Is syndication the answer to MLS innovation?

Jul 26, 2011  |  Michael Wurzer

I’m at the Inman Data Summit conference this week in San Francisco and, as you might expect, there’s been a lot of debate about use of the MLS data by third parties.  When should it be allowed? Who decides? What uses are allowed? A variant on this theme is whether MLSs can or will innovate or will companies like Zillow, Trulia and Move be the driving forces of innovation, shutting MLSs out of the new value propositions being created.  Considering Zillow’s recent IPO and near $1 billion market valuation, this issue is perhaps even more at the fore than previously.

One of the most compelling answers to MLS data usage questions is that the brokers own the listing contracts and they should choose when, where and how the listings can be “used.”  I put the word “used” in quotes, because I think the discussion is easily scuttled when we confuse the various use cases.  Syndication traditionally is related to advertising on other sites and so that’s my primary focus here (but I think the non-advertising uses of the MLS data may be even more controversial).

With that in mind, the main point I’m making here is that syndication seems like an obvious answer to how MLSs can allow innovation, because it allows the brokers to decide.  I think few would argue that when it comes to advertising, the broker should decide when and where the listing gets advertised. That is, after all, what their listing contract directs them to do. Moreover, in a market economy, where the individual choices of each competitor are designed to produce the winner, broker control through syndication seems the most American of answers.

But does this answer also apply to all of the MLS data, the aggregation as a whole?  For example, if syndication (where each broker decides which of it’s competitors sites get to display heir listings) were applied to IDX, would IDX be as effective as it is?  Similarly, consider Realtor.com versus Zillow or Trulia.  How would the competitive landscape look different if Realtor.com only received listings by individual brokers or Zillow or Trulia all received the same data as Realtor.com?

Perhaps the answer to this question is yes.  Zillow and Trulia, which have been forced to rely on individual broker choices (syndication) for the most part most likely do not have the same deep listing footprint as Realtor.com but maybe they already have a critical mass and it’s only a matter of time before they have all the listings.  If that happens, then syndication is the answer to the question of how MLSs can innovate.

My guess, however, is that a syndication-only approach will foster innovation only by companies with enough resources to reach that critical mass.  As impressive as Zillow’s valuation is today, they’ve had to spend a lot of money building their brand and have yet to sustain a profit.   From that perspective, reaching critical mass through syndication appears difficult and I suggest MLSs continue to have a lot of value in the entire aggregation and syndication alone will not easily create an eco-system of innovation.

Instead, MLSs need to continue to argue and discuss and work hard to figure out how to allow innovation on the entire aggregation while also not allowing uses that make brokers not want to cooperate with the MLS any more.  One potential answer to the innovation question is to shift the discussion from distribution of the data to third parties to providing a way for third party developers to deliver products in the MLS system, which already serves not only agents but also consumers.  The analogy is making the MLS the platform and app store for access to and development of products relating to MLS data.  Instead of sending the data out, bring the developers and consumers in.

2 Responses to “Is syndication the answer to MLS innovation?”

  1. Dan says:

    Mike,

    I’m not sure how controlling the listing allows for innovation. People that want to innovate don’t want to run into a barrier that makes it hard to get reliable data consistently across the board. This is what happens when you have a lot of different entities controlling their part of the data.

    I agree it would be normal to assume that the owner of the data would direct its syndication. But maybe in this is no longer practical (or desirable) given how the market has changed with the onset of big consumer portals, VOWs and how the internet is evolving.

    Given the current state of the industry you could question whether it makes sense for the brokers to go head-to-head on internet marketing while the Zillow’s of the world attack from all sides –OR- to enable the brokers with a common strategy that positions the broker brand/listing well against the others that are (re)publishing listing data on the internet. In doing so they would be reaping tremendous value from their listings that others currently are receiving. But only if the pretext of cooperation can be met so their collective mass becomes a far more effective advertising engine than any individual could aspire to be.

    For sure, this is a different way of thinking about marketing and revenue channels but hey, the market has changed in strange and sometimes disastrous ways so innovative thinking on the business and technology front are needed, IMHO.

    This brings us back to the fact that having a common, highly accessible source of reliable listings is just what the doctor ordered to inspire innovation. Accessibility to data was key to the social engineering successes of Web 2.0. I think it will also play a key role in Web 3.0 (or 4 or 5 depending on your alliances) where common things like people, places, events, etc. become structured or linked in ways that make it easier to find relevant information on the web. I’ve been in the RE tech space for some time now and I don’t see much forward thinking. Today’s syndication is not the answer.

    And where is the MLS is all of this? As you said they’re a key enabler because they aggregate listings for the broker and work towards standardizing access and enabling the innovation the industry desperately needs.

    Finally, I couldn’t agree more that bringing the outside world in makes way more sense than sending the data out. I think it’s time for the owners of the data to take the initiative.

  2. Tina Fine says:

    Ultimately the market for Real Estate Information will be a free, or nearly free buyer and seller user created database like a homingCloud.com.