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Brier Dudley's blog

Brier Dudley offers a critical look at technology and business issues affecting the Northwest.

October 24, 2007 at 12:19 PM

Zillow’s real estate deal: Watch out, newspapers

First it was Craigslist, then it was Google and Yahoo.

Now Zillow is emerging as the latest big threat to newspapers, which are watching a series of Internet companies go after their dominant share of advertising and undercutting them with free services.

At least that’s how I’m reading today’s announcement that Zillow has signed a deal with ERA to display the realty firm’s listings on Zillow’s site.

ERA is just the first announced user of Zillow’s Listings Feed sevice. The Seattle Web company is also in talks with other brokerages about Zillow Feeds.

The feeds could increase the usefulness of Zillow by adding more “real” information about properties, but I wonder if it will also diminish one of the original promises of the company: To upend the real estate market by giving consumers new tools to independently search for and evaluate the value of homes, similar to the self-service effect Expedia had on travel.

Those tools are still there and Zillow has added more, including neighborhood discussion features, but the chances of Zillow leading to a self-service revolution in real estate seem lower as the company cozies up to brokerages and sharpens its focus on advertising.

With Listing Feeds, Zillow is providing free exposure to brokerages. In return, they’re helping Zillow build and refresh its property database and providing traffic that will help Zillow sell more ads.

This is the Craigslist strategy: Offer free listings that lure advertisers from newspapers, then take the community of users that have relied on newspapers’ classified ads.

Newspapers blew it by responding with lower classified prices and by taking that community for granted, but they have done a great job with categories such as real estate that are a cornerstone of their business.

Remember they’re not just paper products — virtually all newspapers are providing online services for brokerages to list properties online, as well as local Web sites where buyers and search for homes.

A consortium of newspapers also operates major real estate sites such as HomeGain and Homescape, which provide listing services and search and valuation tools for buyers.

It’s hard to compete with free, which is what Zillow is offering, but the site also has a long, long way to go before it has papers’ reach and market penetration.

Comments | More in | Topics: Startups

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