Brief Thoughts on the 2017 MLS Policy Changes

Greetings from the Land of the Morning Calm!

I know I should just be focusing on my Asian vacation/trip, but it’s been too long. Plus, I got a bit of time to hang out at one of these ultra-modern cafes in Apgujeong, one of the hippest parts of Seoul. So I figured I’d opine on a couple of things having to do with the arcana of MLS policy.

I realize that most people are going to be focused on the “MLS of Choice” piece. But I think there’s another piece that is a doozy: the proposed changes to sold data over IDX/VOW have some implications that make me wonder if the folks on the Committee have really studied them fully. So to help them think about the issue, as well as MLS people who may be required to deal with the policy change, I figure I’ll throw some thoughts out.

First, Watch Tom Berge

Before we get into it, go ahead and watch this short video from Tom Berge, the 2017 Chair of the MLS Policy Committee:

Like I said, most folks are focused on the first proposal, which changes MLS Policy Statements 7.42 and 7.43. This is the so-called “MLS of Choice” recommendation.

I find this proposal entirely unremarkable. Maybe the only thing remarkable about it is that it is controversial at all. As Tom says, the opponents argue that there’s a free-rider problem. Well, in 2017, there are a ton of other ways of dealing with free-riders than asserting the power to charge people who don’t use your MLS.

So even though this proposal will suck up most of the energy, that is competely uninteresting to me. Just pass it, let brokers and agents save some money, and move on.

Proposal 2: Sold over IDX

This next proposal is one where things get… sticky. It seems eminently reasonable. Basically, the current IDX policy requires that three years of sold data be made available over IDX. But that change was made in 2014.

Back in 2015, I wrote this post talking about copyright and solds-over-IDX. I realize that few people worried all that much two years ago; I realize that few people are likely to worry today. But hey, I gotta warn everybody again with the same words as I did back then.

I recommend that you read the entirety of the 2015 post, but if you’d rather not… let me give you a brief summary.

Photographers typically grant a limited license to their clients, the real estate agent and/or broker, which allows usage of the listing photos to market that property or to market the agent/broker.

Any usage outside of promoting/marketing that property or promoting/marketing the broker is a violation of the copyright.

Solds-over-IDX has a big problem if the listing photographs are made available, since there is no marketing of the property (it’s already sold, remember) and no marketing of the listing agent/broker.

That was true in 2015; it remains true in 2017. Unless the listing agent/broker got a different license (perhaps a work-for-hire agreement, or an expanded license to use of the photographs), that broker cannot assign rights it does not have to the MLS. In turn, that MLS cannot grant rights to Participants that it does not have. So, making photos of sold properties available via IDX or VOW or whatever is skating on extremely thin ice.

VHT v. Zillow

One item that is of interest is that in 2015, I interviewed Brian Balduf of VHT for that post about copyright and IDX. Since then, VHT has brought a lawsuit against Zillow for copyright violation. I don’t know the precise allegations and pleadings, and much of the lawsuit was already dismissed, but one small piece survived… and VHT won a $8.3 million judgment against Zillow.

In the story linked to above, we find this:

The jury’s decision “protects the interests of real estate photographers and their clients,” says VHT CEO Brian Balduf. “We look forward to continuing to work with our team of nationwide photographers, as well as our industry counterparts, to create a rights management organization to ensure that all real estate photographs are managed properly and protected against unlicensed uses.”

Real estate practitioners that contract with a photography service should take notice, says Katherine Johnson, general counsel for the National Association of REALTORS®. “It is imperative that brokers and agents understand the rights they are getting from photographers and then giving to third parties like MLSs and portals.”

Maybe VHT only wants to sue Zillow. Or maybe this “rights management organization” of photographers could get real interested in all this photographs of sold houses ending up on all kinds of real estate brokerage and agent websites.

And Katie Johnson’s advice the brokers and agents understand the rights they are getting from photographers, then giving to third parties like the MLS, is excellent advice. But that advice came in 2017. Maybe in 2015.

This is where I get nervous about Proposal #2 above.

Copyright in 2012?

Proposal #2 seeks to expand the availability of sold data (and one assumes that such data includes photos, because without photos… it isn’t clear just how useful sold data really is) to January 1, 2012.

So let’s say that in 2017, when the VHT v. Zillow case was decided, and starting in 2015 when the lawsuit was brought, NAR Legal and other MLS and Association counsel started making sure that brokers and agents had the rights to these photographs they were purporting to assign to the MLS.

What about in 2012? 2013? Did brokers and agents back then really think about what kind of rights they had to the listings photographs taken back then? Did the standard agreement reflect the right to use those images for something other than promoting/marketing that property or the listing agent/broker?

If those agreements from 2012-2015 or so were the standard ones that granted rights to use the photographs “only for marketing”, then expanding the solds-over-idx requirement could be a real doozy.

And it’s going to sneak up on a lot of brokers, agents, and MLS’s. None of them have been hit really hard by copyright violation lawsuits. Yet. But if Zillow got hit for $8.3 million just for how it used photos in the Zillow Digs site/app, then you have to think about how it might be for the MLS to have shared thousands and thousands of photographs dating back to 2012 to every single broker/agent who has an IDX feed from that MLS.

Call Your Counsel; Think About It

I’m not suggesting that the MLS Policy Committee not pass Proposal #2. After all, once you’ve made sold data required over IDX, expanding the time frame seems a minor thing.

I am suggesting merely that the MLS Policy Committee get a rock-solid opinion from NAR Legal or even outside counsel if necessary (including lawyers who might bring such copyright lawsuits) to get a really good idea of what the implications are of expanding required sold data to 2012.

Fact is that copyright law hasn’t really kept up with advances in technology, so it’s a little unclear what the right answer is. I just don’t know that I’d want my local MLS to be the test case for figuring out the limits of copyright and the internet.

Anyhow, I know most Committee members are but a couple of weeks away from heading to Chicago to discuss the proposals in person. I realize that most of them will be focusing not on this seemingly minor expansion of solds-over-IDX policy, but on the “MLS of Choice” issue. Nonetheless, I would like to urge any reader of mine who is on the MLS Policy Committee to think real hard about copyright and sold data. I’d like to urge you to get multiple legal opinions on the topic before you have to cast a vote. Maybe someone like Brian Balduf of VHT is someone you want to hear from before making a decision.

I’m writing this from a cafe in Korea, instead of going out and sampling more street food, because I think it’s actually important. I hope you’ll take it seriously. For all of our sakes.

Well, not sure when I’ll be able to write again. But hopefully before NAR starts up! Your thoughts and comments are, as always, welcome!

-rsh

PS: Since I’m in Korea, it only seems right that the video be Korean, even if most of you have no idea what the lyrics are. 🙂