A small but vocal group of industry observers and participants have been issuing warnings about the imminent takeover of the real estate industry by Internet portals and general search engines such as AOL, MSN, Yahoo!

A small but vocal group of industry observers and participants have been issuing warnings about the imminent takeover of the real estate industry by Internet portals and general search engines such as AOL, MSN, Yahoo! and Google, as well as vertical search engines such as Trulia. Allegations against these companies suggest that they are “aggregating listing information without permission” and, if they are left unchecked, brokers will lose control of their listing data.

This type of commentary is reminiscent of the fear-mongering of the late 1970s when franchises introduced the so-called “100 percent commission” business models, and, more recently when Microsoft launched its HomeAdvisor site amidst cries that it would ruin traditional real estate brokerage companies. Yet, none of these predictions ever came true.

In fact, the history of the real estate brokerage industry is filled with the obituaries of Fortune 500 “outsider” companies that did not understand the unique nature of the real estate business. Sears Roebuck & Co. and Merrill Lynch, for example, made brief forays into real estate backed by substantial marketing dollars, only to leave soon thereafter when their trusted techniques for success in one industry did not transfer into another. Real estate brokerage’s intricacies, decentralization and unique culture simply were not conducive to a cookie-cutter approach adapted from other industries.  

Interestingly, most search services that have been labeled as “disruptive outsiders” trying to exploit brokers’ listing data have actually sought to apply search technology to facilitate the real estate brokerage industry. They certainly have no intention of displacing that industry. Rather, they are responding to consumers’ thirst for online real estate information. Search technology can enable consumers to make sense of disparate property data sources. Using search technology, consumers can seamlessly access more property information and ultimately create stronger connections with real estate professionals.

Because the Internet has spawned a shift in culture where transparency of information and online research is part of daily American life, it is folly for any real estate broker, MLS or service provider to believe that denying portals and search engines access to listings information will stop consumers from using these publicly available tools to locate property data. Doing so only makes the search process for consumers more difficult and positions real estate as an antiquated and even anti-consumer industry.

These same “disruptive” services, such as Google and Trulia, are extraordinarily skilled at locating the information on the Web that consumers want, and then pointing consumers to it quickly and efficiently. Their core competency is to rationalize the information chaos on the Internet — not practice real estate brokerage. 

As to critics’ suggestions that search engines steal or otherwise illegally aggregate property content, in fact search companies index data that appear on other public Web sites so consumers can search and more easily find that data located on the site of the true information source. Search companies index only data that is necessary to inform consumers of what they will find on the destination site so they can make informed decisions about where they want to link.

The capture of copyrighted content from a Web site as necessary to respond to consumer search requests has generally been held to be a “fair use” of the content. This would apply to search engines’ capture of photo thumbnails that appear on listing brokers’ sites, as well as the list price, which some contend is itself copyrightable content. The fact that search engines make money from advertising on search results pages does not defeat the “fair use” defense to a copyright infringement claim.

In addition, search engines use indexing software or “robots” that observe the robot.txt protocol when crawling information on the Internet. Web site operators who do not want their sites to be indexed by a search engine can easily add a code to the site’s meta tags instructing a search engine robot not to index some or all of the data on their site(s). Simply put, brokers always retain control of their listing data.

Courts are increasingly recognizing that search engines are an essential component of the Web, and are dismissing copyright challenges that threaten their operations for the benefit of businesses (e.g., brokerages) and consumers alike. In Field v. Google Inc., for example, the Nevada federal district court recently dismissed a plaintiff’s copyright infringement suit against Google, holding that the plaintiff’s failure to block Google’s robots from his site constituted an implied license from the plaintiff to Google to undertake the indexing and caching of the plaintiff’s copyrighted content. The logic of the Field case applies to real estate vertical search engines. If a broker does not want listings to be indexed by a vertical search engine, the broker can easily prevent it. Likewise, if a broker wants a search engine to crawl its Web site, it has a legal right to do so. In other words, the contention that search companies are acting illegally by indexing data on the Web is unfounded.

Some critics also argue that since search engines have, or will soon have, overwhelming brand recognition, consumers will begin their home search at the search engine site rather than the broker’s site, or a so-called “Realtor-friendly” site such as Realtor.com. They urge brokers to deny access to their listing data at the onset to avoid the huge “tolls” search engines will exact as traffic on these sites increase.

If brokers followed this advice, they would be undermining their ability to control the marketing of their own listings and to drive more traffic to their own Web site(s), which will simply and unnecessarily result in increased marketing costs — all in fear of scenario that is highly unlikely to ever come to pass. First, the search engine “industry” is hardly a monopoly: Yahoo!, Google, AOL and MSN all vigorously compete with one another. If one search company or portal extracts “tolls” for the traffic it generates that are unjustified by the value of their services, other search engines or portals will compete for broker business by driving traffic for free, or at fees that reflect the true value of the services being delivered. 

Second, many brokers today are affiliated with nationally branded franchises that are proactively developing their own national Web destination sites hoping to serve as consumers’ initial entry point for their online home search. While some franchises and brokers believe they are competing with search engines for consumer mindshare, the reality is that consumers prefer choices and they will likely rely on multiple trusted sources of information when making a decision as important as a home purchase. Enlightened brokers should align themselves with those search services that consumers have determined by their usage to be trusted sources of Web-based information. 

Finally, search engines are more skilled at bringing order to the chaos of online real estate information. Real estate brokers, on the other hand, are more skilled at bringing order to the chaos of a “real world” home search and purchase. Smart real estate brokers would be advised to turn a deaf ear on the voices of paranoia and instead use creative, balanced strategies to incorporate search-engine partnerships into their Internet marketing initiatives.

Robert D. Butters, Esq., is an attorney with Arnstein & Lehr LLP, representing real estate brokerage, franchise and technology companies, and MLSs.

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