“This last round of revisions — adding many new pages and vast new capacity — took four months. If this advertising play does not pay off, could it (Zillow) turn itself into a national semi-automated real estate brokerage? You bet. In six months at the outside.”

flipping a switch in only 6 months will leave precious little time for most current participants to retool. So, as we say in sunny California, “have your earthquake kit ready” (even though no on does)!

It may be an issue of semantics, and perhaps I’ve been too black-and-white in my thinking. When I think of Zillow disintermediating the industry I think of them literally becoming brokers themselves, and you’re right that there are any number of options between serving up advertising and doing the actual brokerage itself.

For instance, if Zillow gets enough consumer clout on its site, it could perhaps charge agents for the privilege of adding content.

Look at what Amazon (early Web 2.0 champion) is doing. What Yahoo is doing. The killer stories in the past few years are new Internet distribution networks enabled by broadband adoption, Internet user experiences (AJAX and open source) and shift in American culture (spearheaded by Gen Y) to actively participate in Internet communities. All killer Internet stories are *new* distribution networks.

The old distribution network in Real Estate is indeed changing, and there’s no going back. Think of these new Internet supergiants in RE like Zillow and Trulia as new distrubtion networks, not new destination sites. And to think that distribution networks will only do advertising is naive. In real estate, the lion share is in the transaction and the services around it, and there’s no reason to abstain. Zillow won’t replace realtors and brokers, but I find it extremely naive to think they are not aiming to take a significant piece of the transaction.