I manage an MLS with about 10,000 Realtors in Minneapolis/St. Paul and nearby portions of Minnesota and Wisconsin. As I see it, MLSs do two important things:

1. They aggregate listing data from multiple brokers representing a nearly-comprehensive inventory of available properties in a market. In other words, MLSs make a market in real estate in a way that is akin to the way a stock market makes a market in stocks. This is the "compilation" side of the NAR definition of a multiple listing service.

2. They provide a facility for brokers to offer compensation to and collect compensation from each other in real estate transactions. It is an NAR requirement that any active listing on any MLS system include an offer of compensation.

As far as I know, MLSs are the only entities that do these jobs. We have cultivated critical competencies like rule enforcement and arbitration in these areas. In order to thrive, we need to continue to do them and do them well. That means getting accurate data from our subscribers and enforcing their expectations about how that data will be used once they share it with us.

MLSs are not the only entities that distribute this data. In many ways, we don't really have the critical competencies to distribute it. That's why we hire MLS vendors, but we have our own rule enforcers on staff. If we viewed distribution as a critical competency, it's unlikely we'd farm it out. Some MLSs don't farm it out, but these organizations are in the minority.

Focusing on this aspect of what we do may be a mistake.

Our brokers may choose to work with outside vendors to achieve their own objectives on the distribution side, and I believe we should encourage and support that, not impede it.

But we must still protect all brokers' expectations about what will happen to their data. In light of those concerns, here is what we believe our brokers may do who want to distribute listing data:

• The brokerage may do whatever it wants with data relating to its own listings, including advertising. In other words, if a broker downloads his or her own listing data from our system, we place no restrictions on how it can then be used. While there may be regulatory or ethical limitations, these are not the concerns of the MLS.

• The brokerage may use all the data we provide internally for purposes of advancing its residential real estate brokerage business, provided that all licensees given access to it are subscribers to our service. This means the brokerage can download the entire MLS database, put it on an in-house system, and redistribute it to its own agents and staff. This does not constitute advertising. The only entities getting access to this data in this scenario are the MLS subscribers' own licensees and staff. This is entirely consistent with brokers' expectations: When Broker A puts a listing in MLS, she expects Broker B will make it available to his own agents. The exception is brokers with offices in multiple markets; they are not permitted to make listing data from us available to their licensees in other markets unless they pay subscription fees to us for those licensees.

• A brokerage may make listing information of other brokers available to its buyer customers and clients, provided it has qualified the listings shown to each client as matching that client's interest and ability to pay. Again this is entirely consistent with what other brokers expect. We don't say that this brokerage can do this only by printing the information out and handing paper to the buyer; the buyer's firm may also provide access for the buyer to a password-protected web site maintained by the broker. We wouldn't have a problem, in principle at least, with what eRealty.com has done in the Austin, TX, market.

• A brokerage may never make the listing information of other brokers available to anyone else, except in three circumstances:

  1. The brokerage gets express permission from other brokers (e.g., Broker A allows Broker B to advertise her listings);

  2. The brokerage is part of our Broker Reciprocity program (pursuant to NAR's IDD mandate);

  3. The brokerage may make access available to its computer contractors to achieve items 1, 2, or 3, provided the contractor agrees to provide access to no one else and agrees not to use it for anything else.

As for costs, the brokers pay us for any out of pocket costs to provide them the data in the form they request. We build reasonable overhead cost into that, because having multiple copies of the RMLS database makes our jobs of rule enforcement and technical support more difficult. But the price is still quite reasonable.

As for legal rights, RMLS has a copyright in the database. The copyright is not in the data itself; data are uncopyrightable. It is the selection and arrangement of the data elements in which we have a copyright (as well as in certain photos and arguably creative textual fields). In order to bolster this "thin" copyright protection, as the Supreme Court has called it, we resort to two other kinds of restrictions: trade secrets law and private law (i.e., contracts). In order to protect the database as a trade secret, we have to make commercially reasonable efforts to preserve its confidentiality -- make anyone who gets access sign a contract. That leads us to private law: you should have a contract with anyone who sees your data, where they agree to treat it as your confidential data and to use it only for the purposes specified in the contract.

These statements of policy won't resolve every issue, but they handle probably 80% of the problems we have to deal with.