Michael Wurzer Sam DeBord, a strong proponent of LEAP (formerly NOW), commented on my post last week called “Look Before You LEAP” and then followed up with a post of his own called, “LEAP Forward: Six Questions to Answer on Brokers’ MLS Data.” In that post, Sam outlines the problem LEAP is trying to solve as follows:
Current policy on data access and usage is disjointed, complex, and unnecessarily burdensome. They want:
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- All of the MLS data
- In one efficient data access method
- With one holistic set of rules for usage
Any kind of data that a broker can get in the MLS’s primary user interface, the broker should be able to get, at a minimum, in LEAP. LEAP will be an MLS policy proposed to NAR to create this single access and usage rules model.
Cementing the point in the highlighted text, LEAP declares: “MLSs may not impose any limitations, restrictions or conditions on the use or display of the MLS listing content other than as specified in this policy.” In other words, if it’s not in LEAP, MLSs can’t craft license terms as each deems appropriate.
As I explained in my post last week, the text I highlighted above is the fundamental problem I have with LEAP, namely that it lumps all these different use cases together (IDX, VOW, broker back office) without making any effort at all to recognize that those uses are, in fact, quite different and accordingly require different license terms. Without recognizing these important differences, LEAP is not good policy and will make it more difficult for MLSs to create effective licensing terms that recognize the fundamental value of the aggregated MLS data for different use cases.
To address these concerns with LEAP, I recommend replacing the sentence above with the following to enable MLSs to craft licensing terms applicable to each use case:
LEAP recognizes that the MLS data is uniquely valuable for a variety of uses by Participants and that MLSs should create license terms to reflect and protect that value. Nothing in LEAP should be interpreted to prevent MLSs from creating or requiring licensing terms or agreements specific to each use case. Instead, LEAP simply requires that such terms be presented in a single agreement to simplify the licensing process.
Such a provision not only reduces antitrust concerns raised by the current draft policy requiring collective assent and agreement, but it allows MLSs to craft better license agreements that can improve cooperation through proper incentives, increase value to all Participants, and create a system for better data operations compliance.
The very first change I recommend for display licensing (as opposed to licensing for creating derivative works, which will be addressed in a subsequent post) is that MLSs should use some form of usage or value-based pricing. Just like most content licensing deals, a high-traffic site should pay more than a low traffic site. With all the major portals all becoming Participants these days it seems, such value-driven licensing is more important than ever and would go a long way to create incentives for more rather than less cooperation among Participants.
If Participants know that all data recipients are paying full value for access to the data and there’s real money involved as opposed to nominal licensing fees, they’ll be incentivized to cooperate with such uses. In contrast, if the value of the data isn’t recognized through usage or value-based licensing, Participants will continue to feel like they’re giving up their data for free and they’ll be incentivized to opt-out of cooperating.
In addition to creating incentives to enhance cooperation, value-based pricing incentivizes MLSs to expand data licensing to more channels while also improving the efficiency and compliance of their data and licensing operations, all of which will directly benefit Participants and provide solutions to the problems identified by LEAP. In contrast, the current value-less licensing models make data and licensing operations just a cost center where there’s little benefit to expanding or making them better, and Participants suffer accordingly.
This fundamental shift in licensing will create a framework and opportunity for MLSs to expand and improve data licensing for the benefit of all the parties. Without this shift, however, the problems will continue no matter how many LEAPs are thrust upon MLSs and Participants. As I quipped to Sam on Twitter, “The license terms have been ignored for so long but it’s NOW time to correct it.” A value-based licensing model would enable MLSs to streamline licensing to a single agreement as LEAP advocates while recognizing the fundamental differences in value being created from such use cases.
I’ll wrap this up with the same preview of future posts I anticipate writing on this topic:
- 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.
P.S. Greg Robertson reached out to me and Sam today to schedule a Listing Bits podcast on this topic later this week, so keep an eye out for that in the coming weeks by following Greg’s podcast on your favorite service.