Think real estate agent and broker dues help keep the lights on at realtor.com? Think again.
News Corp. subsidiary Move Inc. has paid the National Association of Realtors $9 million for the right to operate realtor.com in the last five years — nearly $2 million every year.
NAR also received substantial consideration when Move was sold to News Corp. more than two years ago because the trade group held 1.92 percent of Move’s common stock and its only share of Series A preferred stock, according to a regulatory filings.
Realtor.com, the second most-popular real estate website nationwide, is owned by NAR. But Move subsidiary RealSelect runs the site on behalf of the million-member trade group under the terms of a 1996 operating agreement.
How much does Move pay?
According to the agreement, Move is obligated to make license fee payments set to the annual Consumer Price Index to NAR every year.
Move paid license fees of about $1.84 million and $1.85 million to NAR in 2014 and 2015, respectively, according to NAR’s May 2016 Finance Committee report.
License fees from Move to NAR for realtor.com (2011-2015)
| 2011 | $1.727 million |
| 2012 | $1.778 million |
| 2013 | $1.809 million |
| 2014 | $1.836 million |
| 2015 | $1.85 million |
Source: NAR Finance Committee reports
How does Move make money with realtor.com, and how much?
The agreement does not allow Move to charge data content providers — MLSs, mostly — for collecting and distributing basic listing information, but it does allow Move to make money through advertising and “content or services accessed by the public” through the site, according to NAR.
In the first nine months of 2014 — before News Corp. acquired Move — the company brought in $183 million in revenue. More than three-quarters of that revenue — $141.8 million — came from its “consumer advertising” category, which comprises Move’s flagship realtor.com site and other consumer-facing sites.
Thus, it is likely that realtor.com is responsible for the majority of the money Move brings in. A chart created by an expert hired by Zillow in the ongoing Move-Zillow trade secrets lawsuit bears this out.
Mark Glick, a professor of economics at the University of Utah, created this chart using Move information obtained in the course of the suit. Move has not responded to a request to verify its accuracy.
Source: Mark Glick, an expert hired by Zillow, created this chart using Move information obtained in a trade secrets lawsuit between the two companies.
Moreover, since the acquisition, News Corp. has consistently reported double-digit increases in Move’s revenue, largely due to the growth of the realtor.com “Connection for Co-Brokerage” agent advertising product.
See a summary of NAR’s budget for 2017 — including its biggest expense
What are the rules of the agreement?
In May 2013, during NAR’s midyear conference, NAR CEO Dale Stinton characterized the relationship between NAR and Move as a “forced marriage” and described to state association executives what he called “the rules of the game.”
“One, there ain’t no getting anybody else,” Stinton said at the time. “It’s an evergreen agreement that goes on forever. If you didn’t know that before, you know it now. Two, in 17 years, we never put a penny into realtor.com. In fact, they pay us…royalty to use the term ‘realtor.com.'”
Dale Stinton
That money goes into enforcing NAR’s rules on the site because there have been some Move leaders who would like to have ignored the rules, Stinton said at the time.
A couple of months later, NAR’s board approved changes to realtor.com’s operating agreement designed to make the site more competitive against rivals Zillow and Trulia.
That was the last amendment to the operating agreement that NAR characterized as “substantial.” The agreement — and its attendant license fee payments — remained intact after News Corp. acquired Move in November 2014, according to NAR’s Finance Committee report.
Under the terms of the realtor.com agreement, NAR had the right to sever ties with Move in the event of a “change in control,” or if it was not represented in Move’s board of directors.
Had NAR terminated the agreement, the News Corp. acquisition would not have gone forward, according to language built into the terms of the deal.
Instead of standing in the way of the deal, NAR gave its blessing, tendered its own shares in Move and surrendered its seat on Move’s board of directors.
Move will continue to have “the exclusive and perpetual right to operate realtor.com,” News Corp Chief Executive Robert Thomson said in a conference call with investors before the acquisition.
NAR never considered standing in the way of the deal because the upside was “so phenomenal” for members, Bob Goldberg told Inman at the time.
Goldberg is president and CEO of the NAR subsidiary that oversees the realtor.com agreement, Realtors Information Network (RIN).
“If we had not approved the acquisition, we’d still be working with Move anyway, so it wasn’t an issue of NAR taking [realtor.com] back,” he said.
“We need the thrust of a strong media player that can bring far more to the table than we’ve experienced before.”
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