One of us is misremembering. I seem to recall an interview with Gates and/or Ballmer where they talked about the realization that the cost of 5 or 6 floppies at wholesale was insignificant compared to the revenue from the software, that it was a no-brainer cost-wise. CDs were the first time when cost became an issue, iirc (again) because you had to pay for one or more masters to print the production copies. I'd feel better if his history was right.

This time the retail channel itself is very cheap, but the ancillary costs, both financially and emotionally, are very high.

And, of course, only large companies and publishers can bear these costs. My fear is that It’s only a matter of time before developers find the risks and expenses prohibitive and retreat to the safety of a larger organization. We’ll be going back to square one.

I can't even address the "emotional costs" he talks about, but there is a precedent for dealing with risks of this kind. For consulting engineers, it's called "errors and omissions insurance." It strikes me that if there isn't something like that for developers, one plausible reason is that this kind of liability hasn't actually been a problem. Is there errors and omissions insurance for developers?

From our experience, it’s entirely possible that all the revenue for a product can be eaten up by legal fees.

The author uses the phrase "from our experience," but I wonder what that experience actually is. At this point, it's not even anecdotal, because he doesn't supply the anecdote! We can't even begin to ask if his experience generalizes. For example, did he get good counsel? Was he actually infringing? Should he have settled? Did he avail himself of the FSF or ESF if applicable? Should his product have been more profitable?

I think I'm either blessed or cursed with too much curiosity to take this guy at his word.