By: Steve Outing
In the rush to makes sense out of how to take advantage of and do business on the Internet, the real estate business is not a shining example. And for that, the newspaper industry might breathe a collective sigh of relief.
The best example of Realtors’ missteps in the online world is the Realtors Information Network (RIN), a project that has lost millions of dollars for the National Association of Realtors and is on the brink of bankruptcy. RIN began development nearly two years ago, envisioned as a proprietary online service that would create a national (U.S.) searchable database of real estate listings. NAR’s board has killed the proprietary service and plans to move the information to a less expensive, private intranet to connect U.S. Realtors.
In the middle of its development, RIN (like so many other proprietary online ventures) got blind-sided by the growth and popularity of the open-standards Internet. What was to have been a network made available to all Realtors (but not readily accessible by the general public except when viewed on a subscribing Realtor’s office computer) had to be re-invented midstream to take into account what was happening on the Internet. Slowly, MLS (Multiple Listing Service) listings were showing up on the public World Wide Web, and it became apparent that the NAR’s attempts to continue to control access to formerly “restricted” MLS listings were losing ground.
RIN has been hemmorrhaging dollars for a while now. The venture has spent $16 million to date, according to reports from Inman News Features, a real estate news syndicate that serves Internet and print media publishers. 1996 year to date revenues through August were about $700,000 compared to expenses in the same period of $1.72 million, according to a recent Inman article about RIN’s financial troubles. The 1996 budget called for sponsorship revenues of $3 million, but nothing has been earned. Projected income from home listing advertising also was expected to be about $3 million, but less than $200,000 had been generated by August. According to an NAR spokesman, RIN has several thousand Realtor subscribers, who pay approximately $20 per month — far short of the 50,000-member projected break-even point. Unless RIN finds a new source of capital, it could be forced to file for bankruptcy reorganization.
Inman News Features editor Brad Inman, who has been covering this story for months, says this is a classic example of a huge, sprawling organization getting online and flopping. “It tells us a lot about how complex” creating a national online service can be, he says.
NAR, which has about 700,000 members nationwide, has historically viewed new technology as a threat to the status quo, Inman says, since developments like the Internet have threatened to take the middleman (Realtors) out of the loop. RIN was conceived as a secure, private network so that a prospective house-buyer couldn’t simply browse home listings without aid of a Realtor.
MLS listings in just the last year, however, have opened up. Inman estimates that there are about 1 million listings currently on the World Wide Web. At some newspaper sites — like the Los Angeles Times, which is working with a subsidiary of the California Association of Realtors (CAR) to publish MLS listings for Los Angeles, Orange, Riverside, San Bernardino and Ventura counties — MLS listings are being handled as extensions of real estate classifieds.
This is a profound change, in just a year’s time, for real estate listings. The old restrictions, which technically wouldn’t even allow an MLS book to be given to a Realtor’s client, are fast breaking down, Inman says.
This is great news for newspapers, of course, because it opens up the possibility of linking real estate ads in the online environment to complete MLS listings. Newspapers, if they can get the cooperation of their local Realtors, as the Los Angeles Times has done, are in a position to offer a complete real estate package for the first time.
The outlook is brighter
A year or more ago, I would have been writing a more pessimistic view of newspaper real estate classifieds, which looked to be seriously threatened by Realtors’ own online efforts. Realtors seemed to be embarking on a strategy to keep MLS listings to themselves, and provide nifty new electronic services for their customers that would have lessened the need for newspaper real estate advertising. The failure of Realtors to create a national MLS database service seems to have put the ball back into the local market court, where newspapers have the opportunity to make the next move.
Inman thinks that most local Realtors continue to like the idea of allying with newspapers, because they recognize the strength of papers in the local real estate market. Newspapers still have a lot of clout with the real estate community, especially in light of RIN’s failure. Local and regional Realtors’ boards are less likely to try to create their own Internet MLS database services alone after seeing NAR lose millions of dollars.
Publishers should remember than Realtors need newspapers for “appearances'” sake, says Inman. Agents need to show clients that they are working hard to sell a property, and placing newspaper ads is a visible way to demonstrate their efforts — even if the ads are less effective than other techniques.
Inman’s advice to publishers in working with local Realtors’ organizations is “1) take the initiative; 2) don’t be too humble about your clout, and 3) don’t be intimidated about the listings business.” He expects to see more Los Angeles Times-CAR alliances emerge in the coming year.
There are still real estate dangers looming for newspapers, however, particularly in the home and apartment rental market. While Inman thinks that real estate for-sale print classifieds are safe for the time being, he says publishers should worry about their rental ads. Newspapers have not had a strong relationship with landlords, primarily because most tend to be independents and not part of a body with which newspapers have alliances. Property managers are more prone to take advertising out of print classifieds sections if there’s a strong electronic alternative.
Inman cites Rent.Net, a Web service that currently contains about 800,000 U.S. and Canada rental ads, as the type of threat to newspaper rental ads that publishers will see more of. (Placing ads on Rent.Net is $19 for a one-month placement; the site also is supported by banner advertising, of which it appears to have plenty. Among its features are “virtual walk-arounds” of listed apartments.) Rent.Net was founded by a couple of University of California at Berkeley students, and earlier this year was acquired by CUC International.
Plan of action
The Web, obviously, is an ideal medium for real estate advertising and listings. Newspapers must recognize this and create compelling real estate services online to complement the printed component — ideally in partnership with local Realtors. Failure to do this in a publisher’s local market could be disastrous, because Realtors will do it without you if your newspaper is not a willing partner — the result being eventual erosion of a paper’s real estate classifieds.
Last week, it was announced that real estate giant Century 21 plans to put its home listings on the World Wide Web, for example. Then there’s Cyberhomes, developed by Minneapolis-based Moore Data Management Services, which has agreements with dozens of MLS associations and boards across the U.S. to offer property listings.
Realtors and MLS associations and boards are now positioned to partner with local newspapers and seem to recognize the benefits of developing listing services tied to newspapers. The time is right for forging partnerships. But there’s always the danger they will go it alone, so bold action is called for by cyber-savvy publishers.
Contact: Brad Inman, InmanNews@aol.com
Dom’s column via e-mail
Besides reading my Stop The Presses! three days a week, there’s another columnist you should be reading. Dominique Paul Noth has a column on the World Wide Web called Dom’s domain: Media Sites and Strategies, which covers newspaper-oriented new media topics. (Noth’s latest column evaluates several Knight-Ridder papers on the Web.)
Design research study
Mike Donatello and Jim Conaghan at the Newspaper Association of America are putting together an outline for NAA’s latest new media study, which is expected to be published early next year. As part of the study, they are looking for information from publishers who have conducted Web site design research. If your company is willing to discuss its findings, methods and concerns, please contact Donatello, manager of market research.
Contact: Mike Donatello, MDonatello@aol.com
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