What if the MLS industry does not apply for .MLS?2011 August 30
This post is from guest contributor, Brian N. Larson, Larson/Sobotka Business Advisors LLC
Our client, MLS Domains Association, is planning to obtain .MLS as a new top-level domain (TLD) on the Internet. Common among the current 22 TLDs are .COM, .NET, and .INFO; but ICANN , the international organization that governs the domain name system on the Internet, is expecting to permit hundreds of new top-level domains. ICANN adopted its final timeline for the new TLDs in June 2011: The application period will open January 12, 2012, and will close in April 2012.
If MLS Domains Association applies and is successful, only legitimate multiple listing services would have domains at .MLS.
Failure to apply during this window means (a) giving up the domain to anyone else who claims it during this window or (b) waiting until the next application window, which industry leaders expect not to come until 2014 or 2015, to apply for .MLS. Both of these alternatives are bad for our industry. If MLSs don’t apply during the 2012 window, it’s likely some entrepreneur will. If no one applies during the 2012 window, the ‘MLS brand’ will continue to be eroded by brokers and third parties for another couple years until the industry can apply. Given the comparatively small cost of applying and operating the new TLD, the industry would be foolish to pass up the opportunity.
First, the costs
For MLS Domains Association to apply for and obtain the .MLS TLD will cost less than $1,000,000. To operate it will cost less than $500,000 per year. Compare that to the costs of other national industry initiatives. I would hesitate to call the amounts trivial, but a one-time expense of less than $1 per MLS subscriber and less than $0.50 per year per subscriber seems a pretty small price to protect the MLS brand. But how will MLS Domains Association’s efforts ‘protect the MLS brand’?
The business case for someone else to seek .MLS
We don’t know who will apply for TLDs in first quarter 2012. But there is good reason for many applicants to keep their plans secret. Imagine that DomainSpec, Inc. (an invented name) is waiting to see whether MLS Domains Association applies for .MLS. Imagine that MLS Domains Association does not apply and that DomainSpec applies for and receives the .MLS TLD. DomainSpec then takes the names of the 500 largest cities and towns and 200 most populous counties in the U.S. (think ‘Chicago.MLS’, ‘DadeCounty.MLS’, ‘Springfield.MLS’, etc.); it approaches real estate agents in each of those markets and offers one broker or agent exclusive use (i.e., domain registration) of her town or market name, plus .MLS, for an average cost of $1,000 per year. The cost would probably be higher for bigger cities and lower for smaller ones, but we can take $1,000 as the average. The resulting revenue of $700,000 per year would be more than enough to operate the registry (especially since DomainSpec could get economies of scale from operating a couple other TLDs) and make a tidy profit. Don’t you think there’s at least one agent in each of these cities and towns who would be willing to pay that price to ‘own’ ‘Chicago.MLS’, ‘Houston.MLS’, etc.?
Even if an MLS participant uses one of these domains to deliver an IDX site (with the necessary disclaimer that the site is not ‘actually an MLS’), the result is that the value of the term ‘MLS’ will be eroded. A site at ‘LosAngeles.MLS’ would be a broker’s site, leaving the visiting consumer confused about what an MLS is. If you think your local brokers now don’t like sites like ‘YourMLSOnline.COM’ and similar pseudo-MLSs, wait until they get a load of ‘Cleveland.MLS’ or ‘Boston.MLS’ operated by one of their competitors.
Because MLS Domains Association is applying for the new TLD as a “community,” it would win over the hypothetical DomainSpec in the ICANN process. But if MLS Domains Association does not apply or fails to reach the thresholds of support required for a community application, I believe someone like DomainSpec will get .MLS.
The business case in the absence of a speculator
Your brokers already dislike the pseudo-MLS websites at domains like ‘YourTownMLS.COM,’ ‘YourMLSOnline.COM’ and the like. MLSs generally cannot prevent such sites from existing, as misleading as their names may be. But with a .MLS TLD available only to MLSs, in time the value of those pseudo-MLS domains would erode. This is true whether or not your local MLS operates a consumer-facing listings website:
- On one hand, if your MLS operates a consumer-facing listings website, it will certainly not hurt for it to be at ‘YourTown.MLS.’ And sites like ‘MLSYourTown.COM’ and others will become less relevant to consumers.
- On the other, if your MLS does not operate a consumer-facing website, it could still operate an ‘IDX clearinghouse’ site, optimized for search engines, that your MLS could use to link out to broker IDX sites. In time, this could take traffic from national aggregators and ‘faux MLS sites’ and redirect it to local IDX sites.
Gathering enough support
Though the costs to obtain and operate .MLS are relatively small, we need to round up as much financial and community support as possible before making the application if we expect to be successful. Despite success in membership recruitment, MLS Domains Association’s fund-raising efforts are somewhat limited because the Association has sought grassroots support as a non-profit organization rather than for-profit investors. You can help now:
- If you are an MLS, join the MLS Domains Association (the cost is $500 or $1500 per year, depending on your MLS’s number of subscribers). Fifty MLSs are already members, representing more than half the MLS subscribers in the U.S.
- If you are a member of MLS Domains Association, claim a domain (or claim a second, third, or sixth). You put up $800 per domain claim, and half that amount remains in escrow until the Association’s ICANN application is approved. Leading MLSs have already claimed more than 250 domains–is your town one of them?
- If you are a partner to the industry (e.g., a provider of MLS, lockbox, or other product or software solutions), become a sponsor of the Association to aid it though its first few years of operation. We expect to be able to announce in September final agreements with two industry partners to be Platinum Sponsors, with one agreeing to provide $50,000 per year for four years and the other providing a $400,000 line of credit for the first five years of operations. (Other levels of sponsorship are available; contact info@MLSDomains.org for details and sponsorship benefits, etc.)
I’m impressed by the shows of support this effort has received so far, but without more help from the community of MLSs and their business partners, I think we will fall short. I don’t want to wake up some morning next May and hear that someone else applied for .MLS.
I welcome your comments. If you have questions about the Association, contact info@MLSDomains.org or reach me directly.
Nonprofit Tax Quiz
Everyone talks about the weather, but how many of us actually know what a lenticular cloud is or what the dew point means? In the nonprofit sector we throw around tax opinions, but here's a chance to learn something (uh oh). We loved working with Kim Klein of "Talking About Taxes" on this fun quiz.
We advise you to take this 17-question quiz with your friends or co-workers before looking at the answer sheet. (Hint: it's easiest if you print out the Quiz.) At the end of this article is a link to a print-friendly pdf of the quiz, the answer sheet, and the scoring guide.
1. If you give a nonprofit 501(c)(3) $10,000, how much less will you pay in federal taxes (assuming you itemize and are in the highest tax bracket)?
d. $10,000, but only if you get a receipt within 60 days of the donation
2. In a group of ten people, seven of them filed the short tax form, and three filed the long form. All ten of them gave to a nonprofit. How many of them will reduce their taxes as a result of their donations?
a. Five. The other five gave their money to churches or religious institutions, and giving to religion is not deductible because of separation of church and state.
b. All ten -- that’s only fair.
c. Only the group of three. The other 7 are part of the 70% of Americans who file a short form, so they receive no tax benefit for their giving.
d. Eleven of them. One is filing two tax returns under different names.
3. Which of the following paid the least in U.S. taxes for 2010?
b. Sierra Club
c. General Electric (net profit $14.2 billion)
d. Willie Nelson
4. If you die and leave your son an estate of $3 million, how much in estate taxes (also called inheritance taxes) will be owed on the $3 million in income he is given?
b. 15% which calculates to $450,000
c. 35% which calculates to $1.05 million
d. 15% on real estate inherited and 35% on non-real estate inheritance assets
5. Who said the following: "The estate tax -- our nation's only levy on accumulated wealth -- is the fairest and most important tax we have"?
a. Karl Marx
b. Theodore Roosevelt
c. Bill Gates, Sr.
d. Pope Paul VI
e. Thomas Jefferson
6. A "progressive tax structure" means:
a. It is supported by "progressive" people.
b. It is part of Obamacare.
c. People with higher incomes pay a higher percentage in taxes than people with lower incomes.
d. Taxes increase with inflation.
7. In the United States, if you live in a household with a total gross household income of $250,000 or more, what percentage of U.S. households have less income than yours?
8. If Michael, an attorney whose billing rate is $300 per hour, donates 3 hours of legal counseling to a nonprofit, how much can he deduct from his taxable income?
b. 15% = $126 ($300 * 3 = 900, then 14% of 900 is $126)
c. $900 if he itemizes
d. Three hours at the average attorney billing rate in his state
9. Which of the following is legally a restriction on 501(c)(3) nonprofits:
a. Nonprofit staff cannot donate blood.
b. Nonprofits cannot borrow money, except from board members and staff.
c. Nonprofit board meetings must be open to the public.
d. Nonprofits cannot divvy up the surplus at year-end and distribute it to staff.
e. b and c
10. If you buy $20 worth of raffle tickets (for a new car) from a nonprofit as a fundraiser, you can:
a. Deduct $20 from your taxable income.
b. Deduct between 15% and 35% of the $20 from your taxable income depending on your tax bracket.
c. You can deduct only if the ticket says, “Donation requested” and indicates how you can get the tickets for free.
d. $20, but only if you win the car.
11. True/False: Thank-you notes to donors are required by law.
b. False, but you must send a receipt (acknowledgment letter) to a donor for any donation of $75 or more.
c. False, but you must send a receipt (acknowledgment letter) to a donor for any donation of $250 or more
d. Thank-you notes are only required for donors who are intending to list the donation on their tax returns.
12. To be officially poor according to the federal government, a family of four can have a total annual income of no higher than:
d. the salary of the governor of Wyoming.
13. Median household (not individual) income: you live in a household that makes more money per year than 50% of American households. Your total household income is:
d. More than Scrooge McDuck makes in a year.
14. If you paid $10,000 last year in federal income taxes, how many of your tax dollars went to conservation and the environment?
15. If you paid $10,000 last year in federal income taxes, how many of your tax dollars went to military and defense?
16. Sally Stockowner received $50,000 in income last year as profit from selling stock (that she owned for more than a year). Tanya Teacher is a school teacher with a salary of $50,000. Assuming they have no other income and they both take the standard deduction, which of them paid more in federal taxes?
a. Sally and Tanya both paid the same.
b. Sally Stockowner paid more.
c. Tanya Teacher paid more.
d. I don't like word problems.
17. If you pay at the highest individual rate for federal income tax in your country, in which country would you pay the highest amount in taxes?
c. United States
Answer sheet and scoring guide
Congratulations! You're done! Now: to download the free answer sheet and scoring guide (and the quiz without the answers to make it easy for you to photocopy for a group), please click here.
Our thanks to tax accountant Hank Levy, CPA, and to Paul Rosenstiel for assistance with this article.
Kim Klein is a legendary fundraising trainer, writer, and advocate for grassroots organizations. Among her five books is the classic Fundraising for Social Change, a must for nonprofit bookshelves. She is part of the "Talking About Taxes" work of the Building Movement Project, and she writes a blog on their site; click here to go there.
Jan Masaoka is editor of Blue Avocado.
See also in Blue Avocado:
|Blue Avocado Nonprofit Tax Quiz.pdf||715.03 KB|