To paraphrase what she said: "You don't lose readers at a higher price point, you lose downloaders.
Downloaders are those who grab anything just because it's free. It's not that we authors don't like internet users who want something free. After all, most of us like something free too.
The problem is that downloaders (1) often don't like the genre of the downloaded book so they slam it in reviews or (2) they rarely buy anything because they're only interested in free downloads. So they may have every free book you offered, but they still won't buy your 99cent book because its, well, 99cents, not free.
Free should be a carefully-used part of your overall marketing plan, not an evergreen concept for your entire inventory. After all, an author can't make a living if the public is trained to expect ebooks to always be free.