If it's in the Public Domain, Ludlow isn't "Allowing" Them to do Anything... The AP reports that "Guthrie publisher lets cartoon use song." From the article:

With nary a jab thrown, Ludlow Music, the song's publisher, agreed in a settlement Tuesday to allow the cartoon -- one of the biggest Internet draws of the summer -- to keep using the song.
In return, JibJab dropped a lawsuit against Ludlow that sought an order saying its use of the song was protected because it was a parody and "This Land" was in the public domain.
The creators also agreed to provide a link on their Web site to the song's original lyrics and to donate 20 percent of any profits to the Woody Guthrie Foundation.