Everything he says about publishers and middlemen might be true, but it is not the reason why aspiring novelists don't make money. They don't make money becaus

Everything he says about publishers and middlemen might be true, but it is not the reason why aspiring novelists don't make money. They don't make money because the supply of novels (including unpublished and self-published novels) is far greater than the demand. Furthermore, most unpublished and self-published novels are simply not very good. Note that "bad" here need not mean they're poorly written, though that's often true. It might just mean that they don't have anything that would make someone choose to read them instead of doing something else. Rewards are distributed to authors in a steep Pareto distribution partly because that is the distribution of talent, and partly because of the nature of the market: there is social value in reading the same books that other people have read. Either way the number of authors sitting near the decision boundary between "making it" and "not making it" is pretty small.