Wired posted an article called Should Web Giants Let Startups Use The Information They Have About You that touches on many of the topics dear to the FBS Blog, especially the terms of use on which data should be shared. Here are some key quotes:
The Internet these days is supposed to be all about sharing. Thanks to a common commitment to open access and cooperation, the data mashups that have defined the Web2.0 phenomenon have exploded. . . .
But beneath all the kumbayas, there’s an awkward dance going on, an unregulated give-and-take of information for which the rules are still being worked out. And in many cases, some of the big guys that have been the source of that data are finding they can’t — or simply don’t want to — allow everyone to access their information, Web2.0 dogma be damned. The result: a generation of businesses that depend upon the continued good graces of a relatively small group of Internet powerhouses that philosophically agree information should be free — until suddenly it isn’t.
When data is put in a silo and application developers have to develop on top of that data repository, the power to change the rules for access is critical:
Such vulnerability to sudden data blackouts illustrates why some potential investors get nervous about funding scraping-dependent businesses. “Anybody who is a supplier to you has power over you,” says Allen Morgan, a venture capitalist at the Mayfield Fund who has invested in a raft of Web 2.0 companies, including Tagged, a teen social network and Slide, one of the most successful makers of Facebook applications. Morgan says that as those data providers help power more applications, they take on the role of operating systems — with a vested interest in consolidating their power. “Inevitably, they will feel compelled to compete with application developers in order to grow their business — and it’s an unfair fight.”
The article concludes wrongly, I think, in favor of the scrapers, when the reality is that what needs to occur is a three-way agreement among the data providers (in the case of MLSs, that’s the brokers), those wanting access to the data (third-party applications), and the MLSs or other entities aggregating the data (data repositories). All bring value to the equation and enabling interoperability and data exchange is key, but that requires mutual agreements on the terms on which such data exchange occurs.
There are two primary companies that create street map data: NAVTEQ and TeleAtlas. The traditional focus of both of these companies has been in-car navigation. However, more recently, both companies have liberally licensed their data to web mapping portals like Google, Yahoo!, Microsoft, MapQuest/AOL, etc. If you go to any of those sites and look at the bottom of the maps, there almost always will be a copyright attribution to one or the other of these companies.
What’s most interesting today, however, is that these web portals are turning around and making the street maps available to any public web site (not private ones, like MLS systems) for free. In other words, when NAVTEQ or TeleAtlas licenses their data to Google, they also effectively are licensing it to all of Google’s customers and the web sites they power, such as Trulia, RE/MAX, etc., for free. (Well, actually, RE/MAX, through eNeighorhoods, is listed as an enterprise customer for Google, so maybe they are paying, but that would be strange since Google’s API is free for public sites like RE/MAX’s.) Anyway, I can hardly imagine what Google must have to pay NAVTEQ and TeleAtlas for this nearly unlimited extension to their license.
This story gets even more interesting now with devices like the iPhone or the Treo, which have the Google maps application installed, which comes awfully close to a navigation system. The only thing missing is making the Google maps application location aware, which can’t be far aware given that most of the phones have GPSs built in for 911 emergency purposes. Once Google maps is location aware, haven’t they completely cannibalized the traditional space of NAVTEQ and TeleAtlas?
The license agreements these companies have with Google, Yahoo!, etc., undoubtedly already prevent Google from using the map data for location aware directions, and these agreements are likely to get even stricter for NAVTEQ now that Nokia has purchased them. This acquisition may not have hit the radar of everyone in the real estate business yet, but, trust me, this one is going to have a big impact on real estate practitioners, which can really benefit from wireless systems, including mapping.
Also, what will Nokia’s purchase do to NAVTEQ’s long-term relationship with Google and their public API? Will Google be compelled to purchase TeleAtlas to protect themselves? Undoubtedly a good part of NAVTEQ’s revenue was in their deal with Google, which had to pay a lot of money to NAVTEQ, but Nokia may be more inclined to take a different direction than the free APIs allow. All I can say is that I’m glad we aren’t relying on any free API’s for our products, because I’d hate to be betting my business on their long-term continued availability when “Google may modify the Terms of Use at any time with or without notice”.
Update: Reading O’Reilly’s post about this same topic, I’m reminded that TeleAtlas was bought by Tom-Tom, another hardware manufacturer (GPS instead of phones). (The NAVTEQ deal caught my attention more, because we license NAVTEQ data for use in our MLS software.) Wow, that the two primary sources of street mapping data are now owned by companies with interests in conflict with Google and others interested in local search bodes for some very interesting negotiations down the road. The GPS and web world are being smashed (not just mashed) together, and the street map data stands between.
REIS Innovations, a subsidiary of the Florida Association of REALTORS®, has produced a very interesting and useful document outlining the terms of use policies of many web sites to which real estate agents and brokers submit their listing and other data. Terms of use are easy to blow off, and many times doing so is justifiable from a risk/benefit perspective. In other words, the cost of digging into the terms of use far outweighs anything bad that could happen as a result of agreeing to the terms. This may well be the case for an agent submitting a few lisitngs to a web site for advertising purposes. But is it also true for a company submitting their entire listing inventory to a site? What control do you want to have regarding what can be done with the data once you submit it?
Here’s what I’m reading before the RETS conference this week:
The Summer of 1787: The Men Who Invented The Constitution, by David O. Stewart.
Code v2, by Lawrence Lessig.
Social Intelligence, by Daniel Goleman.
Earlier this week, I posted about our woes in dealing with GeoJet at the end of our contract, and that has given me the idea of doing a short series of posts on this topic. I’ve negotiated our MLS software license with over 100 different MLSs and I’ve been told consistently that our contract is one of the easiest to understand and negotiate that they’ve experienced.
Part of the ease of negotiating, I suspect. is that I do it myself and so have authority to modify the contract, without having to go through a long bureaucratic process. Also contributing, however, is the fact that our core contract is only eight pages long and the exhibits add another five pages. It’s simply easier to understand and negotiate a shorer contract.
Most importantly, however, is that, as we’ve learned from past negotiations, we modify our base contract to adjust to the most common result. I think this is unusual. Most companies simply keep battling over the same provisions, over and over again, or employ a take it or leave it approach, but that doesn’t make sense to me.
For example, previously, our base contract required that any litigation over the contract occur in our home state of North Dakota. This is called a jurisdiction provision and is very common. However, this provision was challenged every time by clients, wanting jurisdiction in their home state. With many attorneys, this provision was a battle royale; they simply had to have it their way, which usually made me dig my heels in even more, too.
Some time ago, however, I was negotiating this provision and the other side suggested that jurisdiction favor the defendant. In other words, whoever is bringing the suit has to do it in the other’s home court. Brilliant! A provision that discourages litigation and is balanced for both parties. Ever since that negotiation, we now include it as part of our standard contract. Why battle over a provision that has a good, well-balanced solution?
Next up, we’ll talk about arbitration provisions, and why I hate them.
