CoStar Buys LoopNet

Winning Hand
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So CoStar buys LoopNet – or as one headline put it, LoopNet Agrees to be Acquired by CoStar.  Didn’t see it coming but I’m not surprised.  They’ve been in and out of litigation for years – over photos, data scraping and copyrights.

CoStar gains a lot with this acquisition.  They can retire the anemic Showcase, CoStar’s marketing alternative to LoopNet that never really took off and CoStar won’t have to lift listings anymore.  Plus the threat of LoopNet’s property database becoming a viable alternative to CoStar’s product is gone.

Bigger question was why did LoopNet do it?  They seemed to be on a very positive trajectory.  Was there another lawsuit in the offing and they just gave up?  Did they hit a wall with their technology infrastructure (too many disparate systems, too much hand coding)?  Or was the money too good to refuse?

We’ll have to see how this plays out for agents, but here’s some of my thoughts:

  • Pricing model changes.  LoopNet allowed companies to purchase features (Looplink for example) without requiring a per agent cost.  No way will CoStar let that practice continue.
  • Property database goes away.  LoopNet (and Cityfeet) will be treated as marketing platforms.  You want property, tenant data or market stats – get CoStar.
  • LoopNet owns REApplications and a marketing platform, ReactionWeb.  They’ve been integrating ReactionWeb’s features into REApps as LoopNet Pro Tools to sell to larger brokerages who want to keep their own data.  Maybe CoStar keeps ReactionWeb to augment LoopNet’s agent offerings.  REApps’ future is in question.  After all, why would CoStar want you to keep your own data when you can buy theirs?  I can’t see CoStar giving REApp users access to their data to populate a brokerage’s database.
  • More calls and high pressure tactics from CoStar.  Would they be so foolish to make CoStar a requirement for using LoopNet – or cripple basic accounts in a way that makes them useless?  If so, they give a huge opportunity to NAR’s Commercial Source or non-mainstream data aggregators like RealUp or CIMLS to pick up disenfranchised brokers.  Or maybe local agents will get serious and create local CIEs with Xceligent or Catylist.
  • There’s got to be a positive, right?  Maybe CoStar will offer an option to view non-LoopNet submitted listings within LoopNet.  Or sell other data through the LoopNet interface instead of requiring the purchase of their software.  Or integrate some of their software features in LoopNet’s cloud.  All for a price, of course…