I received a call yesterday from a sage MLS executive. He saw the article in RE Technology about Sandicor adding a new syndication field into their MLS. We had discussed this a few years ago after some broker focus groups. At the time, the brokers did not seem to care too much about syndication, so the idea did not go anywhere. That changed. Adding the field is on the agenda at their next board meeting. He is probably not alone.
Aside from that, he shared with me his vision for how syndication is going to play out in the long run. He said that I could write about it, but could not use his name. The recent outbursts on Facebook and Blogs about MLSs are not worth the aggravation I will leave that topic for a future article. I will try to recount the essence of his vision for the future of syndication. He believes that syndication is going to change in one of 4 major ways within the next 12 months – and it will be painful.
Background of IDX
In many MLS markets, the MLS provider charges a data access fee. Depending on the size of the market, the fee may be as high as $1000 per month per vendor, or as low as free. Any vendor who wants to provide products and services on top of the MLS data must first have broker approval, then enter into a three party data license agreement (broker + MLS + vendor). If a vendor, like Homes.com, Real Estate Digital, Wolfnet, or iHomefinder, etc have hundreds of customers – the fee is a reasonable cost of doing business. Most MLS markets with more than 2500 subscribers have 50 or more vendors paying this license fee.
The MLS data fee covers three primary costs to the MLS. It pays for the bandwidth fees associated with pushing terabytes of data out the door every day. It allows the MLS to fund the legal and administrative fees for processing and enforcing the data agreement. It pays for the support services to data vendors when the feed has service issues. These are all real costs. Syndication has the same real costs, but the service fees are not being recovered by the MLS.
Future developments in Syndication
In most cases, syndication does not have any fees at all. The broker and the publisher get syndication services and support from the MLS as a subscriber benefit. When syndication was an infant, neither the broker nor the MLS saw much harm or cost in syndication – so they turned it on. But today, syndication has become an insolent teen. Change will happen, and it may come in a variety of forms. Here are his thoughts. They are all built on the principle that syndication has costs that are not being covered by the benefactors of the service.
- MLSs could charge for syndication like they charge for IDX. If the 900 MLSs charged $500 per market per month – the resulting $5.4M in fees would effectively end the life of most national publishers of broker data. His feeling is that it is that syndication has the same costs to support as IDX, but the MLS is not recouping the fees. The free pass should go away. Data feeds cost money. Contracts cost money. Support costs money.
Sidebar on implications: NAR could pick up the fee for Realtor.com since that is a member benefit anyway.
- MLSs can simply stop offering syndication as a member benefit. If brokers want to syndicate – they will need to do it on their own. The MLS did not build their print ads for the newspaper. Why should the MLS build a broker’s online ad? Why should the MLS shoulder the cost and the aggravation?
- MLSs will create a paradigm for data sharing that will allow any broker to display listings from any other willing broker in America. Effectively, all brokers will be able to provide consumers with a national property search solution. A huge data repository like CARETS will be built. Alternatively, the service will be provided by one of the companies that already have most of the data on their servers – Homes.com, MOVE, Wolfnet, or iHomefinder. MOVE is the only company that has all of the data. Homes.com has about 99%, Wolfnet and iHomefinder have about 98%.
- MLSs will create a paradigm for data sharing among MLS consumer facing websites. With the drafting of one simple agreement, all MLSs that operate MLS consumer facing websites could share data and create something close to a nationwide property search solution. Take a look at Http://www.mlscloud.com
Change will happen if syndication continues to be viewed as insolent. For certain – the free service offering for syndication will go away. The teenager who has been living in daddy’s house for free is going to learn what the cost are to living alone. Welcome to adulthood.
Does anyone agree or is this MLS executive just an old, out of touch crazy man? Feel free to leave your comment below.