Well, when doing a site search in Google for site:mahalo.com "Links Powered by Google" there are 553,000 pages indexed in Google which are using scraped search result content (with optimized page titles) to help pull in traffic. http://www.google.com/search?q=site%3Amahalo.com+Links++Powe...
and keep in mind that is just links from Google...there are also chunks of content from Google blog search, Twitter, and other sources (images, videos, news) on those pages
he is full of ____ if he is trying to get anyone to buy that doing the above is responsible for less than 1% of their traffic when Compete.com shows their search referral traffic as being ~ 60% of their referrals
It is not just a few (thousand) 100% auto-generated (experiment/stub/zebra/spam) pages that have scraped content on them...the above search shows Google estimates over a half million pages in their index contain content from their own search index...total regurgitation of 3rd party content :D
And lets not forget that 1.) he is using people's optimized page titles as content on his pages 2.) search traffic monetizes better via ads than other traffic forms...especially the search traffic that lands on a page for some random longtail keyword made up by arbitrarily combining chunks of 3rd party content mixed together and re-aggregated. 3.) in addition, there is a $0 editorial cost to scraping these millions and millions of content snippets and re-displaying them. 4.) he is making at least 5 figures a day from that content scraping...with 100% certainty.
his 1% remark is just another form of misinformation. nothing new there!