MLS Direct Syndication Negotiation

In my last blog post I promised that, “In a future post, I will take a closer look at the direct syndication model. Why? It’s more complex, it’s more interesting, it gives MLS’s more flexibility, and it’s arguably the trend for the foregoing reasons.”

Well, the future is now. And it seems to be an apropos time to publish this post – Zillow and ListHub are severing ties, Zillow is putting the full court press on MLSs to get direct feeds, and many MLSs are exploring the idea of providing such feeds to portals such as Realtor.com, Zillow, Trulia, and Homes.com.

In this post I’ll start by providing an overview of the variation in technology that powers direct syndication and how that might impact direct syndication agreements. After that, I’ll describe the agreements with which MLSs can start their direct syndication negotiations. Finally, I will provide a list of some of the terms MLSs may want to consider incorporating into their agreements and negotiations with portals.

A note on the technology

There is one point from the last post that I’d like to clarify a bit, and that is the distinction between the listing content license and the technology that powers the process. This post focuses on the former, but MLS leadership should be mindful of what technology they will use to achieve their direct syndication goals.

There are several technology vendors out there to support direct data feeds. The MLS decision-makers out there will want to determine what features are important to them. Tech options may offer features such as broker opt-in/out on a portal-by-portal basis; broker permission for agent opt-in/out; listing-by-listing syndication; incorporation of metrics pulled from portals, for example leads and clicks-throughs; and probably other features I’m neglecting at the moment.

Additionally, each vendor’s solution may facilitate the distribution differently. Some are incorporated into the MLS’s primary system; some are tacked on to the MLS’s system and lean on the MLS’s RETS server, which may be provided by the MLS’s primary system; and some create a parallel listing database and RETS server to distribute listings.

And the process by which each tech solution does the foregoing may differ. For example, one that creates a new RETS server may simply replicate the MLS’s RETS server to permit faster data transfers, while another may normalize listing content across MLSs to provide portals a more consistent data structure. MLS leadership will want to determine whether any of the above matters to them.

Here’s the point of this rambling: MLS leadership needs to remember to keep the technology solution in mind during this process of “going direct,” and if it’s important to the leadership, to ensure they can use the technology solution they want in their agreement with portals.

The base agreement

[Full disclosure: We have a bias here because we do this work for MLSs. You can decide how many grains of salt to give our opinion on this one.]

What follows is not legal advice. For advice specific to your organization’s circumstances, please contact an attorney.

MLSs have a few options for agreements with which they can open negotiations. MLSs can start with a portal’s agreement (which is likely drafted in the portal’s favor), a model agreement to which portals have agreed (which may have concessions built into it but is still probably geared to be satisfactory to the portals), or an MLS drafted agreement (which the MLS can draft in its favor). I’m in favor of the last option because (1) the MLSs can put every term that is important to the MLS in the agreement, and (2) the MLS is starting with the same agreement for each portal and can compare what they get from the portal “apples-to-apples.”

The MLS’s requests

Ok, let’s get to the meat of this (or at least the meat from my legal-nerd perspective). What terms does an MLS want in its direct syndication agreement? Good question. Below is the start of a punch list for MLSs to consider. Note that there are several things here that some portals might not agree to, and perhaps a couple that none of them will agree to. However, they are all suggested as items for consideration for inclusion in an MLS’s agreement if they are important to the MLS.

Asking for them helps frame up the various portals’ offerings, even if they decline to accept a request. And the more MLSs that ask for something, the more likely the portals will look for ways of meeting the need.

General legal terms

• MLS receives indemnification for Portal use of Licensed Content
• MLS gives no indemnification for MLS content
• Other general legal terms: term, termination, suspension of delivery of data, confidential information, security, audit rights, ownership, warranties, disclaimers, limitation of liability, venue, law, assignment, etc., etc.

Licensed data and data interface

• A tightly defined scope of the licensed MLS content
• The permitted use of the licensed MLS content. We encourage our clients to draft this as what a licensee may do with the data, and then note all other uses are prohibited. Some agreements are drafted where permitted uses are ambiguous or only notes the things the licensee cannot do with the licensed content which leaves the portal free to use the data in unanticipated ways.
• Portal may not have a perpetual license to MLS provided content
• Data interface (e.g., a RETS feed)

Display requirements

• No paid placement, or at least the ability for a user to sort on objective criteria
• Portal must show broker and agent contact information
• First link is to listing agent/broker
• Portal will not allow comments on listings
• Portal will not display estimates
• Portal will not permit agent reviews
• Portal will not alter MLS licensed content
• Portal will not require a fee for full display of a listing
• Portal must note the source and provide a copyright notice; update of same
• Portal must post a redirect link as provided by MLS
• Portal will not harm search engine optimization of links provided to portal
• Portal must clearly distinguish advertisements
• Portal will not co-mingle FSBOs with MLS licensed content
• Portal will brand leads as directed by the MLS’s agreement
• Portal will not permit framing
• Portal will comply with applicable laws and the NAR Code of Ethics, as applicable

Updates and accuracy

• Rules for when Licensed Content will trump content for the same listing from other sources
• Portal must promptly remove listings when they go off market
• Portal must promptly make changes

Licensed content use rights

• Portal must not syndicate
• Define portal’s “network”
• No access to third parties
• No surrender of MLS, broker, or agent rights
• No use for IDX or VOW

Services

• Portal must provide leads
• Portal must provide error reports
• Portal must provide metrics
• Portal must provide timely support

Trademark license terms

• Terms under which a portal may use MLS’s trademark, if applicable

Fees or other consideration

• Fees portal pays to MLS
• Data portal provides to MLS

Keep in mind

Please be aware that this list will likely get updated or could go stale quickly. I’m aware of, and providing input to, at least one industry organization that is working on a similar list. So, keep your eyes open for more input from others. But this should provide a good basis for internal MLS discussions for what might be important to an MLS, and could serve to determine whether there is room for agreement between the portal and MLS. Your leaders should dream about things to add to this list and ask for them. Don’t let a list of terms or a model agreement be your ceiling—let it be your floor.

Additionally, MLS leadership should keep two other points in mind. First, the MLS may have existing agreements it wants to renegotiate or terminate prior to implementing direct agreements with portals. Second, while negotiations are speeding up between MLSs and portals, some portals are new to the idea of accepting an agreement that incorporates an MLS’s requests and are slow to respond to such requests. MLS leadership will want to make sure they’ve allotted enough time to achieve their goals.

So, what do you all think? As always, comments, questions, concerns, gripes, shameless plugs and general musings are welcomed below.

Thanks for reading!
-Mitch