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Hardly a week goes by without another round of stories, citing unnamed sources at major media companies, that seeks to criminalize Google for its purported failure to protect copyright holders from wanton piracy on YouTube.

“I have learned that, as part of being a player in the media industry, the way one negotiates, is everything is leaked and you are sued to death,” Google Chief Executive Eric Schmidt said in response to a question from an investor attending the Bear Stearns Media conference in Florida on Tuesday.

On the one hand, you have a company that generated more than $10 billion dollars in revenue last year, mostly by pointing consumers to other people’s content. Seen another way, the Silicon Valley company is the innocent tourist getting mugged by sharp New York media players and doesn’t quite know what hit it.

Schmidt sought to counter vague accusations that the Web search leader’s business model is somehow based on intellectual property theft. “The lawsuits that go in the media industry appear to be the normal course of doing business,” Schmidt complained. 

Schmidt hinted that negotiations with major media companies over YouTube licensing rights may be hung up on Google’s insistence that the parties focus on measurable results. While allowing that Google is just as interested in serving up high-quality programming as any media company, Schmidt argues that some programs which media companies are demanding top dollars for may have no audience.

“People say my product is worth ‘x’ and Google says: ‘Prove this,’” Schmidt said. “That hit you thought was so wonderful, on the Internet, no one watches it.”

“There is genuine disagreement and an opportunity for a new experiment,” he said of the stand-off between Google and potential major media partners.

Google sees itself as the potential best friend of the media programmer. In the voracious world of digital information sharing, the Web search leader believes it can supply technology to convert the uploader of pirated video into a licensee of that content, then help media rights holders make money when such fans share videos with their wider social network.

“A better opportunity for you, Mr. Media Company, is to think of this person as a potential monetizable target. Think of this person as a fan… they like it (your video) so much they uploaded a copy. This is someone you want to get to know,” Schmidt said.

– Kenneth Li in New York and Eric Auchard in San Francisco

(PHOTOS: Reuters, Fox TV on YouTube)