I'll start off by saying that I understand the artist's sentiments... and I'm not a lawyer (nor anything close) but they probably deserve some money out of this... But this is the Internet World and artists are going to have to start coming to grips with the same issues other Old Media groups have been facing: The ease, and therefore frequency, with which digital content can be copied and shared (pirated?).
Let this be a wake up call to future artists: We play by a different set of rules in the Internet World, whether you like it or not. I believe that good artists will embrace this incredibly efficient new form of distribution (call it pirating if you like) and use it not only to augment the viewership of their work, but also to add to their work.
I'm not really offering solutions, but I sincerely believe they exist. Here are some thoughts to start with:
As for distributing freely on the internet and still making money, an example that I appreciate is what rappers are increasingly doing with their music: producing unofficial mixtapes that are intentionally released to the internet for free consumption. These mixtapes are basically original music without quite the polish of an official studio album. This provides free marketing and it ingratiates the artists with an audience that, believe it or not, recognizes that pirating is real. This audience in turn buys the artist's official album whenever it is released (though it is probably available somewhere to pirate) as a show of support for an artist that embraced them... instead of reviling them. Lil Wayne released several high-quality mixtapes prior to the release of his multi-platinum selling official "Tha Carter 3" album. I truly believe this effect bolstered the official album's success.
As for actually adding to the artwork itself, maybe the money lost to pirating can be offset by additional content created by the Internet... By that I mean understanding that Web 2.0 is based on harnessing user-generated content. The same audience that is consuming your artwork for free is also offering up content they've created for free. They post opinions, reviews, remixed images, locational data, networks of friends, youtube videos, tweets, and are often happy to provide you with content specific to your needs if you just ask them for it. Accept their trade and make work that uses that content.
Returning to the article, I don't think that Google believes they are "pirating" these artists' work... Google thinks they are doing these artists (and society at large) a favor. In the future, artists should recognize that if they understand Google's point of view, they can harness the power of the favor it is doing them.