I love music. I’ve been a music fan all my life. So, back in 1999 when a 19 year-old Shawn Fanning created Napster I freaked. All of a sudden, here was this gigantic library of songs sitting there on the Internet for me to download as long as I wanted to sit, click and wait. Within a few weeks my music collection went from a couple of huge boxes of CDs and tapes to a hard drive of thousands of songs. I literally replaced all that plastic in a few days. It was amazing. Paradigm shift. Despite it’s greatness, Napster had a few major problems that spelled its ultimate doom. Firstly, sound quality was dicey. Second, it was a security risk. You were as likely to pull down a virus as you were Stairway to Heaven. Still, for me and many millions of other music fans it was worth the risk. The access was intoxicating.
Oh yeah, and it was illegal.
In 2000, band Metallica called foul and hired a team of lawyers to shut them down for copyright infringement. Turns out that musicians and their record companies didn’t want consumers getting their music for free. In a few months Napster was shut down and while it still exists as a pay service, it’s place as top-of-mind music resource is gone forever. The Napster idea was based on peer-to-peer access; a brief jailbreak prompted by one sharp kid that wanted what we all wanted – convenient access to valuable content. OK, yes it was illegal, but it rang a bell could not be un-rung, so to speak. That brief taste of freedom sparked the music industry to rethink their business model or die a slow death.
Then in 2000, Apple purchased a small music service called SoundJams and renamed it iTunes. The rest is history. For my purposes here, the most important thing iTunes did for the music industry is give them new life in the form of a price strategy. Because Napster gave you access to other music libraries on other PCs around the world, you just saw lists of songs. You no longer had to accept entire albums to buy music. iTunes works much the same way. You can buy an album for a one-click price, but people buy single tracks much more often – and $.99 is the accepted rate. So, for $1 per song, iTunes revolutionized the music industry by answering a most vital question. What is the consumer’s price threshold for a single song. Well, it’s a dollar. Apple gets a cut and so does the artist and label. It’s far cry from the days of $15 per album and a buy-it-all-of-nothing approach to selling music, but artists and their labels are still working.
Keep in mind that what brought this about was a kid with a lot of brains just wanting a way to get more music. A consumer starving for content.
Skip ahead to July of this year. Spotify is launched in the US. I downloaded it and I freaked all over again. For a mere $10 Spofity allows live streaming of any song you can imagine to your PC and/or smartphone. Let me put that another way. For $1o, you have access to nearly every piece of recorded music in history at your fingertips. I’m doing this now. I just typed in “Beethoven” and I’m now listening to his 8th symphony in F major. I just typed in “Tiny Tim” and now I’m listening to Tip Toe Thru The Tulips With Me. Ok, enough of that. You get the picture.
Spotify gives me unlimited access for a small fee. No, I can’t copy the music to my library or burn it to a CD, but who cares? It streams to my PC or phone whenever I call it up. Why do I need a hard copy? Spotify, the artist and label all get paid. Again, this is not the death of the music industry at all. It’s a shift in business model.
The point of all this is simple. The consumer has driven the once iron-clad music industry out of the shadows and into a new way of thinking and it wasn’t going to happen without Napster. Someone had to come along and toss a monkey wrench into the machine. The music industry was certainly not going to do this on their own. They were content with their comfortable, inwardly-focused model of distribution. Sound familiar?
So how different is our situation? How long is the real estate industry going to stay barricaded before someone throws in a monkey wrench and causes the mass-rethink necessary in the distribution process?
Don’t we already have our own Napster on the scene? Of course we do. There’s someone out there giving the consumer what they want and those among us (the national, state and local trade organizations, the national franchisers and local brokers and yes, MLS vendors) that see both threat and opportunity will prevail. We’re not doomed to die, we’re doomed to change. Why not death? Because much like the music industry, the product (the listing) has an origin that really, really matters. Zillow is a lot like Napster in that the content is readily available, but the quality of the content is a serious risk.
I just looked up my house on Zillow. It shows 1.5 baths. I have 2.5 and always have. Where did 1.5 baths come from? No idea. See?
Wouldn’t Napster have lasted much longer if they took music feeds directly from labels and began charging a small fee for the high-quality, non-corrupted songs?
As much as I wanted music, just having the music wasn’t enough. I wanted high-quality music from a source I trust. We all do.
Thoughts?
I am open to that concept for an MLS. Although change is scary it is a necessary evil in the world of ever changing technology. I think the agents will appreciate this kind of choice. Lead the way SE!
I love this because I can relate to it! Turning it and applying it to our own industry is a brilliant way to create easy understanding, too.
What we did learn is that Labels and Artists are still being paid for their product and product delivery mechanisms/methods have changed tremendously.
Think about the epic music store that was Tower Records. Sadly, it went out of business in ’06 because of this great migration in the music industry.
Who is Tower in our story?
Juli I think I will argue that’s r.com. Your brand can rule, by offering the access people want for a fair price. Bill’s right, you’ll be giving up $0.30 to get a dollar. Huge value creation.
Interesting. I’d like to see how this progresses.
Bill absolutely love the music industry analogy! I guess my question is what it going to take for Zillow to become our industry’s Spotify? Is it going to take us as an industry to expose Zillow’s data inaccuratices to Joe Public, and thus making us out to be the bad guys(think Metallica being labeled as greedy)?
Unfortunately, MLSs don’t have spotless data, either. And much of what appears on Zillow AND realtor.com comes from MLSs as well. Those of us who manage MLSs know how often there are poor measurements, unreported statuses, and quibbles about unfinished basements. If we are going to brag about MLS data, we ought to think about getting serious about cleaning it up. Clearly fines and training haven’t done a very good job–and those are the tools we’ve used as we try to get busy salespeople to provide accurate data. How can we do the job better, and produce data worth bragging about?
Hey Judith, thanks for the comment! At the CMLS meeting on “MLS Branding” in Anaheim a few weeks ago, your concern was voiced by a couple of people concerned with an effort to brand/certify data that itself had integrity issues.
In my opinion, MLS data is coveted not for its perfection, but for the mechanisms in place that attempt to make it so. For example, we have data validation tools built into LIST-IT as well as seek-and-clean reporting options for our MLS staff in an effort to heal less-than-perfect database records. We’re database nerds at heart, so we make every technical attempt to curtail “garbage in” and hit it again with another system to avoid “garbage out”.
Bad data is going to happen, but my clients and I are proud of our work to keep it to a minimum. This is a market-by-market war and it will never end as long as there is human listing entry.
Having said all that, your point is well taken. It’s an issue, but while MLS data might have some rough edges, but it’s the object of desire of those whose business is based on large amounts of data that’s of much lower overall quality.
I’d love to hear from my clients on this. What’s your impression of the relative accuracy of your data?
I agree with Judith that MLS data isn’t spotless, however, we do everything we possibly can to make the larger % of the data accurate. We are constantly monitoring listings from all aspects to try and make sure the data is the best we can get. I agree totally with you Bill that as long as there is human input then there will be errors (not to say that mechanical input is 100%). If we could get the agents, who want to make their lisitng stand out by putting in “fluff” that doesn’t belong, to stop that practice that would be a big help, however, that is a mamouth job at best.
We do the best we can with using the citation manager which has turned out to be a big help as well as the agents having a tattler link in the listing to report issues that the citations don’t catch. When they aren’t busy they find “stuff” to report all the time.
We do have a way to go but I personally think that our data – specifically – is 1000 times better than it was 8 years ago before we switched over to Solid Earth. Keep up the good work.
I think our data is pretty accurate, and getting more so all the time as we normalize across regions. And anyway, what are the alternatives? If we compare MLS data to some mythical “perfect” dataset we might come up short, but there is no such thing as a perfect dataset. Not in the US anyway.
So, MLS data is not perfect but it’s excellent, and timely, and actively self-scrubbed by the host of REALTORS and sales agents and appraisers in the field every day.
The real question is this: do we want to band together and offer a feed to the other sales channels in our space (Zillow, etc)? I think we do. And, it’s not that hard to do. We already know the format, the most likely customers, I even think we know the price point for a listing. Now all we need to know is, do the Brokers (who after all own all of this data we’re talking about) want to band together and assert some control?
Solid Earth believes that our mission is to empower Brokers, and their agents, to fine tune the MLS platform to meet this demand, without trying to grab a piece of the pie. Solid Earth already offers high-performance RETS services to dozens of cities in the US containing over 200,000 active listings, updated all the time.
The new Spring MLS platforms and our relationship with Bridge Interactive provide our customers with leading edge syndication platforms. With these, and the right business model we could deliver a single clean feed to third party channels. It’s easy, they can already pay online and maybe the MLSs could start leveraging some of that valuable data!
Let’s face it, pretty much everyone wants MLS data because it is the most accurate data out there. We are giving away priceless information for free and everyone else is making money on it. None of that makes any sense! I think that people are starting to understand that now and NOW is the time for everyone to come together and take our data back. I’m just not sure how to make that happen….
Nice post, Bill. My thoughts differ from yours in one important way:
I don’t think that the integrity/quality of the listing data is the sole or primary issue at hand. I do think that MLSs are the most thorough and accurate source of listing information, but the key issue for the industry right now is one of value:
What is the value of listing data, and how does this compare to the value of the exposure to consumers that third-party real estate websites offer?
MLSs and their members currently provide their entire listing database to virtually any site that requests it either directly or via syndication. By doing so, without compensation, MLSs have declared that the value of the listing database is exactly equal to the value of the exposure these third-party sites provide.
I believe the listing database is worth substantially MORE than the exposure these sites provide, and THIS is the central issue at play. THIS is why there is so much frustration and conversation about syndication within the industry.
IF agents, brokers, and MLSs believe their data has value, then the solution is simply to charge for access to it. The question then becomes “How much is it worth?” Well, it’s worth less than these sites gets paid in ad revenues (they deserve to make a profit), and more than nothing (which is the going rate for the virtually all MLSs and their members). The open market will quickly determine the right price.
IF the sites currently getting listing data refuse to pay for it, or IF they find other means of obtaining it for free, then the market has determined that there is no value for aggregated, accurate data. IF that happens, it is evidence that the data has no value.
If that is the case then we will have learned a lot.
If that is the case then the industry should fully embrace these sites as vital partners in its efforts to help agents sell more real estate.
I honestly feel that Trulia, Zillow, and the like are in a better position to, and in most cases will do a better job presenting listings and relevant real estate data to consumers than an MLS can- The truth is, most MLSs do not have the resources- time, energy, money, or skills- to produce consumer facing websites that drive significant consumer traffic to properties listed for sale, and to relevant real estate information in general. There are notable exceptions, hats off to Bob Hale and his team in Houston, by example, for their incredible success doing so.
The problem is that the vast majority of agents, brokers, and MLSs have not attempted to let the market determine the value of their data. How do you do it? There are vendors out there with technology to charge for access. Our company does, and we are not alone. Talk to us. Talk to our competitors. Compare solutions. Find one that works for you, then MAKE THE CHANGE.
Third Party Listing Websites have gotten a better deal than they deserve, and it’s time to change that.
Turan…interesting perspective. I agree that the data has to be valuable and that the industry hasn’t asked the market, per se, to determine the value. But … A) there hasn’t been an MLS provider out there that’s tried it … yet and B) should ‘the market’ have the sole responsibility to determine that value? I personally think the industry, to include MLS providers, knows more about the data, its purpose and what can be done with it than a 3rd party therefore making them the ideal candidate to build such an interface. I agree that the listing data has to be both accurate and valuable. Mike Audet’s 2011 WAV Group MLS Survey even highlighted data accuracy among one of the prominent themes across MLSs as something to be improved. So, accuracy is still at the top of the list in my opinion. Mobility is also in the running and per the discussions at NAR and opinions stated in the WAV Survey, everyone appears to be in agreement on that. One user quoted in WAV’s survey even said: ”My clients get better info from the Internet for free than I do and I pay for the information.” We all see that the industry is in need of a makeover and Solid Earth is on the cutting edge of that impending shift with Spring. I’m certainly eager ( <– this is an understatement) to see what this platform does to the real estate landscape.