Home Real Estate Mid-Year Series: Syndication Showdown at CMLS Corral, Presented by Zillow

Mid-Year Series: Syndication Showdown at CMLS Corral, Presented by Zillow

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This post, and this series of reports and opinions from NAR Mid-Year 2011, brought to you by:

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First, as you noticed with the sponsorship banner above, Zillow won the Ebay auction for sponsoring this series. So thank you Zillow. Make them look good for sponsoring this series by clicking repeatedly on the banner. 🙂

Second, unfortunately, I am writing this from the comforts of my lair in Houston. As much as I wanted to be in Washington DC today to see the CMLS Syndication Workshop in person, leaving my wee bairns alone overnight while both mommy and daddy were traveling was likely to make it unpleasant with the authorities, with the spouse, the grandparents, and the like. So I will be taking flight tomorrow instead. I’m sorry that your intrepid reporter won’t be able to report from the scene. I suppose I’m now ready for a job at the New York Times as a journalist. Except that I’m actually telling you that I’m filing this from home.

Luckily, I’m far more than just a reporter this week. I’m also an Op/Ed person, of sorts, which I can be since this is my blog. I shall, therefore, opine away, from afar, on the one topic that was on many of the attendee’s minds: listing syndication.

A Little Background

Issues with syndication can actually be traced back years, to the very start of the real estate web. After all, Realtor.com’s agreement with NAR was, in a sense, a syndication agreement. But we’ll limit ourselves to more recent history.

The conversations about syndication issues have actually been going on for quite some time, but mostly under the surface among the MLS crowd and the tech companies that focus on that market. People like Brian Larson, Victor Lund, and Matt Cohen have been thinking about, writing on, and discussing syndication-related issues from inaccurate data to copyright ownership for quite some time.

However, I don’t believe syndication became such a major issue until Move acquired ListHub last year. I wrote about that acquisition a couple of months afterwards explaining why Move, who operates Realtor.com, the one national portal that receives a direct listing feed from every MLS under its agreement with NAR), would buy a listing syndication company. That acquisition came as a surprise to most industry observers. That acquisition was followed swiftly by the announcement that Yardi Systems, previously known mostly for being a technology provider in commercial real estate, acquired Point2, the other major listing syndication company. And of course, we know about Zillow’s recent acquisition of Postlets, which some folks consider a syndication company as well. (Although, see my views/questions on that acquisition here.)

My view was that Move’s acquisition of ListHub was driven by the desire to create a strategic advantage over its rivals, Zillow and Trulia, by forcing them to live under the same ruleset that Realtor.com has to live under. But given that we are talking about organized real estate here, no such move was going to take place without gathering opinions, gaining consensus, and creating a political movement.

Enter Clareity Consulting, which published the Syndication Bill of Rights earlier this year, then followed it up with a far more detailed white paper on the subject, Syndication to Real Estate Portals: Problems and Solutions. That triggered a widespread discussion about syndication woes within certain circles of the industry, particularly within the MLS circles. Naturally, the Council of MLS (CMLS) would take an interest, and hosted the Syndication Workshop at Mid-Year.

We are now up to date. Let’s explore the issues, shall we?

The Issues

The opening paragraphs of the Clareity Consulting white paper, I think, serve as an excellent summary of the major issues with syndication:

The MLS industry is a buzz about syndication, especially after Clareity Consulting’s MLS Executive Workshop in March teed up the topic and a vibrant discussion among MLS executives ensued. Matt Cohen, the Chief Technologist at Clareity, gave an overview of syndication today and blew up the myth that “Listings Everywhere” may have as much value as some people think. Matt showed that the traffic to many sites is so negligible, that one has to question whether that exposure has any measurable value for the broker or home seller, especially if the leads are being intentionally siphoned off and monetized, and potential buyers are left confused about who the listing agent is, and sometimes are annoyed by multiple agents contacting them who know little or nothing about the property they inquired about.

Remember the good old dot com days when MLSs were paid a dollar per listing? Today MLS staff spends time dealing with syndication accuracy and data proliferation complaints and the MLS gets little in return – and brokers receive less and less unless they spend money to feature the listings they provide. And, there are more sites than ever leveraging the listings to extract money from brokers and agents while deriving profits from the listings in other ways as well. How did we get here? Is there a way back – even partway back?

Clareity more or less hits on all of the major points of contention.

  1. “leads are being siphoned off and monetized”
  2. “potential buyers are confused about who the listing agent is”
  3. “multiple agents contacting them who know nothing about the property”
  4. “portals getting rich off the labor of MLS and brokers”

I mentioned to someone (I think Amy Geddes) after reading the white paper that it read more like a Call to Arms than a typical white paper just looking at the issue. I believe she thought I was being dramatic. But read the paper for yourself and ask whether you would want to continue syndicating after that.

The conclusion of the white paper is, I think, dispositive:

Online publisher business models have changed considerably in recent months. Some of these changes, combined with data inaccuracy issues, are causing dissatisfaction with syndication, resulting in the sense of a loss of control, and even talk of ceasing syndication altogether. Clareity expects the publishers’ models to continue to evolve, and suggests a fair balance needs to be struck before matters get even worse. There is a balance point where the publishers can run their business, innovate, and make a profit, while still respecting the data provider ‘s reasonable rights and wishes.

If the industry can coordinate around a voluntary set of standards for listing display and lead collection, as suggested by the “Syndication Bill of Rights” in this paper, it can create a better experience for the consumers, and a more cooperative and harmonious environment for the data providers and publishers.

The days of brokers checking the “send to all” box on a syndication network, without any intelligence or guidance, need to come to an end. Clareity hopes that MLS organizations will use this paper as a starting point for evaluating and rating local and national publishers and strive to help their brokers make informed decisions on where to syndicate their listings.

I personally can’t think of a more ringing clarion call to battle than, “The days of brokers checking the “send to all” box on a syndication network, without any intelligence or guidance, need to come to an end.”

The Syndication Workshop

Sadly, not being in the room, I wasn’t able to hear what the presenters and panelists said. Trying to follow it on Twitter was… well, impossible — it appears that the Internet access in the location was next-to-nonexistent, and besides, the topics were apparently not conducive to 140 character streams. But the few informative tweets more or less made clear to me what the mood must have been in the room.

Here are some selected tweets I picked out of the #cmls hashtag from today:

Maybe it’s because I wasn’t there, so the distance and lack of hearing the tone of how things were said may be affecting my thinking, but… sounds to me like the major portals were more or less asked to justify their existence, while the vendors were more or less asked how they can help the brokers and the MLS control the portals.

Hopefully, there will be a post from one of the attendees that reports on the conversation, and perhaps everyone said things to Trulia, Zillow, and Realtor.com in loving dulcet tones, smiling the whole time. But I’m not going to assume too much. Because it is unnecessary to speculate as to what was actually said at the panel.

Why?

Because I believe syndication is merely a symptom of a far larger struggle that will come to the fore over the next several months. In fact, the whole theme of the 2011 Mid-Year Meetings could be summarized in one word: power.

Power And Its Consequences

The ancient Greek historian Thucydides wrote the classic History of the Peloponnesian War about the war between Athens and Lacedaemon (basically, Sparta). In the first chapter, he describes all of the specific events that led up to the outbreak of open war, such as the conflict between the Corinthians and the Corcyraeans and so on.

But Thucydides makes a statement that remains as true today as it was thousands of years ago:

The real cause I consider to be the one which was formally most kept out of sight. The growth of the power of Athens, and the alarm which this inspired in Lacedaemon, made war inevitable. (Thuc. 1.23)

He is speaking of ancient human motivations. Those who have power will seek to keep it; those who gain power will seek to consolidate it.

Syndication, and the struggle over it, could be looked at as the battle of Plataea. It may be the immediate, proximate “conversation” but the real cause is the growth of the power of web portals, and the alarm which this inspires in MLS’s and brokers. Conflict is inevitable.

I believe that as of this writing, the balance of power is decidedly with the MLS and brokers. The most difficult part of creating the real estate Web — data collection and data cleaning — lies with them. The MLS and Broker community need the portals far less than the portals need the MLS and Broker community; it is, after all, easier to build a website than it is to build the web of relationships that makes up the compliance mechanism in real estate. Plus, the portals compete with each other far more than they do with the MLS and brokers; as I’ve outlined above, at least one player (Move, Inc.) is lining up with the MLS and Brokers.

What Comes Next?

Since Syndication is not on the agenda of any official NAR meeting this week (as far as I know), I don’t believe we’ll see any formal movement by NAR on the topic. I do think CMLS will start to move towards some sort of a standard for controlling syndication; products in the market already are taking steps towards that. Coupled with that will be intense debate about money (who pays whom?) and certain business practices of the portals/publishers.

The first move has already been made, a scant six days ago, when Clareity Security (a sister company of Clareity Consulting) released its SAFE Syndication product:

SAFE Syndication provides a consolidated system for measuring and reporting on listing distribution activity. In addition, the compliance tools in the product provide independent verification and reporting by the MLS and/or Clareity as a neutral, trusted third party. Unique features of the product include a compliance API for portals and vendors to allow centralized reporting of violations and concerns, a publisher certification management function, and the ability for the MLS to define its own compliance standards for reporting and comparison. SAFE Syndication will also offer additional features in the near future, including innovative ways to find and document unlicensed data uses.

How… timely. Why, it’s as if they started working on this product months ago, without waiting to see what the outcome of the CMLS Syndication Workshop might be.

And who might you think would be the very first company to partner with SAFE Syndication? If you guessed Move, Inc., give yourself a pat on the back:

Clareity Security is pleased to announce that SAFE Syndication will soon be integrated with ListHub, the largest online syndicator of real estate listings to real estate web sites and provider of performance reports for brokers, franchises and MLSs. This will ensure valuable data being collected and delivered on behalf of MLSs syndicating through ListHub will be integrated into the SAFE Syndication product. ListHub Publisher Scorecards will also be accessible via SAFE Syndication, and both companies are working together on a method for watermarking syndicated MLS data and detecting its unauthorized use. “ListHub and Clareity Security offer complementary services that will help MLSs generate exposure for brokers and their listings while ensuring the appropriate use of their valuable content,” said Errol Samuelson, chief revenue officer of Move, Inc., operator of ListHub. “We look forward to the continued expansion our suite of ListHub services to benefit both content providers and publishing sites.” [Emphasis added]

Why, it’s as if this was the strategy behind the ListHub acquisition from the start! Whodathunkit?

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.

Oh yes, this will be an interesting year or two ahead of us.

-rsh

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