He's not.

Nevertheless, 10% of a larger number is more. The smaller the base, the smaller that 10% is, and the more money that 10% must pay in for CCP to turn a profit. It's easier to motivate 10% of 1,000 to spend $1 a month, then it is to get 10% of 100 to spend $10.

Not necessarily. The more targeted your appraoch, the smaller the potential player base (that we all agree on). But the more targeted the player base the higher the rate of "perfect match" customers that basically have nowhere else to go and lose any interest in the competitions offerings.

Those are the people that play an MMO for a decade straight without any sign of wear. Those are the guys that pay thousands upon thousands of dollars to improve their experience because they identify the product as part of their everyday life and as a worthwhile area to invest money into.

You can target a very general group of people to maximize player count and viral effectiveness. But the more general the group your product appeals to, the less is this product able to satisfy each of the subsets your general group is composed of.

The consequence is a general loss of long term retention and less incentive to invest money that has to be offset by having a large number of players that, on average, spend less.

I haven't played MAG and thus have no idea what exactly happened to it. Reading around these forums though it seems to me that a patch of some sorts pissed people off which is indicative of them trying to switch the target group and this attempt firing back horribly as expected.

As i said "perfect match" players are happy because the game is already in a general state that appeals to them. Once aquired, all you have to do is not abandon your core game design concept to keep them. Getting players to try a very specific game is the hard part but once they're here you have a good chance on keeping them.

I suspect that just as many players would leave if respecs where added as without them. The difference is that the one group would've otherwise stayed for years and the other is mainly waiting for the next game or console release either way.
Games like LOTRO (read: almost all MMOs of the last 6 years) where cookiecutter copies of the EQ/WOW concept, often of considerably worse quality. They tried to attract a very washy market segment that is highly oversaturated without bringing anything worthwhile or unique with them. What forced all those games down the F2P road was the almost complete lack of a unique identity (besides the occasional movie license, wohoo) so they have to attract new players constantly to compensate for the bleed.

LOTRO going f2p was the "many players" approach. I expect dust to follow the "loyal players" approach if you will.

Not sure what you're trying to say here

And yet SWTOR had to go fp2 hybrid to avoid a complete fiscal failure. You need to try hard not to dominate any market you engage with what is essentially the greatest franchise to have ever existed. The current 2m subs* are not particularly exiting in general, even less so with 'star wars' in the name.

2m accounts, created since going f2p.

Right... so that prove my point..? If something as big as Star Wars have problems being selective... what makes you think that EvE is going to be fine ?