He has a point - it's sort of like how Wal-Mart can greatly expand sales for a company but can also cut their profits to the bone and even put them out of business.
So why not just not sell to Wal-Mart? That can not be viable when they own too much of the distribution.
Publishers are careful to only say nice things about Steam and how grateful they are for all the increased sales, but it often cuts the revenue per title to the bone.
And once that cat's out of the bag, it'd be hard for them to go back to charging $30 for the game they used to get instead of $10 and under $5 on sale.
And it drives customers away from the publishers' sites to Steam. for example, because of Steam, Spiderweb cut the price on all their games on their website - but Avernum 1 is now down to $20, the same game that was $3.39 yesterday on Steam, and lists for $9.99 there. Right now, the five Geneforge games are $45 on their website (down from the $75 I paid, on sale), and are $9.99 on gog.com on sale, $14.99 normal price.
In the short term, companies can make money from the increased sales, but it also has the effect of driving down prices even for companies who don't participate.
It's a tradeoff. Expand the customer base, reduce the prices. However, that can drive down budgets as the market for expensive games dries up.
There aren't many studios who can still sell at the higher price point.