The struggle continues between the IDX feeds and the brokers who feel that they are losing out on potential deals that their listings create. The struggle does not need to exist and should be rectified sooner rather than later, one way or the other. The easiest solution that we have determined would be to pay the listing agents for their listings instead of the current model which doesn’t pay the listing agents anything while their content is being used to generate revenue for the syndication sites that use them. This revenue share could be designed similar to the model that Apple used to revolutionize the music industry.
When the first major interrupter came to the music industry it was in the form of a file sharing site called Napster. There were others but Napster was the one that garnered the most attention so it is used here as an example. The problem that Napster brought to the forefront was that the musicians that created the music were not receiving any revenue while their music sales were potentially being usurped. It was not the musicians were not the ones that brought this to the attention of the federal government. The government was notified by the music industry moguls heading up Sony and other publishers. In the same way the real estate industry will not be changed dramatically until the large brokers join together and act on their suspicion that they are losing out on potential revenue. Musicians were fooled by the fact that their music was getting more plays than before and they were told that the more downloads they got the more CD’s they would sell. This did not happen and when record companies got wind of the loss of revenue they acted quickly and decisively. The only problem was that there was no other business model that was working to maximize the power of the new technology. That was until Apple introduced the world to iTunes. The idea was to make a little money from a lot of people and share the revenue with the artists and studios. This was the beginning of the digital music industry and the beginning of the end of record stores.
After iTunes launched the musicians and studios were able to make money from the new technology and expand their business. Still some studios and musicians fought the iTunes concept for various reasons.
Could this same model work in the real estate industry or any other industry that benefits from the aggregation of content and then provides that content to users?
We think that it could and we also believe this is the eventuality of sites like Zillow, Trulia and the rest of the data aggregators in the real estate industry.
Here is how it could work.
Each time a real estate buyer clicked on a listing the listing broker would receive a small payment. For the sake of argument we will use 25 cents. If a broker has 100 listings the broker would be paid each time a buyer clicked on the listing. Each listing receives an average of 5 clicks a day. This means that the broker would receive $3,750 each month from listing their homes on the syndication sites. This is $45,000 a year which would go a long way to soothing the wounds that have been opened up with the syndication of their intellectual property. We would go so far as to say that this method would actually promote the brokers adding their listings to more syndication sites. The $45,000 is a nominal fee to be paid for the data but it is more equitable than what we have today and a smart broker might take the funds generated from their listings and either share it with their real estate agents or use it in some other meaningful way that benefits the agents directly. For most brokers it is not about money. It is about equity and not feeling as though they are being taken advantage of
Why should it matter what the broker thinks? The decision to allow a property onto IDX feeds should ultimately belong to the seller. Just as they have a right to chose their agents they should be able to have a say in the scope of how their properties are listed. As with a dual agency there should be a waiver in place to protect the property owners rights when IDX is opted out of. As I read this back to myself I can’t help but feel a little naive, forgetting that someone will always find a way to game the system. But I still can’t help but think what kind of a market we would have if we put the sellers needs first, instead of getting into pissing matches on who has the rights to publish a listing.
Agreed but it has long been the assumed responsibility of the real estate agent to advise the consumer. The advise to syndicate could be far easier to swallow if there was some recompense for the use of the intellectual property of the real estate professional. The idea is to head off a rising tide of dissatisfaction among the real estate community.
I think the one thing to take from this article is that at some point in time it’s going to happen. You get enough big dogs barking things start changing. Eventually you’ll have enough brokers quoting that famous phrase from the movie “Network” “I’m mad as hell, and I’m not gonna TAKE this anymore!”
Great point Irvin. I think we need to be honest with ourselves and admitt that lots of people are already gaming the system. Agents suggesting one loan officer, the loan officer suggesting one escrow company are examples of gaming that happen every day.
It’s not gaming, it’s getting gamed that we don’t like.
When we feel like we are helping its not gaming, it’s conscientious. It’s the same for everyone else involved.
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