The Wall Street Journal carried an article on their front page today about the Department of Justice’s examination of the National Association of Realtors’ Internet policies. My friend Russell Capper’s company, eRealty, as well as other Internet-based real estate companies are challenging the way real estate business is done.

Why is this interesting? Not just because Russell is a friend of mine! It is interesting because it exhibits classic symptoms that almost all innovations display, primarily resistance and fear. Of course realtors do not want to see their business move to an electronic model, but it is only a matter of time before much of the real estate business is done through the Internet.

The most analogous industry is airline ticket sales. Travel agents didn’t want to see their business move to the Internet either. But end users want to do their own searching, identifying the flights they want to purchase. Some of them still want the services of a travel agent.

The move of the real estate business to the Internet is simply slower because users trade real estate far less frequently than they purchase airline tickets. But ultimately it is customer demand that will force this industry to move more completely to the Internet.

The activity of the Department of Justice points out another classic issue for innovations. A society’s flexibility enhances its ability to prosper from innovations. That is why countries with common law systems are more prosperous than countries with civil law systems. Attempts to make rules arbitrarily constraining innovations is not a good thing for prosperity.