The best I can tell, they serve two functions:
1) They pre-screen "undesirables" for the landlords, allowing the landlords to avoid legal issues. (I'm not making a moral judgment, just observing behavior)
2) They negotiate higher prices for the seller. (This is just theory, per "Freakonomics" they seem more likely to hold out for a better deal on their own homes.)
So why in practice is it so hard to get rid of MLS? Because of their head start in the information monopoly, it is hard to replicate, and they have no incentive to let others into the game.
What's a good analogy? Look at how hard it is to unseat market data providers in Wall Street. Someone could beat Bloomberg, but only if they convinced all of Wall Street to stop using their feeds. Data providers usually only change when Wall Street says, "Let's create our own rather than give money to someone else."
Net - you would have to convince a meaningful (20%? 50%?) amount of brokers that they're going to get a larger market share of a smaller pie, that will inevitably send their old pie out of business. Or a TON of marketing money to convince a lot of home owners and buyers they're better off on their own.
I hope that someone pulls it off, because a lot of these brokers make investment bankers look like altar boys.
These listings won't get sold because people won't be able to find them online. As a result people will stop listing their homes with brokers.
I recently bought my first home, and the negotiating started with "since you aren't using a broker we can take $10k of the listed price". That was the selling broker's opening negotiation, before I even made my initial offer.