NAR IDX Policy proposals in Anaheim

This post is by Larson/Sobotka attorney and consultant Elizabeth Sobotka.

This post discusses proposals to change NAR policy regarding how and where MLS participants may display IDX data. The proposals impact IDX displays, use of IDX data in social media and mobile applications, RSS feeds, and future, unforeseen technologies. The NAR Multiple Listing Issues and Policies Committee will review these proposals at the 2011 Annual Convention in Anaheim next week.

Background

Next week’s NAR meetings will be the third consecutive NAR policy meeting where the national trade group has taken up the question of social media displays of IDX data and the question of IDX franchisor indexing. The previous efforts had mixed results: (a) a “franchisor indexing” policy was first adopted and then suspended; and (b) no new display policies for IDX in social media were adopted, despite two tries.

After the muddle in May in Washington DC, NAR assembled a new Internet Data Exchange Presidential Advisory Group (IDX PAG) charged with reviewing MLS IDX Policy Statement 7.58. The PAG’s job was to address several IDX-related issues and develop recommendations for consideration by the NAR Leadership Team. The members of this PAG are the most capable yet assigned to take on this task.

As charged, the PAG issued its recommendations in August 2011 and drafted IDX policy revisions in October. You may link to the PAG’s report and the draft policy statement revisions on NAR’s website (login required).

The proposed policy changes fall into two categories. One set of proposals expands the channels through which MLS participants may display IDX data. The second proposal rescinds the IDX franchisor policy. Today’s post addresses only the expanded channels of display of IDX data; the franchisor policy may be the subject of a later post. (Brian wrote a long post in the summer urging the scrapping of the franchisor policy.)

NAR hosted a conference call a couple weeks ago regarding the proposed policy changes, and the Council of MLSs hosted a call dealing with the issues on October 31. (If your MLS is not a member of the Council of MLSs, you are missing out on a valuable relationship.) Our thoughts below reflect only some of the issues raised by our own review of the policy language and what we’ve heard from others.

PAG’s Intent – Where Can Participants Display IDX Data?

The PAG’s job was to determine whether participants should be allowed to display IDX data through media other than “participant public websites,” the terminology contained in today’s IDX policy. Specifically, should the IDX policy authorize display of listing information (a) using mobile applications, (b) via social media, or (c) using RSS subscriptions? The answers turned out to be: yes, yes, and yes. The PAG recommends that NAR expand its policy and rules to clarify that all delivery mechanisms and devices may be utilized for display of IDX listings, provided that the resulting display complies with the IDX policy and applicable laws and regulations.

The PAG’s objective was to modify the IDX policy to reflect both today’s reality and the future. Thus their view appears to be that the IDX policy should regulate how participants may display information in their advertising efforts, not what device or channel is used. Mobile apps, social media, and RSS feeds are likely to stay a while. And who knows what comes next – what will be the hottest new innovative service after Twitter, Facebook, or your latest smart-phone or tablet-based app? Modifying the IDX policy now, and in a flexible manner that recognizes the datedness of the phrase “participant public websites,” seems a worthy cause. But there was controversy about the proposed language, and especially about the impact of RSS, during October 31’s CMLS conference call.

Proposed Policy Language

To achieve their goals, the PAG has proposed language that broadly expands IDX. The first sentence added to the policy is (additions are underlined):

The IDX policy gives MLS participants the ability to authorize electronic display of their listings by other participants.

In support of this statement, references throughout the IDX policy to “participant public website” have been replaced with language such as “display by electronic means,” “electronic display,” “alternative display options,” or, “other authorized display mechanisms.”

“Electronic display” is defined in the policy as:

(D)isplay on participants’ public websites, displays controlled by participants on other websites, display on social media sites used by participants, RSS subscription, and applications for mobile devices.

Further, the policy requires that all electronic display of IDX information must:

1. comply with state law and regulations
2. comply with MLS rules
3. be controlled by the displaying participant
4. comply with the IDX policy and MLS rules.

Also of significance, the policy exempts displays of minimal information (e.g., thumbnails, text messages, tweets) from IDX disclosure requirements, but only when linked directly to a display that includes all required disclosures.

Impact of Potential Policy Change

The draft policy achieves its intent to expand a participant’s IDX display options. But it does raise some questions about the look and feel of the brave, new IDX display world. This section poses some of those issues and questions.

One concern is that the policy might not articulate its own limits clearly enough. For example, what are the acceptable IDX display modalities? While some language refers to “authorized display mechanisms,” other language states, “all delivery mechanisms and devices may be utilized.” May an MLS place any constraints on the method of IDX displays?

A second potentially problematic phrase in the policy is the language permitting “displays controlled by participants on other websites.” Situations that are neither black nor white might arise, absent a better definition for “controlled by participants.” Maybe franchisors can turn their national sites into social media platforms; then local franchisees could put all the local IDX listings on the franchisors’ sites under this policy. (This is more viable, we think, than the copyright fair-use solution to franchisor woes that Rob Hahn proposed.) May the participant now send IDX data feeds to Trulia, Zillow, or Franchisor for display? Could an MLS prevent the participant from distributing the data or place any constraints on the third-party data recipient under this new policy?

Third, under the IDX policy, a participant’s display must comply with the policy and applicable laws and regulations. However, disclosures required under the policy could be problematic. Will a participant clearly understand which IDX disclosures are mandatory versus exempt for a given display? Will all electronic displays of IDX data be capable of linking directly back to a display that includes all required disclosures? If not, may an MLS ban the display?

What requirements that had applied to “participant public websites” might not work for these other channels? Are there critical differences among the channels? For example, if state law requires disclosure of the brokerage firm when displaying listing content, is a tweet exempt from that requirement? Could the MLS ban the display?

Fourth, as far as compliance, how will an MLS be positioned to monitor IDX displays? May the MLS charge a participant according to the number of display channels, rather than simply for a data feed, to defray monitoring costs? We think the implied answer is ‘yes,’ because generally, NAR has not gotten in the business of setting MLSs’ prices. Will the MLS be in a position to manage broker and seller opt-outs as before? We think the answer is ‘probably yes,’ but there may be additional cost in terms of time and resources. The policy’s opt-out language remains intact. So, if Participant A does not like the chosen electronic listing display of Participant B, is Participant A’s only choice to pull out of IDX altogether? The answer appears to be ‘yes’; if social media uses of data are controversial, the result could be damage to IDX in general.

Changing with the Times

The PAG’s IDX policy recommendations are acknowledgment that public websites are only one of many forms of electronic communication available to participants for advertising. Innovative solutions are out there. Is the proposed policy just right to allow participants to creatively use the next, as-yet-undeveloped technology in her real estate efforts? Or is it too wide-open for practical implementation? Should any of the language issues be resolved before the policy is adopted?

-Elizabeth