I have some curiosity about the financial info and profitability of the site. ( How much did you make; where does it come from; what was the profit; etc.. ). It'd be very cluetrain manifesto-ish for ya'll to share that info.
This strikes me as drivel too, as others have stated.
As a [moderately prominent] Flash Platform developer, let me assure you that Silverlight is considered a viable platform for building Rich Internet Applications. Many "Flex/Flash" shops have also picked up Silverlight projects. I expect the platform will continue to become more prominent over time as penetration grows. Didn't Microsoft rush through four versions of the player very quickly?
Something to note; he did say that 50% of his income comes from sheet music. I have no idea how many of those buyers are teenagers, of course.
He also specified that "the entire record business is in free-fall" which you point out and then switch to "music business" in your response. The record business is in a free-fall; however the record business just makes up one portion of the music business.
There are two aspects of copyright here. One is on the recording, and other is on the material being recorded. He should have no problem copyrighting his recording of those sounds; but should have no right to be able to copyright the sounds.