What you dont understand about running an MLS is that it is not just a database. That part is cheap. Its all the other things that go on behind that which are expensive.
As for Zillow, I was spot on. They came to change the RE Industry but all they have suceeded in is selling overpriced advertising to realtors that generate some of the crappeiest leads I have ever received. I tried them out for 3 months and what I got from them was garbage.
They do provide some useful information but for the most part they add very little value to the system. Certainly not a revolution.