In short, it's along the lines of: How did publishers miss the opportunity to buy it instead? And, by extension: How do they not realize MSNBC is going to come and try to eat their lunch?
Everyblock is a powerful source code that aggregates local data on crime, construction, civics and consumption, everything from restaurants to break and enters, and yields the data according to zip codes and blocks.
The good news is that the source code is open for others to use. The catch is that whatever you create you must let others use, too.
Mutter suggests Everyblock has the potential as a Cragislist-like competitor for local advertising. He wonder why newspapers didn't see this coming and construct the deal themselves.