Among other hints that all was not right at Homestore was something that was never made public knowledge - that Homestore was trying to reduce its I-LEAD royalty payments to participating MLSs by tying them to listings instead - at $.50 apiece. While some MLSs will agree, will Homestore be more hurt in the end?

From a dollar to fifty cents a listing. That's less than half of the going rate that the national listing sites are paying MLSs for data feeds, according to what HomeAdvisor pays. And, it's also about half the amount that royalty participants have received in the past, say some MLS board members.

And that has some of them seeing red instead of green.

Homestore has two ways to pay for MLS listing data feeds. One is by Gold Alliance agreement in which participating boards are paid up to three dollars a listing for their data feeds. The other is by royalty agreements in which non-Gold Alliance MLSs are paid for access to their brokers so that Homestore subsidiary Realtor.com can sell I-LEAD lead generation packages to the MLS's members.

Now Homestore is trying to reduce its I-LEAD royalty payments to participating MLSs by tying them to listings instead - at $.50 apiece.

When Homestore was contacted for more details about its royalty agreements, spokesperson Dan Wool declined to respond. He commented, "The details of agreements are confidential information."

In October, Homestore announced that it would cut costs in several key areas. What it didn't make public is that it was going to try to cut costs by biting the hand that feeds it - listings aggregators.

That's when Homestore approached Jay Huffman, CEO of Multiple Listing Service of Northern Illiniois (MLSNI,) with a new deal - renegotiate the royalty agreement to $.50 a listing.

But there was some confusion as MLSNI determined that the agreement in question might no longer be valid. As negotiations ensued, Homestore missed its payment according to the agreement that MLSNI believed was in force.

"MLSNI was within 24 hours of cutting off Homestore's data feed," says Darcy Dougherty, CEO of the Chicago Association of Realtors. "but it was decided that because there were so many members who use the I-LEAD pages (about 12,000) that it would be a disservice to them."

As Huffman explains it, that's a real dilemma with possibly strong consequences for all concerned.

"We're not selling data as many believe," explains Huffman, " - we are selling a data feed. MLSNI sends approximately 45,000 listings a day to Homestore. How can we make a business decision like cutting off a vendor that isn't paying us, and serving our customers who are dependent on that vendor because of products they have purchased?"

"The bottom line was that we were giving listings to Realtor.com because it was distribution exposure for our brokers. We are an inventory system that facilitates the transfer and sale of properties, and we felt exposure of properties would be a good service for our brokers. We dropped the Gold Alliance because we thought we could easily find other sources to pay us for the data feeds, and we didn't feel that Realtor.com needed the protectionist approach as much as when they first started. They were supported by everyone in the industry when they morphed out of RIN.

"We had no intention of going against the NAR because we are a Realtor organization, but we are under a royalty agreement based on access to the broker market."

Adds Dougherty," "The service that you get is poor, and there are a lot of complaints about what they do with the information, and that they receive daily listings, but don’t update them every day on Realtor.com.

"We should be getting excellent service as their livelihood depends on MLS's feeding them the data," Dougherty continues. "I get complaints all the time from members upset with Homestore. There are various issues with the homepages and the layers to get to the property information - it's too many hoops for consumer to get through to get the information. I'm sure that some people love the service, but I'm not hearing from them."

Huffman says the MLSNI is looking at alternative solutions, an undertaking he is not taking lightly due to the consequences for listings sites like Homestore.

"We have a broker transfer program that for a small fee we take the broker's listings and send them everywhere they want, and then we're out of the loop," explains Huffman. "The problem is we have to identify the 12,000 agents that Homestore is serving and that can't happen overnight.

"I'm doubtful that Homestore can manage 800 feeds - how will they process 12,000 new feeds when they only had to handle one from our whole area?"

"We figured that we had a substantial database, and we have made it easier for Realtor.com to get significant listing inventory, and that is what the buck a listing was paying for. We were being compensated for listings shipments.

"There is a big difference between data mining and data shipments," concludes Huffman. "if we aren't going to be compensated, then we would like to find an alternative way for our brokers to participate with companies like Homestore, and that is what we are looking at internally."