Upstream (əp-ˈstrēm) definition:
adverb
- Toward or in the higher part of a stream; against the current.
- At an earlier point in a production process or supply chain.
noun
- A real estate industry initiative designed to seize control of real estate listings and provide a systematic national system for agents and brokers to distribute listings — democratizing listings data, kickstarting more innovation.
- Real estate brokers and franchise executives huddling secretly for a year to hatch a plan to fend off the power of the local MLSs and the real estate portals.
So which is it? Dark or light?
Will Upstream create industry and consumer benefits by democratizing data? Or is it merely a plan to stop competing agent ads from appearing on property listings?
Is it a last-ditch effort to slow down the portals, threatening their largest revenue source, listing advertising? Or is it a big-broker surge to seize listing data control from a hodgepodge pack of 770 MLSs who often pander to small brokers and who can go rogue?
Whatever it is, exactly, Upstream is a real estate data land grab, a winner-takes-all strategy that could open up an exciting new phase of online real estate by giving anyone access to listing data. I am not sure that is the vision of the founders, but that is my hope for the venture.
Like any gutsy move, however, it could become a bumbling industry initiative that sputters — or, worse, backfires.
Agents in the trenches understand its potential better than me.
Upstream is “a major win for all brokers who want to control where their listings go. The system of listing distribution is disjointed,” said independent broker Nick Solis on the Inman Coast to Coast Facebook page.
Makes sense. However, the Upstream gang must walk a careful line between a well-intended industry initiative and shenanigans to corral listings like it did in the early 2000s, which ran afoul of government regulators. A herd mentality driven by fear with a little bit of hubris could snowball into anticompetitive business practices. That’s a path big brokers and the National Association of Realtors (NAR) are all too familiar with.
In 2005, the U.S. Department of Justice (DOJ) sued NAR over industry attempts to curtail the content of property listings and over who could publish them. Tagged as anti-consumer by the DOJ, the case was settled with the National Association of Realtors in 2008.
Back then, fear of new business models and conflicts of interest inspired industry big shots to cross the line — anything inspired by young people with offbeat business plans or anything that competed with NAR’s coveted realtor.com investment.
Today, broker anxiety is economic: competing agents buying prime ad space next to listings to latch on to homebuyers who are checking out property. The only way around this ad strategy is for brokers and franchises to pay a gating fee to the portals to protect the virginity of their listings.
An influential Upstream supporter, Keller Williams’ Gary Keller holds sacred “your listing, your lead,” which gets mangled when listings are cluttered with agent ads.
Re/Max broker-owner Linda O’Koniewski described it on the Inman Coast to Coast Facebook page: “Now [with the help of Upstream] when a consumer wants information about a property they’ll be able to contact the person with the answers, not someone who bought the right to appear next to the listing.”
Upstream insiders say their ambitions are modest and that their initiative is not a standoff with the portals. They describe it as a technology solution, building a single MLS data hub for agents, brokers, franchises, tech suppliers, innovators and entrepreneurs — like it is done with neighborhood data or public record information.
What could be wrong with that? Absolutely nothing — if done right.
The democratization of listing data could be an important step for increasing innovation. As it stands, realtor.com has the data and Zillow is close to having it. Anyone else must have a huge bank account — millions of dollars — to run around the country signing up MLS organizations.
The best way for the industry to keep Zillow and Move in check is not withholding information from those companies but to give it to everyone else. That’s radical, and the industry should become more radical.
Upstream could crack this home listing oligarchy once and for all. The key is that the constraints around the data are not one-sided and that access is given to almost anyone.
Finally, after a year of meeting in private, the Upstream founders are out of the closet. Now, their actions and motives can be openly discussed and debated. And knowing what they are up to, pressure can be put on them to do the right thing.
A video was produced to explain the marriage of Upstream to RPR, NAR’s fledgling (and expensive) data startup. And the CEO of RPR, Dale Ross, sent out an email last week outlining a yearlong set of meetings and events that led to the hookup of RPR/NAR and Upstream last month.
So, where is this headed? Let’s consider a couple of scenarios:
- The industry finally builds an accessible national listing database that it can license to anyone who wants it — big boys like Move and Zillow, or a small app developer who is eager to add value to property listings. I suspect Zillow and Move have already been in conversations with the Upstream folks. Terms for licensing data to others should be done in the open.
- Could the initiative actually wound the portals, cutting off a big revenue source, driving folks like Zillow to pivot to a new and less-friendly business model? One Wall Street stock shorter told me, “Selling the box next to active listings with three to four Premier Agents paying for lead generation is 70 percent of their total revenue.” I am uncertain about these numbers, and you should consider that the source will be a happy camper if Zillow fails. I don’t expect the Z boys to suddenly flip their biz model. But I do expect innovation at Zillow around this problem, because that is what good tech companies do: solve problems.
The biggest threat to the portals could be bringing down the barriers to entry for other innovators. For now, listing data is one of their competitive advantages.
All that really matters are the consequences for the agent and the consumer. What is important is that Upstream chiefs do nothing to mess with the everyday life of agents, homebuyers and sellers; do nothing to disrupt a successful real estate marketplace; do nothing to encumber the homebuying and selling process; and do nothing to add to transaction costs.
Better yet, open the real estate listing data to the world. Innovation will follow. I cannot tell you how many cool business plans I have seen that never get off the ground because the hill that needs to be climbed to get listing data is impossible for most entrepreneurs.
Message to Upstream and NAR: In your self-interested determination to control the flow of data, do not sell the most important people in real estate down the river — push them upstream.
Onward!