June2015 - Equitas Realty
In Part 1 of Roadkill on the Internet Highway, I discussed how the departure of The Zillow Group (Zillow + Trulia) as a ListHub customer essentially renders that product as irrelevant.
So the next Roadkill question is: what else in the MLS ecosystem is at risk based on the megalithic control of consumer eyeballs that The Zillow Group has amassed? Hmmmmm
MLS database platform vendors
Time was, back in the old days of MLS platform software (5-10 years ago), that the purveyors of the database platforms that MLSs use were also selling the notion of the MLS having customer facing websites that consumers would flock to. No matter that this notion competed with local brokerage websites or that they didnt get that they were about to be blindsided by Zillow, it seemed like a good idea for the MLSs to promote their data publicly on the Internet. The MLS platform vendors were basing a lot of software development effort on consumer MLS websites, and their profitability was modeled including that product-set revenue. Well, with the exception of a few of the largest MLSs, Zillow has killed that product segment. Zillow is now where consumers go to get listing information on the internet, not the MLSs. So the MLS platform vendors, of which there are less than 5 prominent ones, are competing for the 500+ MLSs solely as the database that serves the MLS agents, which is a limited subset of the revenue these vendors initially envisioned. Survival in this segment is iffy and we will see more Roadkill.
For years there has been the persistent (and failed) discussion in the MLS ranks, of moving toward one national MLS. Realtor.com had grand hopes here, but that dog just couldn't hunt. However,it is inevitable and makes sense in real estate's 'Zillow Age' for smaller MLS organizations that have limited funds or technology expertise to merge into larger close-by MLS systems. And as smaller MLSs merge into larger ones, the MLS platform vendors customer base shrinks, insuring the Roadkill in that segment. So there's a double whammy in the MLS ecosystem: less MLSs and less MLS platform vendors.
If, as is the case, the average age of NAR members is 57, it might just be that the average age of local Realtor Association management is somewhere north of 57. And of the 60+ crowd, excluding the many outright Luddites, most dont really understandthe watershed industry changes being driven by the techno-giants as we speak. Yet,this is the management team tasked with developing MLS strategies locally in the Zillow Age!
Case in point: In a few short weeks, on April 7th, ListHub will stop feeding our listings to Zillow, the biggest source of consumer eyeballs on the internet. Since this announcement was made 3 months ago, there has not been one message from our local MLS or the Association management to the 3000+ membership brokers and agents about what the MLS plans are for maintaining our listing presence in front of 70+% of the consumer eyeballs on the Internet. Either a) the Association management has their heads stuck in the sand and are oblivious, or b) perhaps they are deer in the headlights, or c) (wishing hopefully) just maybe they are thinking really hard and consulting with other top industry thinkers and are about to tell us at the 11th hour their brilliant solution to this potential disaster.
Smart money isn't on scenario C.
But I can guarantee that there are a lot of extremely smart, young, tech savvy MBA grads at Zillow who have a very well thought out plan that they are executing on every day. Their plan is not just about the coming months, but actually about how listing data will be acquired, managed and published for years to come. Their plans likely have nothing to do with a surviving MLS system, large or small. MLSs are an inconvenient bump in the road whichwill be completely repaved into a smooth efficient highway in the not too distant future.
And the national MLS system will be Roadkill under that new layer of asphalt.
The entire ecosystem, including IDX Based Systems
No more MLS no more IDX. WOW! Now we are talking about a large swath of vendors, from market reporting software, to mobile platforms , to brokerage website vendors, etc. This could make for fun new posts titled Roadkill Parts 3-5, but I dont think Ill go there. Suffice it to say, at some point Zillow (and/or other national internet databases) will be the data source for the ecosystem of real estate vendors, once the MLS dodo is extinct.
And there will be huge opportunities for new tech startups that play the game according to Zillow, as they leap over the carrion of a lot more roadkill on the internet highway.
JW (Next post: Gary Kellers Snake Oil: 'your data'.)