Text of the RPR agreement and 'public debate'

RPR has so far refused to post the text of the RPR MLS Content License Agreement online. RPR’s president Marty Frame said (in a comment to a previous post about the agreement) that he hoped more of the discussion regarding relations between RPR and MLSs “will happen out in the open so that everyone can have the benefit of it.” When I asked Marty to post the agreement, he told me via email that “at this point the only public discussion we see about the agreement is coming from vendors and consultants,” that he’d like to see more debate coming from MLS execs, and that until they are the source of the comments, he’d rather “negotiate contracts as is typically done in private and among businesspeople and their attorneys.”

One of our clients consented to us posting the agreement they received from RPR on our blog. Interestingly, that client did not care to be identified as the source of the copy and wanted to make sure we removed any reference to it before posting. Legally, I suppose we could do that, but I’m concerned about introducing errors in the process of copying the text of the agreement, and consequently, I’d rather not post it.

This is not the only example that I have noted of folks with something to say or discuss regarding RPR who prefer not to be identified as the source of comments. I think this reasonably arises from a tendency by some in the industry to brand those who question or disagree with NAR’s plans as “traitors to the REALTOR blue.” I’ve witnessed some of that first-hand over the years – it is not merely paranoia. This is probably why Marty is not seeing MLS execs or brokers commenting in the public forums as frequently as consultants and advisors.

So, I’ll make an offer to the industry: If you are a broker or MLS exec and want to share a comment about RPR anonymously, please email me, and I can post it as a comment without identifying the source except in general terms (E.g., “From the CEO of a medium-sized MLS” or “From the marketing director of a large regional brokerage firm.”)

Also, in some upcoming posts, I’ll comment on specific provisions of the current version of the agreement, with reference to section numbers, etc. If you are an MLS exec and want to follow along, request a copy of the agreement on the RPR blog (link on the right invites: “MLS: Request Enrollment Package”). If you are a broker, ask your MLS to get you a copy. If you advise MLSs as a consultant or lawyer, ask one of your clients for a copy – as far as I know, they are free to share it with you. If you have a copy and are willing to post it, please do so and let us know so we can link to it from here.

-Brian

Broker comment on RPR

The following comes from George Percel, a Florida broker and former association/MLS manager. I offered to share it with MLSTesseract readers. (I added the links to his text.) I'm very interested in hearing from folks with contrasting views, so if you don't have your own blog but want a comment posted here, please feel free to email me. For example, see a comment I posted earlier today on another MLSTesseract post. Of course, it's easier for me if you just post your comment here on the blog - there is an anonymous post option.
-Brian

Hi Brian,

I respect Mike Audet’s opinion very much and I just read through John Rees’ very thorough check list. I also watched for the second time Mona Steen’s video demo on the RPR website. The first opinion is: It’s an MLS on steroids. Actually I like very much the slick, professional and comprehensive body of work. However, being a lowly Broker in the backwaters of the Everglades, I wonder how this is going change the world of real estate as we know it.

MLS has always been, and remains today the most valuable service the LOCAL Realtor Board/Association can provide to its members. The explosion of the Information Super Highway on the scene, and the inherent savings of Internet connectivity (no more long distance calls to log into the MLS), allowed for local MLSs to band together to achieve an Economy of Scale. We were told to entertain the idea of merging with adjacent, and some not so adjacent, MLSs into one regional MLS to save Subscribers money. In view of the fact that 90% of Realtors make 90% of their sales within a 25 mile radius of their home base, this, in my opinion, makes the argument in favor of Regional MLSs imperfect. Now we have Super Regionals and State-wide MLSs, or at least State-wide “data sharing”. Most Realtors do not need nor can they absorb all this information. In fact, most do not use more than about 10% of the capabilities that most MLSs offer. RPR’s apparent ease of use, breadth of information and packaging may change this.

At this point, not being familiar with the business proposition of RPR, I wonder how did we get to the prospect of allowing non-Participants to “propagate” MLS data (or its derivatives), when Participants, the actual owners of the data, can’t. I think it might be wise for the Brokers to ask themselves some of the questions John proposes before they allow their listings to be entered into any MLS. The MLS’s function is simply to make other Participants aware of a listing and the details about the property, while making a unilateral offer of compensation to another Participant who brings a ready, willing and able buyer who closes. In my office 99% of the offers come from local Realtors.

The display or advertising of listing information should be left to the Brokers. We have a very wide distribution of our listings on the Internet. The benefits should be evident; however we are not selling more of our own listings. The Internet aggregation of active listings appears to be mostly beneficial to the aggregators. It appears that by merely throwing a switch RPR could be easily morph into a public website as well. Many MLSs in the early stages of the game set up a public website where most of the active listings were displayed. Many decided that the same information about the listing would be made available online that is given to a consumer who walks into a Broker’s office. Reasonable. In many instances there is enough information on public sites to write a reasonably well informed offer on a property. Now the dilemma: will the listing Broker refuse to compensate the non-Participant Broker who brings an acceptable offer? In most cases, of course not. RPR will in actuality make one of the fundamental principles of the MLS: the offer of compensation to only Participants a moot point. Or, will there be universal offer of compensation. What about non-Realtor Brokers? Are we looking at a new DOJ drama?

Within a virtual minute the business of “Internet Display” of active MLS data was seized by uncontrollable zeal. Today, I dare say that a lot of that information is scraped and used by those (like moving companies) who can profit from access to the data. (Do you remember having to properly dispose of unused MLS books?) Recently R.com and NAR decided that historical or off-market data should be displayed on the Internet. This of course helps the AVMs become a little more reliable and debilitates another service offering by the Realtor (CMAs/BPOs). We all know the timeliness and reliability of getting sold information through “official” tax data. So, for the purveyors of AVMs – advantage. RPR attempts to trump this by making the RVM available to Realtors only as a service offering. Will a version of the RVM be available to the consumer on the public version of the site? Maybe for a fee? Oh, I’m getting carried away.

The Internet has changed our business landscape on a scale that many Realtors are still unable to embrace. While NAR has gathered a very competent and experienced group of individuals to lead this venture, I think we are babes in the wilderness entering an arena strewn with unforeseen challenges. We are now going to attempt to compete with people with a ferocious commitment to exploiting the application and sale of “information”. As an Organization are we going to be able to respond with the required velocity to the dynamics of the information industry evolving at breakneck speed? I fear that that if we continue to attempt to embark on ventures which are beyond our scope, resources and ability to control, we will certainly become a weaker entity.

The bottom line is that I want my MLS to provide reliable, timely data to the Associates so that they can do business within their market place. I want the Local, State and National Association to focus on making sure that we can continue doing business unencumbered by regulators. I recognize the possibility of “outsiders” creating a similar platform. I am more concerned about the prospect of how the local Association will cope with the loss of revenue currently provided by their MLS. (Brokers could upload their listings to RPR through the RETS Client. That would create significant savings for Realtors – no more MLS fees.) Will RPR share some of the $60 million of the projected revenue with the local Associations/Boards? I do not want the Realtor Organization to get in the middle of the business cycle if it is going to raise the cost of doing business.


Best Wishes,

George A. Percel
Managing Broker
Prudential Florida Realty
Marco Island
www.GeorgePercel.com

Another checklist for MLSs considering licensing to RPR

John Rees has offered another checklist for MLSs considering licensing data to RPR.

John's list of questions takes a decidedly more legal perspective than Mike Audet's (mentioned in yesterday's post). Taken together, these two posts identify most of the issues that MLSs considering licensing data to RPR should consider. I'll try to provide a supplement later this week to fill in any gaps, if I actually find any gaps.

Any MLS considering signing the RPR license agreement should at least review these checklists and the questions on them. You owe it to your brokers to think this issue through and not make a knee-jerk decision for or against RPR (as I have heard some MLSs have already done).

-Brian

WAVGroup white paper on RPR is a must-read for MLSs

Update 2/1: Some folks using Internet Explorer had problems with the links in this post earlier today. WAVGroup fixed the problem on its server. They should work now.

If your MLS is considering licensing data to RPR, I think you will find that the WAVGroup whitepaper on the topic, by Mike Audet, is an essential tool for your decision-making.

Mike is a former colleague of mine and is blessed with a sharp mind and fine critical thinking skills. I'm telling you now, but it would be obvious to you after reading the white paper.

The whitepaper provides a sort of checklist of questions your MLS should answer for itself before agreeing to license to RPR.

I'll keep an eye on the WAVGroup blog for your comments, or you can share them here!
-Brian

RPR’s Content License Agreement: What am I missing?

We obtained a copy of the RPR MLS Content License Agreement (CLA) from an MLS client of our law firm on January 27. Our client provided a copy and said we could review it and blog about it but did not give permission to post the actual agreement. (The document is a PDF file that embeds the name of the client.) The document is marked “Version 2010.01.22”. I expect this means RPR completed this draft on January 22. Note that RPR may be distributing different versions of the agreement to different MLSs. RPR has told us we cannot have an ‘official’ copy for our review, that we must get one from one of the MLSs. If you are not an MLS, you are on your own getting one for the time being. We’ll post one if we get permission.

I planned for this post to provide an overview and high-level assessment of the RPR MLS Content License Agreement (CLA). Subsequent posts would have looked at it in more detail and addressed brokers’ perspectives.

But frankly, I’m flummoxed. In this contract, RPR basically does not promise to do anything for the MLS or its subscribers in return for the MLS and brokers turning over one of their most valued possessions. Will RPR offer a separate contract where it promises to deliver all the fine things that Marty Frame and Dale Ross have been talking about for the last month? If this is all there will be, I can’t imagine any MLS signing it.

If you are curious what I’m talking about, read on.

The 5Ws

An overview of a contract should address the same things as a good news article – the 5Ws (and the H): Who, what, where, when, why, and how? Briefly, then, here they are for the RPR CLA.

Who: The parties are RPR and the MLS (referred to as “Provider” in the CLA). The CLA addresses services to be provided to three other classes of people/entities.

• “Participant/Subscriber” means brokers, salespeople, and appraisers that are customers of the MLS.
• “Authorized RPR User” refers to all Participants/Subscribers (whether or not they are REALTORS®) and to all REALTORS® (whether or not they are customers of this or any other MLS).
• “RPR Customer” refers to those “who are not NAR Members and with whom RPR has contracted to provide the RPR Offerings.”

What: The central provision is a license from MLS to RPR for RPR to use the “Licensed Content,” which consists of all data relating to all listings (regardless of status) and membership roster information in the MLS. “Licensed Content” is not limited by time or to certain fields – under the agreement, RPR gets everything the MLS has.

With the Licensed Content, the CLA permits RPR to create “RPR Offerings,” defined as “those business products, services and/or applications created and developed by RPR using the Licensed Content.” The agreement provides examples of two types of products, RVMs and something called “Match & Append Products.” But these examples illustrate – they do not limit the products NAR can provide.

In short, RPR gets everything the MLS has and can largely create any kind of product it wants to with the MLS data. (There are some limitations on those uses detailed in the agreement, but they are not significant.)

One would imagine that the contract would then offer the MLS a host of useful things in return. But AMAZINGLY none of the following appears in the CLA:

• There is no promise from RPR to provide the RPR system, the demo of which so many folks have been crowing about, or that MLS’s subscribers will be able to use the RPR system.
• There is no promise from RPR to incorporate the MLS data into the RPR system, which would theoretically make both much more valuable.
• There is no promise from RPR that MLSs subscribers will get public record data from RPR or that MLS will be able to access public records from RPR via an API.
• There is no promise from RPR that active listings from your MLS will be visible on the RPR system to subscribers in other MLSs.

In short, the agreement promises nothing that RPR’s leaders have been touting as its value proposition for the last month. The agreement permits RPR to do all those things; frankly, that’s because it allows RPR to create almost any kind of product with the listing data. But it does not require RPR to do any of them.

The only thing RPR really promises in the agreement is NOT to do certain naughty things:

• RPR will not compete with the MLS as a “multiple listing service,” a term defined in the CLA more broadly than in NAR policies. (The broader definition of “MLS” in this case is good for MLSs, but puzzling coming from an NAR subsidiary.)
• RPR will not “challenge or take any action inconsistent with Provider’s rights” to the Licensed Content.
• RPR will not provide products that would make it or MLS a credit reporting agency, subjecting them to the Fair Credit Reporting Act.
• RPR will not use the MLS data to violate the law.
• RPR will stop using the Licensed Content (mostly) when the agreement terminates.

Also amazingly, the agreement does not even acknowledge that listing brokers will have to consent to this use of their listing data. NAR General Counsel Laurie Janik confirmed at NAR annual meetings in San Diego that RPR is not one of the ‘core purposes’ of an MLS; consequently, NAR policy mandates that MLS must obtain listing broker consent before using the broker’s data in RPR. The CLA does not distinguish data content of brokers who have consented from data content of brokers who have not; the agreement requires MLS to license and provide it all.

Where: There are some issues relating to geography, but they are largely trivial.

When: The agreement has a term of one year from its execution by the MLS. It automatically renews for consecutive one-year periods unless either party gives notice at least 90 days before the expiration of the current period.

Why: That’s a good question. See the next section.

How: MLS must provide data to RPR via a RETS data feed, updated no less frequently than MLS updates the data feed for its other licensees.

Why?

OK, I’m tired – I’ve been traveling today – I’m reading this agreement for the third time, but my brain cells are dimming. Could I have missed something? I’m going over it one more time before I make the following assessment.... OK, back now.

I think it is fair to say that RPR does not promise to make, produce, or deliver any product or service whatsoever to the MLS, its subscribers, or to REALTORS® under this license agreement. In effect RPR is saying, “Let us use your data. In return, we promise not to do certain naughty things.”

That’s it.

Really.

How many times have folks come to MLSs asking for data and promising the world? Those promises may have been pie-in-the-sky, but at least there were promises. RPR promises nothing. Marty and Dale have articulated a variety of value propositions for MLSs to license their data to RPR, but none of them appears in the agreement. Why would any MLS agree to this?

I guess I’ll wait for comments. For myself, I’m too confused to speculate.

-Brian

Where are the copyrights? Copyrights in MLS listing content Part I

With RPR now on the scene seeking to license listing data from essentially every MLS in the country, Brian and I figured it was a good time to review the way that copyright law interacts with MLS databases; several issues make that interaction complex. Chief among them is the 'fractured ownership' of copyrights in MLS data content. In the absence of certain concrete steps, brokers and MLSs probably own less than they think they do, and brokers and MLSs need to reach an understanding about ownership to permit them to enforce the copyrights effectively.

The key determinations with regard to MLS data content are (1) whether the MLS has obtained the rights to use the content as it must to carry out its purpose and (2) whether the MLS has the power to prevent misuse and piracy of the data content. The answers to these two questions hinge on two bodies of law: federal copyright law and state contract law. In this post, I'll provide a summary of the key legal principles and then discuss some important issues for MLSs.

Who are the copyright authors and owners?

(This discussion relies on a number of assumptions about how MLSs and brokers operate. I've tried to make them explicit in my comments, but it is important to recognize (more than usual) that these posts are not intended as legal advice – you should consult legal counsel before attempting to address copyright issues.)

Copyrights subsist in "original works of authorship." In the case of MLSs, there are three principal kinds of work in which copyright can arise: compilation, original text, and photographs.

In general, the author of a work is the individual human being who creates it, and she secures copyright in it the moment she creates it. Sometimes, the author of an original work is the employer of the human being who creates it. It is also possible for certain kinds of works to belong to an entity that commissions them from the actual creators. In each case, this is referred to as a "work for hire" or "work made for hire." In the case of real estate salespeople, however, the work for hire doctrine is probably of little use. Most salespeople are not employees of the brokers, and most have not signed independent contractor agreements with brokers that designate their creative work product as works made for hire of the broker.

Compilation is the selection, coordination, and arrangement of the elements in the MLS database, to the extent they are creative as opposed to merely functional. The author of this work is whoever created the selection, coordination, and arrangement; this will usually be the MLS, the MLS's vendor, or both jointly.

Original text is text that has at least a spark of creativity: This would include all remarks and free-form text fields where salespeople and brokers have an opportunity to express themselves freely. It may even include the list price, since that number is the product of a creative process by the listing salesperson. (Whether the listing price can be protected by copyright is a subject of legal debate.) The author of original text in the MLS is usually the listing salesperson but may also be a salesperson's assistant or a broker. In some cases, particularly limited service brokers, the seller may have written the public remarks, for example.

The author of a photograph is whoever snapped the picture. This will usually be the listing salesperson but can often be the seller or a professional photographer.

The person who currently owns a copyright is called the "owner." An author may transfer her copyright interest to another party, so the copyright owner is not necessarily the author. But such a transfer or "assignment" is effective only if it appears in a writing signed by the author.

Some brokers can and do obtain copyright ownership of creative elements generated by their salespeople; they do so by either (a) hiring the salespeople as employees or (b) requiring salespeople to sign written independent contractor agreements transferring their copyright ownership.

In summary, then, the MLS and perhaps its vendor own the copyrights in the compilation; and the broker owns copyrights in works that the broker and its employees (as opposed to contractors) create, some original text and photos perhaps. But the salespeople own the copyrights in the great majority of works in the MLS, including probably most of the photos and original text. Third parties like sellers and photographers may also own copyright interests in photos and text that they provide.

Why is ownership important?

The copyright owner has the power to register the copyright and to enforce the copyright against infringement. Generally, only the owner may do so. (An "exclusive licensee" may also do so, but for purposes of simplification, I will discuss only the owner role; if you would like further details on this subject, please let me know.)

The owner of the copyright in a database compilation can take advantage of rules of the U.S. Copyright office that allow for "group registration" of all new and changed material in the compilation on a quarterly basis. This is a tremendous advantage over having to register the separate elements separately, as each registration requires the preparation of an application form and submission of a registration fee of at least $35. However, in order to register the copyright in the MLS database and its components as a single work, it is necessary that the MLS be an owner of the copyrights in all the components that it seeks to register. Registration is possible without this being true, but the protection afforded by the registration extends only to those portions the MLS owns.

For this reason, MLSs often seek to hold copyright ownership in all the separate works that the MLS comprises: compilation, text, and photographs. The MLS can register all the components in simple quarterly registrations, and if any part of the copyrighted database is infringed, the MLS will be in a position to enforce the copyright.

(NEXT: Some of the problems arising from this situation.)

-Elizabeth

MLSTesseract gets a new author

Beginning in the next few days, my business partner Elizabeth Sobotka will be writing posts for MLSTesseract, too. Elizabeth is a co-founder of Larson/Sobotka, PLLC, attorneys at law, and our consulting subsidiary, Larson/Sobotka Business Advisors, LLC. She focuses her legal work on issues relevant to MLSs and brokers: copyrights and licensing listing data content; pursuing data pirates; technology service agreements; trademarks and cybersquatting; and MLS rule drafting and enforcement, among other topics. She’s a fine attorney and over the last two and a half years has encountered and overcome all the most common MLS legal issues out there.

But perhaps just as valuable is her excellent business sense. Elizabeth has a master’s degree in management and spent more than a decade as a management consultant before going to law school. She worked with consulting firms such as Deloitte on projects ranging from operations efficiency to product marketing. She brings a common-sense, business-oriented perspective to her law clients. She won’t advise you to spend your money on legal projects unless she thinks it will deliver real value to your business.

Having Elizabeth join me on MLSTesseract reflects the way we are focusing our business in 2010:

• I’m shifting more of my energies to consulting projects, strategic planning for our MLS and association clients, and other types of development work with our consulting firm. I’ll still be involved in many legal projects.

• Elizabeth is focusing her efforts on delivering legal counsel, but she’ll still be involved in every major consulting project. We hope the combination of our focus and mix of skills will prove very valuable for clients.

Clients should feel free to contact either of us about either type of project. We’ll always be there to help!

Say hello to Elizabeth here or in comments on her posts!

-Brian