I think the article phrases it wrong.
The way I understand it, you just can't only sell a product digitally - you need to offer a physical copy as well.
Why? Why do I have to waste the time and money to provide a physical copy? I'm not a AAA vendor I'm just trying to get my game out into the public nameshare.
You're still allowed to sell your stuff at doujin shops.
Oh how convenient, I can only sell my stuff at Comiket and Reitaisai (events over in Japanland of course), or in doujin shops like himeya/etc I have to beg to carry my product physically. The "traditional doujin" distribution system is a joke, period. Outside of being in Japan your game will go nowhere, and even in Japan your game will end up on Share/PD in minutes and noone will buy it outside of collectors. Look how big Recettear got just by being on Steam.
TSO, if you're trying to make money off a touhou game then you're missing the point. He doesn't want fanworks to be motivated by profit.
Noone said anything about being motivated for profit. Some people just want to have the fruits of their labor be worth something, or even just cover their costs and break even. And note he lumped both commercial and doujin in the same category, so I get the feeling he wasn't thinking about profit when he wrote that.
I'll be honest, the vibe I get is he wanted to add an artificial barrier to distribution in order to limit the potential number of sales doujin groups could generate. By forcing doujin groups to resort to physical distribution only, he's forcing a huge cost and barrier to entry. Not only that, on a lot of the platforms he forbade, there ARE no physical distribution options, digital is the only way. I can't reasonably make a 360 game and get it pressed. I can't make a physical copy of an IOS or Android game.
Stuff like Steam and Impulse and other digital distribution platforms are amazing for indy developers, as they no longer have to worry about distribution and marketting costs, it's all just part of the system. It lowers the barrier to entry immensely, and gets their game out to a much wider audience. His restrictions scream "I don't want you to be successful".