The one thing he got right is the GMail case, where big companies are "ready to take a loss to kill the competition" (as said by dkokelly).
His tale about the DVR implies that if it's free, it's going to work. But consumers still have the ability to figure out which of 2 free products is best. Free does not preclude quality. Same rules as before apply.
His tale about startups worried about not being funded is far from convincing. VC's will always fund bright, innovative, potentially profitable startups (with the freeconomics model or others).
His tale about advertisement is not clear. If your ad-sponsored business is going well (during an economic downturn), there is an argument for advertisers to focus on you, and not others that fare less well.
His tale about complex transactions is wrong. Paying only for what you use is far from a bad concept: it creates several types of demand among your consumer-base. And it seems to work, as several European low-cost airlines showed during the last years.