His response (for those who don't want to read another article):

"That could happen but it would be against their best interest and the consumer’s best interest. It’s kind of like Zynga just got a $9 billion valuation. Facebook could turn them off at any time. The iPhone could have been turned off by Verizon or AT&T (NYSE: T). There are a lot of synergistic partnerships that make sense for both parties that last a very long time.

We are diversifying our traffic because the internet is moving that way. We’re aggressively focusing on diversifying traffic. We had 100,000 individual eHow articles receive traffic in December alone just from Facebook. We receive traffic from Twitter. We receive traffic from Digg. We receive traffic from all across the web. We receive direct traffic and traffic from apps like Livestrong. We are naturally diversifying our revenues—not because we’re afraid of Google but because that’s where people are spending their time."

He must have missed the memo. Apple and Zynga have contracts signed in blood that keep them from beig "turned off". As we saw today, Google has no reason to keep Demand Media's lights on.

Google would lose money to but they could take the hit, the demand media model would become completely unviable.

But would Google loose money? If the big content farms shut down tomorrow how would that effect Google? There would instantly be fewer ad views. Wouldn't the fewer views be worth more (same number of people placing ads with fewer places to put them) causing an increase in ad price to cover the difference?

Depends if there is a non demand media site for every search query where they provided an answer to still capture the audience. Ads could be more expensive up to a point, but many would probably not want to run ads more expensive than the fairly cheap rates they get through the long tail of the display network.