In an article from SmartBiz.com, author Rosalind Resnick reports on a recent panel discussion that led to a debate on the relative merits of Zillow‘s advertising-based model vs. the pure lead generation model exemplified by House.com

As a consumer, I prefer Zillow’s advertising-supported model of information dissemination as opposed to cumbersome sign up process employed by House.com. Advertising is far less intrusive overall, especially when you employ a secret weapon.

As a marketer however, House.com’s lead capturing model is far more attractive to me – even if there are ways to defeat that processs as well.

I’ve questioned Zillow’s advertising strategy in the past. But Resnick brings up a great point in her article that’s reminiscent of Dustin Luther’s lively ‘Tragedy of the Commons’ post on Rain City Guide:

In essence, Zillow is biting the hand that feeds it.

It depends entirely on advertising monies from Realtors to sustain its business model, and yet clearly is in the business of providing the tools for consumers to circumvent Realtors.

Now, don’t get me wrong, I like Zillow. I love their product and I think Rich Barton is a smart guy. But I do think they’re being slightly disingenuous when they claim they are purely “a media site” – I would expect that they’ve anticipated this quandary (or at least that somebody at their VC, Benchmark Capital, has done their due diligence and asked the question) and that they have plans for other revenue sources. Now, as to what those sources may be, that’s anyone’s guess.

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