I haven't watched the video - but this (apart from the Kemper parallel) isn't absurd; that's how it works. Not the sound, of course, but the songwriting. If somebody's original music is played in a public setting (or used in a commercial, used as a sample on another artist's CD etc), the rights holder is owed money.
I am not arguing that it makes sense on paper but in reality, how many times have you heard a bar band cover an AC/DC song? I have never in my life heard of a band paying royalties to another band for playing their song. At least not in the realm of bands who play their own music. Maybe in the working band's world, where they play covers at weddings and events for a living, its a different story.
EDIT* And my absurdity claim was def in regards to the Kemper parallel.
EDIT 2* Aside from the bad example he makes, I am specifically arguing his claim of another band even covering one of his songs and owing him money. That is just too far an extreme IMHO. I completely agree that a band owns their music and has the right to be paid when it is utilized in the proper domain. If my band covers a Slayer song at a basement show, I wouldn't expect Slayer to come looking for a royalty check.