Did he say $500/ year? Are these free directory listings? That's way too expensive for this service, I'd rather do it myself by hand and save all that $. Two or three listings a day if you really have no time and you'll be done in a couple of weeks. Also how often you really need to update these listings to justify $500 every year, after these listings are all created?
All it does is update info in these directories, probably authorized by them so for every listing he pays a smaller share of the fee you paid to each directory to allow his program to access and edit info in their servers.
I doubt Google would partner with this guy for one simple reason: Google doesn't need him and his service. You'll still manually create and update a Google Places listing whether this guy goes big or disappears in a year or so.