Back in September, when Move, Inc. (which operates Realtor.com, among other units) acquired ListHub, the leading syndicator of listings, there were a number of opinions and speculations on why Move would buy a syndicator of all things.  Given that Move gets a direct feed of all MLS listings under the NAR Operating Agreement, it didn’t make much sense to buy a supplier of listings.

I thought then that I knew the real strategic motivation behind Move’s acquisition, and how we’d eventually see it play out.  But I didn’t write anything about the acquisition at the time because I felt I was in possession of information I should treat as confidential, given how I acquired it.  Well, at NAR yesterday, I got a few minutes to speak with Steve Berkowitz, the new CEO of Move, as well as Errol Samuelson, President of Realtor.com, more “on the record” so to speak.  I confirmed most of my hypotheses, and learned a bit more about how Move intends to utilize its latest asset.

Short version: Move, with ListHub, will be creating and enforcing syndication standards across the industry that will both increase data protection for brokers and agents, and provide Move with a competitive advantage (or at least remove the competitive disadvantage) vis a vis other publishers, such as Trulia and Zillow.

The Realtor.com Conundrum

One of the bigger strategic issues for Move/Realtor.com is the NAR Operating Agreement.  It appears in every single annual report filed by Move, and the agreement with NAR alternatively made Realtor.com what it is today and hampers it from what it could be tomorrow.  Basically, in exchange for being the official public-facing website of NAR, and getting all of the listings from all 850+ MLS’s, Move signed up to a number of restrictions on how Move can acquire and use the listings data.  To use just one example, Realtor cannot syndicate its listings to another website to “power” it.  Therefore, yahoo.realtor.com is okay, but realtor.yahoo.com is not.  Guess who is powering realestate.yahoo.com now?

In contrast, all of Realtor.com’s competitors are not bound by any overarching agreement with anyone. They get their data on a case-by-case basis from agents, brokers, franchises, and MLS’s but their terms of use tend to be far more relaxed than those of Realtor.com.  For example, this is Trulia Pro’s Terms of Use (at least as found on Washington Post):

However, Trulia reserves the right in its discretion to (i) delete, disable access to, move or edit Submissions in its sole discretion for any reason or no reason, or (ii) take any other action that Trulia deems necessary relating to use or misuse of the Trulia Pro Service. You hereby grant to Trulia a non-exclusive, royalty-free license to use, publish, copy, modify, transmit, display and distribute your Submissions in connection with the Trulia Pro Service. In addition, you warrant that all moral rights in any Submissions and uploaded materials have been waived and do hereby waive any such moral rights.

The result is that Move and Realtor.com people have felt for years that they are competing against companies like Trulia and Zillow with… shall we say, restrictive rules of engagement.

Earlier this year, Move and NAR modified the Operating Agreement slightly to allow Move to do certain things with Realtor.com (such as UI redesign) without needing permission from NAR, but it does not appear at first (or second, or third) reading of the modifications that they approach anything close to leveling the playing field.

Enter ListHub.

Control the Source

One of the lasting frustrations of those in the real estate data business — from Move to ListHub to MLS executives to data vendors — is the incredible sensitivity that brokers and agents have to controlling the data in the MLS (note, for example, the debate over RPR) combined with the blissful lack of concern they have to sending the same data to a variety of websites whose terms of use grant them all manner of intellectual property rights that the same brokers and agents would never grant to the MLS or to Realtor.com.

As it happens, ListHub has already been on top of the issue, developing the Channel Scorecard in May of this year.  The goal, according to ListHub, as reported by Inman News, is “to allow real estate professionals to more easily compare and contrast ListHub’s many partners.”  More:

“The primary audience for our scorecard are the agents and brokers and practitioners, (to help them) be smarter about online media and make better decisions about where they send their listings,” said Celeste Starchild, ListHub’s vice president of sales and marketing.

“If a site only purges listings every 14 days, for example, some brokerages might not like that. If a homeowner buys a house and still sees it up and it has pictures of the interior, that might lead to some sticky situations,” she said.

ListHub also hopes the report will encourage transparency among the providers and help brokerages manage their clients’ expectations.

A Scorecard like this is a big step forward, of course.  But the reality of the situation is that most brokers and agents are not going to take the time to compare publishers on a point-by-point analysis to see if they want to send listings to a website or not.  For that matter, it isn’t clear to me that even if a broker were to try to do a compare-and-contrast, they would even understand what the implications of provisions governing license of archival materials really are, as one example.

What is really required is a much simpler system of tiers or classes of websites.  A Homeland Security Alert system, if you will, for web publishers so that brokers and agents can very easily and quickly decide whether to send it or not.

With an easy-to-understand, perhaps color-coded system, that identifies a particular website as “Cleared” or “Questionable” or “Dangerous”, or perhaps even allows for tier-based syndication (e.g., “Only syndicate to Excellent and Good websites”), brokers and agents protect their intellectual property, the MLS protects its data integrity, and Move/Realtor.com takes a step closer towards a more level playing field.

As far as I understand it, ListHub integrates pretty tightly with participating MLS systems.  It also provides fairly detailed reports to its broker and agent customers about listing syndication and performance of such syndicated leads.  Presumably, Realtor.com with its restrictions based on the NAR Operating Agreement overseen by NAR itself will become the gold standard for data protection in publishers.  And Realtor.com now owns ListHub, which controls the largest fount of listings syndication.

There was little doubt in my mind when the acquisition was announced that what Move was doing was a strategic maneuver to neutralize some of the advantages that its big competitors had — freedom to do whatever they wanted with the data, given the widespread ignorance of brokers and agents on intellectual property issues.  Having spoken to Mssrs. Berkowitz and Samuelson, as well as other players in the drama, I have confirmed that this is indeed the mutual vision of the Move and ListHub teams.

“Let’s see how Trulia and Zillow compete if they have to live up to our standards of data protection and data integrity” might be something Move executives never actually said, but I rather think they are thinking it.

The Next Step: Council on Syndication Standards

One thing to consider, however, is that in execution, it is highly unlikely that this will be driven solely by Move.  Even if there is widespread agreement that it would be a good idea for brokers and agents to know what they’re getting into when they send a listing to a website, there is not yet any sort of agreement as to what constitutes what level of trustworthiness.

And this is not the sort of thing that one company, no matter how well-meaning, could impose on the industry.  That goes doubly so for Move, who stands to benefit significantly from the establishment of such syndication standards.

What I expect to see, therefore (and may try to work on), is the creation of some sort of third party industry group that will collaborate on syndication standards and come up with those tiers and levels.  The major publishers will certainly be included, from Realtor.com to Yahoo, along with some sort of voice from smaller publishers (e.g., Estately.com), NAR representing the agent, likely some group of MLS’s representing the broker, and quite possibly LPS, CoreLogic, or both, representing data vendors.  Who knows what the ultimate composition might be, but these are the main stakeholder groups.

This should be an independent-as-possible organization whose standards are the result of negotiation and discussion between all of the stakeholders, whose ability to enforce those standards lies in the member organizations control over the source (MLS) and distribution (ListHub) of listings data.

The next 12 to 18 months should be interesting on this front, with the real impact of these initiatives being felt within three years.

But, without a doubt, we will see some sort of effort towards syndication standards.  Get ready.

-rsh