Then the Gods of the Market tumbled, and their smooth-tongued wizards withdrew
And the hearts of the meanest were humbled and began to believe it was true
That All is not Gold that Glitters, and Two and Two make Four
And the Gods of the Copybook Headings limped up to explain it once more.
- Rudyard Kipling, The Gods of the Copybook Headings
Brian Larson, swiftly becoming one of my must-read bloggers, posts a thoughtful argument that I’m far too cynical. Which is entirely possible.
He posits that my observations about what the recent VOW rules mean for an MLS appear correct:
1) An MLS public website is not subject to the VOW signup requirement.
2) An MLS can create truly ridiculous IDX rules, because IDX was not covered by the NAR-DOJ settlement.
3) An MLS cannot not prohibit brokers/agents from sending listings to Trulia/Zillow/etc. as that would violate Sherman Anti-Trust Act. But the MLS is not required to provide Trulia, Zillow with any data either, unless Trulia signs up as a broker subject to VOW rules.
But, Brian goes on to say, the MLSes are not nearly as evil as I presume them to be, nor are the requirements of VOW such a major deal. His argument (which you should read in full, by the way) is premised upon three assumptions and recent trends:
First, the “VOW signup requirement” is not all that daunting anymore. So many applications folks use online now require registration. The key is to ensure that the consumer trusts you will not bombard her with crap email after she registers. You cannot use Facebook or MySpace without registering…. In the real estate space, I expect we’ll see more applications that rely on registration, or that at least have an “account” mentality. 1000Watt’s post about Dwellicious suggests that it might be an example.
Second, I think the VOW policy gives many MLSs incentives to make their IDX rules more open. By including more fields and statuses in IDX, the MLSs can make it easier for a broker to deliver information through the more-regulated IDX method, rather than encouraging her to use a VOW, which is harder for the MLS to regulate and monitor. I have MLS clients that have already indicated to me their intentions to take this approach. (In fact, I speculate that restrictive IDX rules will actually make it easier for brokers to get consumers to register for their VOWs. “I can show you X more listings if you register….”)
Third, many MLSs have embarked on “listings syndication,” which makes it easy for their brokers to send listings to places like Zillow and Trulia. We did a whitepaper on syndication this last spring (though it seems hopelessly outdated to me now). MLSs recognize the value they can bring to their brokers with syndication. Some still have “protectivist” tendencies, but I think the trend is moving to more syndication.
On this basis, it does indeed appear that I am merely a huge cynic. Again, I grant the possibility of that.
However, the Gods of the MLS Headings are not so kind. Thousands of years of human history have taught us not to overestimate the level of charity and goodwill in your average person, nation, or organization. It is a rare person, and an even rarer company, that forgoes self-interest in the name of community.
Let me delve deeper into each of Brian’s points.
Signup requirement is not daunting
The problem with this analysis, however, is that it takes an objective stance on something that is entirely relative. While it may be true that the VOW signup requirement is in and of itself not daunting, the real issue is whether it is easier or more difficult relative to other alternatives.
There is no version of Facebook that does not require signup. There is, however, a version of the VOW website that does not require signup: the one belonging to the MLS. So faced with two choices — one, a realtor website where I have to signup and provide my email address, and another, a MLS website where I do not — I am going to select the one that puts fewer requirements on me nearly every time.
Furthermore, a requirement’s ease or difficulty stands in relation to the value delivered. I don’t find it all that daunting that I have to study, take both a written exam and a roadtest, before I am allowed to drive a car. The value delivered (driving) is sufficient for the requirement.
Facebook and MySpace, in order to deliver its value (personal space to connect with friends) has to have your personal information. Plus, the value that it delivers is sufficient for consumers to want to signup.
YouTube, on the other hand, will go out of business if it requires signup before a user can view a video — because a competitor will arise (such as Google Vide0) that will drop that requirement. The personal information is irrelevant to the value delivered: viewing a video.
In real estate web, having to deliver my personal information to a realtor just to view listing information is a pretty large stumbling block. I know intuitively as a consumer that you don’t need to know my name or my email just to display photos of a house, or show me how many bedrooms and bathrooms it has. So I deduce (correctly) that the only reason you want my information is to try and sell me something.
Under these factors, I submit to you that the temptation for the MLS to create a public-facing VOW-powered website freed from the signup requirement — that it must place, by law, on every other participant — is rather huge.
Let us not forget that MLS organizations these days are not exactly rollin’ in the cash. Many of them are facing fundamental questions from their membership about the value being delivered to them for their annual dues. There is a growing trend of real estate agents electing not to be part of the MLS, or paying absolutely the minimum for access to listings, and complaining bitterly about the dues being charged because the MLS doesn’t “do anything for me”. And companies like Trulia are only helping to accelerate that trend. No wonder that MLSes are heavily investigating public-facing websites then — being able to deliver consumer leads to its membership may be essential to the very survival of the MLS.
The incentive is large; the tempation is huge.
VOW Improves IDX
Brian’s next point, that the VOW rules may lead MLSes to relax their IDX rules so that their members can manage listings via the controllable IDX feed instead of the uncontrollable (by law) VOW feed simply doesn’t take incentives into account.
The MLS has major incentives to tighten IDX rules (as above) to make it a very unattractive option.
All participants have an incentive to display as much information as possible on their own website, in order to drive leads and conversion.
The listing broker might have incentive to try and control how its listings are displayed on competitor sites via IDX, but no broker is a pure listings broker who doesn’t take buyer inquiries via its own site. So their incentive to want to control listings is canceled out by their incentive to want not to get controlled by others.
The incentive for brokers is to use IDX as bait to get a consumer to signup, so that they can show them the VOW data. The trouble is, there’s already a website out there that shows consumers the full VOW data without signup: the MLS public website. Do brokers truly care, if they are receiving rock-solid leads without charge from the MLS site? The experience of companies like Houston Association of REALTORS suggests that they do not.
I submit that Brian’s clients who have indicated that they plan to relaxing IDX rules will either (a) swiftly scale back those plans, or (b) go out of business when a competing MLS implements the cash-generating cynical strategy I outline.
Trend is Towards Syndication
I agree with Brian that the trend was towards listings syndication. It benefited the agents and listings brokers (and their clients) so much to be able to market listings to dozens of websites with the push of a button. The MLS, in effect, was charging its members dues to provide the syndication service.
However, that was prior to these particular incentives setup by these particular rules.
After these VOW rules are fully implemented, I believe the incentives have changed. Because now, the MLS can absolutely control third party sites like Trulia, whereas they could not do it effectively beforehand.
First, for third party aggregator sites to take VOW feeds, they have to become a participant in the MLS, subject to all of the rules of that MLS. This rule now has the force of law.
Second, since the VOW settlement doesn’t address IDX at all, the MLS can provide an incredibly obnoxious IDX feed to the third party syndicators, say they are providing syndication (which is true), but at the same time, really build out its public facing VOW-powered website.
Third, the MLS can simply cease providing syndication to its members. Instead, it will provide cost-free leads direct from the MLS public site. Which service is the member more likely to value? The lead, or the chance to get a lead from a third party aggregator?
Idealism vs. Gods of the MLS Headings
I actually like to think I’m an idealistic fellow. I care about my fellow man. I care about this industry. I care about the many wonderful professionals I’ve had the pleasure and privilege to meet.
But at the same time, I can’t ignore the economic incentives now at play thanks to the DOJ-NAR settlement, which gives the VOW rules the force of law. I can’t ignore the fact that MLSes are losing membership — partly because of the market, but partly because their value to members has been decreasing for the past several years.
Since MLSes are not government entities run without care for covering costs, but are private companies that must generate enough revenue to pay for its costs, I have to think that making money (through membership or other means) by providing greater value has to take priority over every idealistic principle any MLS executive.
Indeed, even if the MLS executives want desperately not to take advantage of these rules, the economic realities may force them to do so. It’s hard to be idealistic if you’re dead. Survival is the first moral principle, after all, and that applies both to individuals and to organizations.
I hope that Brian can continue to be an influence in the industry, and that not all of his clients go down my cynical path. That would make Brian sad. Which would make me sad.
On the other hand, is it really such a bad thing for the industry, and for consumers, if there were at least a few websites (all of them owned and operated by MLSes) that provided people with the full VOW listings information without requiring signups, jumping through hoops, and the rest of it?