To use an example that he uses consumers want other things for free such as cars but can not have them. This is true do to the basic laws that are killing the price of recorded music. However to equalize the analogy, if GM were to somehow produce a trillion cars next year, there would be way too much supply and the price of cars would drop to probably near zero but not zero because a trillion cars is still not infinite as music is.
So how are musicians supposed to make money? They have to innovate and compete with free and it can be done. The greatest example of competing with free is bottled water. I am willing to bet that the vast majority of people reading this can walk a few feet and find a source of fresh, drinkable water for essentially free, yet the bottled water industry has made billions selling what is ultimately the same thing. How did they do this? They provided the product in a convenient manner that consumers wanted and people are willing to pay them for it. Is it hard to do? Yes. But look at how long water was around before someone put it in a bottle and became rich off of it.