents buy software (“free” from their Association) and whether that’s in their long-term best interest.
P.S. If you click through on this Realty Times article from 1999 (also linked above), you’ll see that there was a debate or discussion among no other than Dale Ross (then head of MRIS and now head of RPR), Jay Huffman (MLSNI and REBIG) and Gregg Larson on the topic of free MLS. If anyone has any documents or links or even memories evidencing that discussion, I’d love to see them. I can’t seem to find anything on the web about it other than the Realty Times intro.
RPR has posted the latest draft of the license agreement they are proposing to MLSs. The draft attempts to address some of the concerns that have been discussed publicly and privately. From my review, the draft still does not live up to earlier statements that RPR would not disclose listing-level information. Instead, 1.w attempts (I think) to address some of the concerns by agreeing not to sell the MLS listings to anyone who is going to use the information to contact property owners or agents (e.g., moving companies, etc.). But is re-sale of listings to build a contact database the only concern?
What now appears clear is that RPR wants the ability to sell the MLS listings to others. By explicitly stating one narrow exception without categorically prohibiting resale of listing-level info, RPR is reserving to itself the right to sell listings to others. Let me know if I’m missing something in my interpretation or if you see something I don’t.
Brian Larson does an excellent service to the MLS industry presenting on his blog his analysis of the RPR license agreement, which he concludes:
RPR has been making promises about how data will be used (on its blog, in presentations, etc.) without incorporating those promises into the license agreement. MLSs that want to be sure that their data is used as RPR has promised will want to incorporate those promises into the license agreement before signing.
I’ve spoken with Marty Frame and and even moderated a panel at Inman with him (and Brian Larson and Jim Duncan) and he’s always been clear about the intent of RPR not to re-license to third parties listing level data (only aggregate data) obtained from MLSs. Given this, why is it that the RPR license agreement doesn’t reflect this stated intent and, as Brian notes, even conflicts with it?
Matt Cohen expresses similar concerns in a recent blog post and also has published results from a recent survey of MLSs Clareity did regarding RPR. Personally, I just find it weird that the license agreement isn’t more clear on points about which Marty Frame and Dale Ross have been clear in public. As Brian Boero recently noted on Twitter: “The communications effort around #RPR is at once excellent and catastrophic. A great case study.” Clearing up issues like this seems to be critical to an effective communications effort.
The value of MLS content is one of the big questions facing MLSs today. The Realtors Property Resource (RPR) from NAR is seeking to license content from MLSs in exchange for software (the RPR web site) and access to public records data. Is that a good deal for MLSs? The answer depends on how much the MLS content is worth.
Similarly, CALREDD (an offering from the California Association of REALTORS) offers Associations MLS software in exchange for ownership of the listing data. Yes, that’s right, joining CALREDD means the local Association no longer owns the MLS compilation. The CALREDD offer is particularly interesting because it conflicts dramatically with the typical MLS vendor/Association relationship. Typically, contracts for MLS software are crystal clear that ownership of the MLS data (compilation) remains with the Association or MLS. In CALREDD’s case, the MLS software vendor (CALREDD) also is an MLS and, as such, claims ownership of the data.
The importance of this change in ownership depends on the value of the data. If the data is valuable, then the true cost to the local Association of the software provided by CALREDD is far greater than the fees CALREDD charges for the software they provide. The NAR’s RPR business model — premised on selling analytics from MLS content — suggests that there is indeed some value in the data. Importantly, early word on the license agreement with RPR is that the license is non-exclusive to RPR. In other words, the MLS or local Association also can license it to others who may find value in it. In stark contrast, striking up a deal with CALREDD means that whatever value is in the MLS content is now owned by CALREDD — in exchange for MLS software.
What do you think? If you were an MLS or local Association considering using CALREDD as a vendor, would you add to the price tag anything for the value of the MLS content you’re surrendering to CALREDD? How valuable is the MLS compilation?
Update: Brian Larson reviews the terms on which NAR’s RPR proposes to license MLS content. Maybe MLS content isn’t worth very much after all?
Some excerpts from a conversation on Twitter this evening:
A bit later, after more conversation . . .
The issue here is the possibility of RPR participating in the RETS with the aim of using the RETS for the RPR public records API. RPR’s willingness to consider participating in standards development is good news.
This could be the opportunity to roll some simplified web services APIs into RETS, because I’m not sure it makes sense to use RETS 1.x for the RPR public records API unless the public records are not standardized and lots of metadata is needed. Where I think RETS could play a very important role with RPR is by offering participating MLSs a repository for exchanging data with their data sharing partners. I’m learning from my hero Kristen, one step at a time, and I’m very appreciative that RPR is listening.
Last week at the Inman Connect conference in New York, Dale Ross, CEO of NAR’s Realtor Property Resource (RPR), was asked by Brian Boero why RPR wasn’t trying to create a national MLS. Mr. Ross initially responded with the same thing Marty Frame (RPR’s President) said during the RPR Reverb panel I moderated the day before: RPR is a small company that doesn’t have the resources to become a national MLS. However, Mr. Ross added that politics would get in the way and there were a “lot of mouths to feed” in all the MLSs involved today.
I was a bit confused by the “lot of mouths to feed” comment at at the time he said it and, even on reflection, I’m not really sure what it means. Does it mean they feel they would have to buy out the existing MLSs? Does it mean they believe they’d have to hire a bunch of people from the existing MLSs? Or something else?
Overall, the statement leaves me uneasy. To date, RPR has clearly stated they aren’t trying to become a national MLS, which seems backed up by their apparent willingness to include a non-compete in the MLS data license agreement. At the same time, statements like those made by Mr. Ross give one pause to consider whether RPR isn’t really a Trojan horse. Looking back, we all can remember that the initial gateway/archive/library, etc., vision was to be a national MLS. Only after there was a lot of resistance to the creation of such a monopoly did NAR hone its message into what is now the RPR pitch for cool tools for Realtors and free public records for MLSs in exchange for MLS data.
I think this is important because a single, national MLS would be a monopoly that would hamper innovation in the long run, and so letting in the Trojan horse would be a big mistake. Importantly, there are legitimate arguments that the pain some brokers experience from overlapping market disorder would be improved by a national MLS but that same problem can be addressed through standards without the long-term negative consequences of enduring a national MLS monopoly. If there are concerns with MLSs today, they’d only be exacerbated years from now with a national MLS monopoly.
Importantly, RPR could do a lot to foster innovation and addressing broker concerns of overlap by promoting standards and data sharing but they’ve also been pretty clear they don’t intend to do that. If I was running RPR, my sole mission would be to create a platform that would foster competition for new technology. Instead, RPR appears intent on being the sole vendor of technology. So, what do you think? If there weren’t a “lot of mouths to feed,” would RPR be positioned as a national MLS? Do you agree with me that monopolies are bad or do you think a national MLS would be a “good” monopoly?
One of our MLS clients received an email yesterday from a representative for NAR’s RPR. In addition to this being interesting because it is the first sighting I’ve had of email marketing from RPR, there were a few interesting tidbits in the email:
I’m moderating a panel at Inman Connect in New York City next week called “RPR Reverb: Should MLSs Love It or Fear It” and would love to hear questions you have about RPR. The panel will include Marty Frame (RPR’s President), Brian Larson (attorney and consult to MLSs everywhere and author of MLS Tesseract), and Jim Duncan (broker at Nest Realty and author of RealCentralVA and original NAR PAG member that envisioned what became RPR). This is going to be a great panel and it will be better with your questions, so fire away!
I attended a presentation from Dale Ross and Marty Frame to a variety of MLS and public records software vendors last Sunday at the NAR Convention in San Diego. Here are a few points I took away from the Q&A session:
There were questions from other vendors as well about the APIs and the business model, but the above were the highlights for me. I walked away from the meeting thinking they were missing a lot of the potential for how a system like RPR could help MLSs and their broker and agent members. Helping MLSs improve data quality, data standards, and data sharing are all key benefits not being addressed by RPR. Hopefully this will change over the coming months as MLSs negotiate licenses with RPR and require that these issues be part of the deal.
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Related and recent posts RPR by others:
Brian Larson — Report of RPRs Birth Is An Exaggeration
Rob Hahn — No More Drama and Hype: Known Facts on RPR
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P.S. Can I please request that all NAR conventions from here on out be in San Diego? What a perfect location, with a great convention center, great hotels nearby, awesome restaurants, entertainment, and, of course, the views and weather!
I wrote yesterday why NAR’s RPR won’t mean the death of the MLS. Today, I want to ask some more important questions regarding the terms on which MLSs will allow NAR’s RPR to use (license) their MLS data. I suspect NAR will be presenting a lot of MLSs with some sort of terms of use over the next few weeks and months, promising their members “free” access to the RPR in exchange for their MLS data. There is some basic information on a fact sheet NAR posted about RPR (thanks, Kevin McQueen!) but the fact sheet doesn’t provide many details.
If I were negotiating this terms of use, I’d want to know answers to at least the following questions:
I understand a press release will be coming later today, but my guess is that the press release will be more hype than details. The real facts will come in the proposed license agreements NAR tries to get MLSs to sign. I think a system like RPR has a ton of opportunity for MLSs to make their members more efficient, but the key to leveraging the RPR opportunity will be in the license agreement for the MLS data. RPR won’t amount to much without the MLS data and so that value should be recognized by the brokers and agents in the MLSs providing the data.
Update: Here’s NAR’s press release for November 9. Not much different from the fact sheet except that CAR is going to partner with RPR with their ZipForms and Relay transaction management systems. I’ll probably post more about that later.
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:
If you’ve read my earlier posts on these topics, you already know that my answers to these questions are:
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.
