Something doesn't have to have mass appeal to be valuable. In fact, that's pretty much what he's arguing for: amateur remixes, which might not have the reach of something with publisher backing, should not be illegal and punishable with extortion-style fines.
The baby video wasn't marketed. Remix culture is pretty local most of the time. Viral videos are an exception - not every video uploaded on a video-sharing site is watched by millions.
We do value it but its more intimate and less noticeable than mass culture. Most stuff people create - jokes, sketches, songs, voiced opinions, puns, parodies, etc. etc. isn't shared. In fact this "microculture" is the basis of our social lives.
I think mass culture is both a result and a product of our social alienation. The Internet and a better, less snobbish school education in music, literature and art can make wonders for world peace and love ;-).
Clearly we value this "remix culture" a lot less than we think we're supposed to.