Economies of scale (sale?)

Bet you never thought I'd complete analysis of the 4 TRUTHS about MLS attributes from the white paper authored by Connecticut's statewide MLS CEO. I had some doubts too, but here we are. It sure is easier to just assume TRUTHS, rather than actually think about the elements that comprise them. That approach saves time and with organizational culture the way it is, you often don't have the information needed to think deeply about an issue anyhow. That's no accident.

On a personal level, I'm still a scientist at heart and rigorous hypothesis testing remains important to me. Then there's the OCD--LOL. Every time a hypothesis is proven false (including my own) the body of knowledge about the world expands slightly (if the results are released--LOL). An alternative is testing "applied hypotheses" where you figure a desired outcome and then design tests to achieve the desired results. That takes skill and effort, though. The more direct way is to just say "this is the TRUTH" and move on with discussion.

Economies of scale suggest that statewide MLS data is cheaper to produce and distribute than data for regionals and individual MLSs, because setting up a database, running the application and administering a system is not related in a linear way to the size of the database. This is particularly true with MLS applications because most of the data input is done by the users and costs little or nothing to the owner of the MLS or the vendor.

At first thought, that sounds like a heck of a deal. Data for a whole state for less money that the cost of data for a smaller area within the state. What's not to like? More for less. Upon more careful consideration that may be a little too simple a conclusion.

Just suppose the MORE doesn't describe a single variable--it's that duality in the concept of "comprehensive" again. More listings--yes. More data about each listing?--maybe, maybe not. More pertinent data about each listing? Probably not in a one size fits all statewide MLS database. How much local data content are agents and the public willing to give up for cost savings? That's a moot point, because no one will ask either group that question. Consideration will take on the follow theme "of course you want a cheaper MLS system that will have data for the WHOLE state, don't you?"

How much cheaper? The white paper assumes (doesn't use the TRUTH word on this) about $100,000,000 a year is lost on a national basis because of inefficient MLS systems that haven't seen the light of consolidation. Sounds like a lot of money--but is it? If there are 1,000,000 MLS users (I have no idea if that's close-but CA has 200,000+/- so it may be on the low side). Do the math. That's a potential saving of $100 a year per user. Most dues invoices are mailed quarterly--so $25 a quarter savings. A dinner for one at a modest restaurant or if you have a friend, you're going to be treating them at a casual place. How much are you going to give up for $25/quarter savings? Perhaps more to the ultimate point, how much would your clients like you to give up when you're representing them in a transaction in which you might make a $40,000 commission?

That's it. We're done with the basic TRUTHS. IMHO, there is nothing compelling about any of the alleged advantages (TRUTHS) of statewide MLS as compared to regionals or local MLS. That's my opinion and I'm sure there are other opinions on the matter.

I'm not done yet (dream on!)

Just suppose the four TRUTHS don't account for the benefits now producing the urge to merge that is sweeping from Connecticut all the way to the left coast. What other factors might be involved?

That's next--the dynamics of power, control and profitability in the MLS ecosystem. Bless the creatures, great and small!