The conversation about giving brokers a single efficient process for working with MLS data (LEAP Policy) continues to heat up. Michael Wurzer has been penning some thoughtful ideas about the value of MLS data and business models to capture that value. I’ve asked 6 questions which the industry must answer to move this data efficiency model forward.
Note: Michael is CEO of FBS as well as Vice-Chair of RESO and one of the industry’s brightest lights. It goes without saying that these are personal opinions, not RESO positions.
Michael and I had a chance to chat with Greg Robertson on the Listing Bits podcast this week and it really fleshed out where the ideas we have been sharing have some commonality. It’s worth starting there:
- Aggregated MLS data’s value is more than the sum of its parts. Participants should benefit from the additional value created via the combined data set.
- Competition is as important as cooperation. Free market competition that resides upon a cooperative foundation of the MLS has created the most efficient real estate marketplace in the world.
- Some brokers have long complained that the MLS is giving their data away. Threats of varying specificity about backing away from cooperation reinforce the need to protect the value of the data.
- The current state of MLS data access and usage for brokers is a quagmire. It’s unnecessarily so.
- The current draft of the LEAP proposal needs more fleshing out of details for usage rules. That needs focus ASAP.
That’s a lot in common. While what Michael and I have been writing about in recent posts may appear to be in direct conflict (some of it is), the goal is the same: ensure the viability and strength of the MLS. That means ensuring the viability and strength of brokers, the creators and lifeblood of the MLS broker cooperative.
Policy, Rules, and Licenses
Michael believes that a good licensing scheme will solve most of the brokers’ problems. I’ve said that good licensing flows from good policy which must come first. Maybe there’s some inconsistent terminology that makes these positions appear further apart than they are. What I know, is as long as we think in terms of IDX, VOW, and BBO at our highest levels of rule development, we will continue to create not only data silos but process and technical silos for brokers.
Policy, followed by more specific rules, allows for comprehensive license guidance that creates consistency and certainty for brokers and technology vendors. If rules aren’t created with the multi-MLS broker in mind, they’re tone deaf. Good technology goes to die in disjointed, custom rules sets for something as straightforward as displaying a real estate listing. You can’t use a local license to erase 600 different requirements for font sizes and the positioning of a brokerage name around a listing photo.
The basis of Michael’s argument for a real estate data Pay-Per-View licensing model (my term, not his) is that the MLS data has significant value and some organizations are leveraging it for more profits than others. One business model, like an aggregator advertising portal, might make most of its money from derivatives or display of the MLS data, while another broker might supply most of the listings but make almost no money through data display.
There’s no doubt that there’s a revenue opportunity in charging for data based on total usage. It’s a sea change in philosophy compared to how MLSs treat data today. Brokers traditionally created MLSs and MLS services to raise the foundation of their collective businesses but not to differentiate services based on business models. Yet MLSs are now creating tiered service levels for power users vs light users of other MLS services. And there’s very little that’s traditional about the current brokerage data atmosphere.
This is a conversation for each MLS to have with its participant brokers. (Note added: Any pricing scheme should be designed with pro-competitive principles in mind and not with the intention of creating a barrier to entry.)
The Town of MLS
LEAP policy and Pay-Per-View licensing are two very different ideas being presented. They could work together. Or they could be completely separated. Here’s how I described it on Listing Bits:
You’ve got a bunch of people (brokers) who came together and said, let’s form our own town with our own government: for the people, by the people. We’ll cooperate with each other through laws agreed upon by our community: MLS Town.
So they collected taxes, built dirt roads, and put up 10 MPH restrictions on them. Residents clunked along in Model T Fords. It worked.
But they moved on to gravel roads, and then paved roads with safety markings. They got newer cars with more safety features and greater reliability. They’d been driving long enough in new cars on new roads that it became abundantly clear that they could loosen the old rules and things would still be OK.
So they asked the town government to raise the speed limit to 25 MPH. But the officials said, “They’re already getting to where they need to go. What problem are they trying to solve?”
And then a different idea came up: “There are new people moving into town with more cars and faster cars. They derive more value from the roads and put more wear on them. So let’s toll the roads. The biggest users of the roads will pay the most. We can generate more revenue for future development of better roads.”
It was worth consideration, but it would take some time to gather feedback and decide on whether it was a good idea.
Meanwhile, the original requestors asked again,
Whether or not we toll the roads: can’t we at least all agree that we need to raise the speed limits now? There’s no cost. And if those future roads still have 10 MPH speed limits, have we solved our original problem? This shouldn’t get held up in a debate over tolls. You can always change your pricing scheme later.
Let’s stay focused on the drivers
That seems to be where the industry conversation stands today. We need to remove the archaic friction of current national policy and see what additional national rules and licensing guidance might add to a widely supported solution. Local MLSs will make pricing decisions where, by and large, national policy will be silent.
There’s a massive amount of value in LEAP’s foundation. It needs industry input into detailed rules NOW. A complementary comprehensive model license could help reduce the current state of different-as-a-default at the local level. We could just call up Mitch Skinner to genericize a current four-part license into non-IDX/VOW/NAR policy language.
So let’s get down to business: policy, rules, licensing guidance, and then local decisions about pricing can commence. The brokers are still driving 10 MPH and they are, understandably, growing impatient.
- Answer the questions about the current LEAP draft policy.
- Ensure that important established usage rules make it into the LEAP proposed rules.
- Establish a viable technical solution for multi-usage designations in a data set (see RESO R&D meeting and business case, Transport Workgroup’s discussion of Field Metadata Resource, RESO Broker Advisory Facebook Group conversation).
- Publicly engage all stakeholders in an FAQ-before-implementation process (venue TBD).