Victor Lund wrote a blog post yesterday called “Brokers Need to Revisit VOW Websites” in which he outlines why brokers may want to opt-out of IDX in favor of a VOW-only approach on the web. I shared the article on Twitter, which started a conversation that veered into a topic I’ve been meaning to write about, namely the proposed (draft) Listing Exchange and Access Policy (LEAP) (PDF file) being promoted to broaden the existing IDX MLS policy so brokers can get one feed to serve all their needs (IDX, VOW, back-office, etc.). I believe this proposal will be considered at the upcoming MidYear Convention, so this seems like the right time to write a post about my concerns with LEAP in the hopes of keeping everyone from going over a cliff without knowing where you’re going to land.
The CMLS draft document summarizes LEAP as follows:
Listing Exchange and Access (LEAP) is a policy whereby participants are provided
access to all MLS content for the purposes of display (where authorized), distribution (where allowed), valuation, internal organizational needs, and working with customers. LEAP governs delivery of all data and content that a real estate brokerage would require to run a technology enabled brokerage firm including public facing advertising, a vibrant client only accessible virtual office website, as well as providing data for internal and external brokerage functions.
I applaud the goals of LEAP to simplify the process for Participants to get and use MLS content. We all know it can and should be easier. My concerns, however, are similar to those I wrote about in 2011 ahead of the MidYear Convention when franchise IDX, social, mobile and other changes to IDX were being debated. In that post, I said:
Now, let’s evaluate a potential solution that reduces the need for compliance by MLSs, focuses compliance where it should be on brokers and agents deploying the data, and creates a mechanism and incentive for everyone to amp up their compliance game, while also allowing for technological innovation without heartache and endless PAGs every few years.
The basic solution is to get away from thinking about IDX in terms of MLS policy and instead shift the discussion toward creation and enforcement of license agreements for the IDX data. Many MLSs already have a strong set of license agreements pertaining to the IDX data and my basic argument is that as long as the license agreements are enforceable and enforced, all the questions regarding who is in control, who is responsible, and what can be done with the data should be answered without the need for an MLS policy on IDX.
On the surface, all of this discussion is made all the more complex by the fact that Zillow and other major national portals are now, or soon will be, Participants. LEAP doesn’t address this significant change in the environment in any way, but rather just accepts it and says to the industry, there’s nothing we can do, let’s move on. As an example, here’s a snippet from the Twitter conversation I linked to above:
My reply to Sam in the thread contains what I believe is a critical change MLSs should be implementing as soon as possible, namely that the license terms for MLS data for display purposes should be based on usage, which is the most common method of licensing content across many industries. The more you use the content, the more you pay.
Now let’s anticipate some arguments against this. First, why should Participants have to pay for usage of the data they contribute to the MLS? Answer: Because the aggregate content has value independent of and greater than each broker’s own listings on their own. For so long, the MLS industry has hamstrung itself with this basic objection that the MLS should just be a conduit for the broker’s data. By creating the cooperation necessary to aggregate the data, the MLS is adding distinct value that isn’t available anywhere else, and that value should be licensed accordingly.
If MLSs would treat the aggregated content as the value it is with proper licensing terms, almost all of the problems LEAP is trying to address would go away. And, more importantly, there would be a sound basis for addressing the wide differences among the companies using the data. Let’s just be clear about this: There’s a HUGE difference in value being derived from the licensed MLS content by Zillow or Realtor.com versus a single agent IDX site. Treating those the same is crazy.
I also can see small brokers saying, hey, I can’t afford to pay more for my IDX site and this is just going to increase my costs. This doesn’t have to be the case. Pricing schemes could easily distinguish lower volume sites with free or low-fee pricing plans. But, again, it is a fundamental mistake to equate a lone agent’s IDX site (or even a franchise IDX site) with a national portal site. Those use cases are entirely different and should be licensed accordingly.
I also can hear larger brokers saying, hey, I’m contributing all my listings, I shouldn’t have to pay more or I should get paid. In response, I would say, yes, you’re right, you should get paid! There’s no reason the license fees couldn’t be returned to the contributing Participants in some prorated manner. This is beyond the scope of this post but it really drives the point home that proposals like LEAP throw the baby out with the bathwater, where the objection that Participants shouldn’t have to pay is preventing them from realizing the true value of the aggregated data. How often have you heard the complaint, the MLS is selling our data! The irony is this conspiracy theory has never been true but it SHOULD be true, and everyone who is contributing should benefit. More irony is that to the extent MLSs have fees for licensing, they are a pittance for the big portals and an obstacle for the smaller brokers and vendors. This is the problem LEAP doesn’t begin to address.
I know this post has already gone on for longer than most people care to read, so I’ll close it here by previewing a few other related topics that I’ll be writing about in the coming days:
- How do license terms relate to the ability for MLSs, brokers, and agents to innovate and create new value?
- How do license terms help MLSs create long-term strategies that address the various mega-platform wars being waged?
- How do license terms that apply to everyone but distinguish according to usage or other criteria help reduce antitrust and related concerns?
- The above discussion is all about licensing the MLS content for display purposes, but an equally if not more important topic is licensing the content for other uses, which, in legal terms, are referred to as derivative uses or works. We all have heard how data is the new oil, right? License agreements need to distinguish these kinds of uses and license the content accordingly. Simply lumping all use cases together as LEAP does is a mistake.
This is a deep and nuanced topic, worthy of a lot of thinking and discussion. I appreciate the opportunity to be a part of it. Call me any time if you want to chat.