It's also interesting to see how much less serious this is to musicians and producers who weren't in the business before the mp3. This is the only world he knows, so he knows how to work it.
It also sounds like he derives a lot of revenue from a healthy live following. Musicians that aren't as performance-oriented are probably less sanguine about this.
I'd argue the opportunities for digital distribution far outweigh the risky and extremely limited opportunities of traditional physical media. The smaller artist has a major lack of publicity muscle. Piracy can provide just that; on a potential scale almost completely inaccessible to unknown artists.
I work for a small record label, I understand the problem very well.