Recently, an event in Chicago captured the attention of all in real estate, exposing a developing conflict over a fundamental question that has never been adequately answered: Who really owns a listing and related data, and who has the right to market and profit from it?
One of the largest Multiple Listing Service (MLS) organizations, Midwest Real Estate Data (MRED) in Chicago, cut its feed of listings to Zillow, alleging the latter violated its listing data policy by filtering out select properties of a brokerage company, which purportedly violated Zillow’s portal policy. That policy prohibits the promotion of listings publicly in advance of displaying on Zillow. The matter is now before the courts with a temporary restraining order returning the listing feed, yet the case and antitrust angle present implications for the economics of an entire industry.
At its core, a listing is given by a seller to a representing brokerage, which submits the information to an MLS. That MLS, in turn, aggregates the content into a searchable database. Although the brokerage company technically owns the individual listing content, the consolidated database is owned by the MLS and becomes a valuable asset to monetize through various means, including sharing data with consumers and real estate portals. Therein lies the rub. At some point in the evolution of the industry, the data provided by others became the raw material for billion-dollar enterprises that had virtually no role in its creation.
Real money is at stake. At a recent industry conference, disparate valuations for public companies in real estate were shown. In 2012, the mega real estate franchising conglomerate Anywhere, parent company of numerous successful real estate brands, was valued at $12 billion. That same year, Zillow was valued at $1 billion. Today, the valuations have flipped with Anywhere, shortly before a recent sale, valued at $390 million and Zillow valued at $17 billion. Anywhere, between its brands, represented more than 200,000 real estate professionals and a significant national market share of listings. Zillow has no listings and no real estate agents in the traditional sense, building its business model on the data provided by the brokerages.
It goes beyond data rights to the topic of attribution. Zillow’s revenue model, like several portals, is derived from real estate professionals paying subscription fees or other charges to receive impressions and leads from online buyer queries. As a consumer, one might believe they are reaching out to the listing agent for more information or to arrange a showing, only to be contacted by a different agent with no connection to, or knowledge of, the listing. A universal complaint from listing agents is that they generate the opportunity only to have buyers directed to a third party, all while their listing is generating profits for the portals.
The industry only has itself to blame. Many years ago, the genesis of data syndication began with MLSs gladly providing property listings to the newly emerging online real estate portals in exchange for exposure as a member benefit. Listing companies would get their properties syndicated to the largest potential audience of buyers as free advertising. Today, many brokerage firms would still readily provide a direct data feed of listings to the portals for the benefit of this continued exposure, even if the MLSs stopped sharing. Yet there is an increasing number who consider the sharing of listing content a costly mistake and wish to put the genie back in the bottle. The Chicago confrontation is, in part, a belated quest by the industry’s largest producers of listing data to recapture leverage. In essence, if your data is the lifeblood of someone else’s business, should you not have some right as to how it may be used or shared in the rewards?
The old African proverb, “When elephants fight, it is the grass that suffers,” may apply in this saga. As brokerages strive to claim more control over how and where listings are marketed, there are legitimate concerns emerging regarding private listing networks and restrictions to access, whereby buyers may find new listings only through the representing brokerage rather than seeing them everywhere, as is the case now. Zillow is making the case that such brokerage actions are anti-consumer, while the participating brokerages state that the consumer may obtain all the needed information to make an investment decision from a legitimate real estate broker instead of a source that did not have skin in the game.
In the weeks ahead, the Chicago case will work its way through the courts. The battle over data rights and attribution is, however, only getting started.
Budge Huskey is chief executive officer of Premier Sotheby’s International Realty.
This article originally appeared on Sarasota Herald-Tribune: Why Zillow and a major MLS are fighting over data | Home Front
Reporting by Budge Huskey, Special to the Herald-Tribune / Sarasota Herald-Tribune
USA TODAY Network via Reuters Connect
By Budge Huskey, Special to the Herald-Tribune | USA TODAY Network
