A Stand-Alone MLS Store is Like iTunes Without an iPod or iPhone

Mar 13, 2013 Michael Wurzer

Greg Robertson has a good post up on Vendor Alley comparing the Spark Store to the Clareity Store. Go check it out.

I agree with Greg that stores like the Spark Store and the Clareity Store are not going to dramatically improve the sale of real estate software, rather it will remain a belly-to-belly business. One area where I’d depart from Greg’s post is in his comment that there is room for a stand-alone store in the MLS industry. To be frank, an MLS store, by itself, simply adds additional cost (i.e., a middleman) to an already too complex and costly sales process. If you’re an MLS or developer, why inject that extra cost of a middleman into the sales process when it really isn’t going to significantly improve the process? Greg offers a a couple of good ideas for how stores may help developers with inside and outside sales (and those are good ideas we’ll definitely be exploring) but, in the end, a stand-alone store is just a middleman and not the long-term solution MLSs or developers need.

As Greg points out in his comparison, the additional cost from the Clareity Store is significant with a startup fee of $250 per MLS (Amy Geddes from Clareity contacted me after this post to let me know that the fee is not per MLS store) per application (I’m not sure if it’s per application or per developer) plus 30% fee on sales (or, for subscriptions, 100% of the first 3 months and 10% thereafter). Given that a store isn’t likely to substantially change the sales process, 30% (let alone 100% of the first 3 months) is a lot of extra cost. Moreover, though the $250 startup fee per MLS per application may seem nominal for access to a large MLS, it’s a significant barrier for the overwhelming majority of the 800 MLSs out there currently.

For example, W&R Studios already has both Cloud CMA and Nudge (in conjunction with 1000Watt) in the Spark Store, which has been launched to over 50 MLSs and 30,000 members. If FBS had that same $250 per application per MLS fee, W&R Studios would have had to pay $25,000 just to get into the Store before even one sale occurred. $25,000 isn’t chump change for any developer and we’re only talking about 50 MLSs. Once you get nationwide coverage, the startup fees would be $200,000 per application. I’m pretty confident W&R wouldn’t have put their applications in the Spark Store if they had to pay such fees.

The differences in the fee structures between the Spark Platform and the Clareity Store reveal a profound difference in the intended goals of the two approaches. The Clareity Store is trying to preserve the status quo. In contrast, the Spark Platform is trying to create an eco-system for long-term innovation by helping MLSs implement the RESO data dictionary, which will expand the products and services to all MLSs, not just the super-large ones that already have the attention of developers.

As the title of this post states, a stand-alone MLS store is like iTunes without an iPod or iPhone or the Android Market without Android. Having one without the other simply adds a middleman and doesn’t create an eco-system for innovation. One response to this analogy will be that the MLS system itself is the iPod or iPhone and, therefore, the platform, but that’s exactly the problem, we need implementation of standards to make that true, which is exactly the point of the Spark API. The Spark API and Spark Store together constitute the Spark Platform, which offers MLSs a means of implementing the RESO data dictionary and gaining access to products leveraging those standards, a true platform for more choice, more competition, and more innovation.

In conclusion, implementing a stand-alone store adds cost to both MLSs and developers without adding value for MLS members, who can already fill out a form on the vendor’s web site to purchase their product. If you’re a developer and wondering whether or not you should participate in a store, be sure to compare the fees and know that sales from MLS stores are still hard work and no guarantee of success. If you’re an MLS looking to implement a store, know that the store itself is not going to generate significant revenue in the short-term (if ever) and instead ask what are your long-term objectives. If you’re an MLS interested in long-term innovation and adoption and implementation of data standards to ensure your members are constantly on top of technological change, contact us about the Spark Platform.