Listings are aggregated by MLSs and put into databases for searches by participating Realtors. This information can also be sold as data feeds to other parties such as Homestore and HomeAdvisor.

In order to gain exclusive rights to key MLS listing data, which was then used to attract consumers to its listings site Realtor.com, Homestore engaged in Gold Alliance agreements with some MLSs, promising them as much as $3 a listing for exclusive rights to publish. In other cases where Homestore could not get exclusive rights to publish, the company offered a percentage of the royalties it earns through sales of Realtor.com I-LEAD lead generation packages to gain continued access to the MLS's listings.

Due to a variety of reasons from member service to the Department of Justice inquiry into Homestore's exclusive relationships, many MLSs have chosen to drop out of the Gold Alliance in favor of making listings available to a greater number of advertising mediums for their agent and broker members.

Jay Huffman, CEO of the Multiple Listing Service Of Northern Illinois (MLSNI,) says, "We dropped out of the program last March. We didn't feel that Realtor.com needed protecting anymore, and we felt we could go from $3 a listing to $1 a listing and make up the difference with other companies like HomeAdvisor."

"We're well aware that when Realtor.com drops its payments, that HomeAdvisor might very well follow suit," says Huffman.

Other MLSs such as the nation's largest, Metropolitan Regional Information Systems, Inc. , (MRIS) have remained Gold Alliance MLSs, but in lieu of recent news concerning Homestore, they are waiting for the other shoe to drop - that Homestore will insist on renegotiating its Gold Alliance agreements down from $3 a listing.

David Charron, CEO of MRIS, says he knew of a meeting that Homestore held for Gold Alliance and non-Gold Alliance MLSs in Chicago a couple of weeks ago. "I saw the list of who attended and there were Gold Alliance as well as non-Gold Alliance MLSs represented there. I know what the agenda was."

"Homestore wants to talk to its Gold Alliance partners and see if there is a method to restructure the relationship," says Charron. "I have not been approached directly, but I have heard about it. If the fees are pulled, it has an impact on us."

One of the problems for Gold Alliance MLSs is budgets. If they have to recalculate their income based on the loss of listings royalties, there could be less money for services to members. Many are in the middle of ramping up IDX solutions for broker and agent members so that individual members can put MLS listings by agreement on their Web sites.

"We have already gone through our budget for 2002, so the impact is significant," says Charron. "I have not received a letter from Homestore but I do understand that Homestore would like to sit down with us, and talk about ways to restructure, but nothing has come across my desk yet."

In light of recent events with Homestore, what will happen?

"I do believe Steve Ozonian is bringing the appropriate amount of humility and I have confidence that he will bring Homestore or Realtor.com to a solvent position, but to make it happen is a huge task," speculates Charron. "It will take a Herculean effort. That said, if he is dropping the numbers by $2 or $3 dollars that may be what he needs but it's not what we want to hear.

"We aren't different from any other MLS system - we are looking for nontraditional revenues that aren't built on the backs of our agents, and this is one that would have an impact. I won't tell you that we will be delaying programs as a result, but it is a sizable amount of money to make up."

In the meanwhile, Charron has put out feelers to other listings services. A relationship with HomeSeekers was grandfathered into MRIS's Gold Alliance agreement.

"I have called and written letters to Homeseekers, but not gotten them to return my call," says Charron. "If they are looking to get data, they might want to respond to inquiries.

But HomeSeekers told MLS organizations in a special online presentation that it will no longer pay MLSs for listings and suggests that MLSs look upon their site as a way to advertise listings - a "member benefit."

"We will send the data where the brokers tell us to send it," says Charron. "We are largely a RETS shop now, and we don't push the data out anymore. We'll work with entities which are RETS-compliant. But so far there hasn't been a hue and cry to send it to HomeSeekers."

"I'm not sure I can appreciate the logic of these firms saying they can't afford to pay for listings after they have blasted through enormous amounts of cash," shrugs Charron. "It is easy to look back and say it is questionable, but without the coin of the realm - the listings - the regional portals and local branding will take on more significance."

Will providing an IDX solution be a lucrative replacement for the Gold Alliance?

"No, the revenues are modest, and they don't replace the content providers," says Charron. "The brokers say it is their data and we have to give them complete access and control of data, and we have to do it at a modest cost. As IDX and whole thing evolves the models and pricing will change.

"It is one thing to have access to the data, but we also have to layer in tools that allow the members to communicate and capture leads so there is a value proposition that justifies the cost. We are understanding what the value is to the marketplace and modifying our methodologies and processes appropriately."

According to Charron, MRIS facilitates over $75 million a day in residential sales over the MRIS network.

Homestore's comment for the record was given by Dan Wool, director of public relations for Homestore, earlier when questioned about royalty and Gold Alliance agreements. "The details of agreements are confidential information," says Wool.

Published: January 4, 2002

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