UNDER ALL IS THE DATA  |  PART 7 OF 8

The Tempting Test

Why “half your revenue from closed transactions” fails three ways, and the differentiator that actually survives scrutiny

By Saul Klein and John Reilly     August 2026

Part 6 left us with the proposal now circulating in one form or another wherever MLS people gather: define eligibility, or at least a preferred fee tier, by revenue composition. If at least half of an entity’s revenue comes from closed real estate transactions, it is a real broker and pays participant rates. If it does not, it is a media company holding a license, and it pays something else, or it does not participate at all.

We understand the appeal. The test feels objective, feels auditable, and feels like it finally names the thing everyone can see. It also fails, and it fails on three independent grounds, any one of which would be enough.

Failure One: The Note Forbids It Three Different Ways

A revenue share floor is a minimum transaction requirement denominated in dollars, and minimum transaction requirements are expressly barred. Revenue composition is a proxy for level of service, and level of service tests are expressly barred. And the test lands hardest on the referral model broker, whose entire lawful revenue is lead and referral income, the precise business model the decree singled out for protection. An eligibility screen that reconstructs, by arithmetic, the exclusions the government dismantled by name is not a workaround. It is a confession.

Failure Two: It Does Not Measure What Its Drafters Think It Measures

Run the arithmetic honestly. Appraiser participants, whose participation is mandatory under NAR policy, earn their revenue from appraisal fees and would fail the test to the last one. Property managers earn rental revenue and fail. Commercial practitioners with consulting heavy books fail. An honest residential broker in a bad year fails. Meanwhile, consider the targets. A portal whose brokerage arm earns referral fees paid at closing can plausibly claim its revenue is transaction derived and pass, while the media company down the street whose revenue is agent advertising fails, and the two may be doing functionally identical things with the payload. A test that flunks every appraiser in America and arguably passes the largest portal is not a filter. It is a lottery with litigation attached.

Failure Three: The Antitrust Exposure Is Not Theoretical

An MLS is a market wide joint venture of competitors with market power. Under the case law that governed the 2008 settlement, access criteria must be reasonably necessary to a legitimate procompetitive purpose and narrowly tailored to it. A revenue screen drafted by incumbent brokers to raise costs on a disfavored class of rivals, adopted collectively, in a period when federal enforcers and state legislatures are already crawling over MLS rules, is not a policy. It is a complaint waiting for a caption. Part 1 of this series described how the last collective attempt to disadvantage a rival business model ended: a decade of federal supervision and a policy the industry still lives under eighteen years later.

Measure the Use, Not the Revenue

Here is the part the revenue test gets right: participant priced access exists to support participation, and an entity that takes the payload to power a media product is consuming something the cooperative never agreed to subsidize. The instinct is sound. The instrument is wrong. The legitimate differentiator is not what the entity earns. It is what the entity does with the data, and the license architecture already draws that line.

Enforce use scope and control. An IDX display must be under the participant’s actual and apparent control: developed by or for the broker, governed by the broker, and understood by a reasonable consumer to be that broker’s display. MLS data may be used only to market property to bona fide prospects and to support valuations. No portion of the database may flow to unauthorized persons. A paper broker arrangement that routes the payload onto an affiliated portal’s consumer product, presented as the portal’s product, is not exercising the participant’s display. Those rules have teeth, they survive the Note, and they are auditable. The question is never whether the entity deserves the feed. It is whether the feed is being used inside the license.

Use the reasonable basis inquiry, honestly. A shell that performs no qualifying cooperation at all is testable on documented facts, evenhandedly applied. What an MLS may not do is run a pretextual review aimed at a business model it dislikes. The inquiry asks whether any qualifying cooperation exists, not whether enough exists.

Build the second track: commercial licensing at market terms. The rules have always reserved the MLS’s right to license the compilation to third parties on terms the Board approves. That is the honest home for the media use case. An entity that wants the data to power an advertising product, an analytics product, or an audience business should hold a commercial license, negotiated at market rates, with its own scope, its own attribution, and its own price, because it is buying something different from participation. Participant feeds at cost for brokerage uses inside the rules. Commercial licenses at market for everything else. The same economic result the revenue test was reaching for, with none of the exposure, and the burden falls where it belongs: on the use rather than on the identity of the user.

Which leaves one question standing, and it is the biggest one in the series. If the private network operator will not put inventory in, and the paper broker takes all the inventory out, what exactly is holding the cooperative together? Part 8 names the problem nobody has solved.

Next in the series: Reciprocity With Nothing to Take, the capstone.