Google (GOOG) CEO Eric Schmidt gave his hotly anticipated keynote at the Newspaper Association of America’s annual convention this afternoon, and he wasn't booed as some feared he might be -- or at least the WSJ didn't report it if he was.

But Eric's comments will probably do little calm fears by content producers that Google is rolling right over them. (See the dust-up between the Associated Press and Google that broke out yesterday.)

Eric basically told newspapers they need a new business model and that Google will be a part of it.

"Try to figure out what your consumer wants," Mr. Schmidt said during a keynote speech at the Newspaper Association of America's annual convention in San Diego. "If you [upset] enough of them, you will not have any of them."

The speech Tuesday marked Mr. Schmidt's first appearance before a gathering of top newspaper executives, many of whom have expressed growing concern that their content has become a source of revenue for Google, even as their industry's business model continues to crumble as readers gravitate to online news.

Mr. Schmidt called on the industry to join with Google to create products that would entice readers to go beyond headlines listed on search engine pages. He said Google envisions a layered approach to information that is personalized, in order to draw in readers.

"We think we can build a business with you," he said. "That is the only solution we can see."

There's room on the Internet for subscription models and micropayments, Eric told the crowd, but to reach the largest audience advertising will remain king.

It remains to be seen how seriously the audience takes Eric's speech. Newspapers can't seem to accept the fact that aggregators like Google News drive them thousands upon thousands of readers they'd never otherwise never have. Instead, they seem determined to treat Google like a "tapeworm," as Robert Thomson of the WSJ put it a few days ago.

Here's more of Eric's talk, via Techflash:

I think you're going to end up with all three [business models--ads and subscriptions]. An analogy I would offer is television. There's free television, over-the-air television, there's cable television and there's pay television. And they have smaller markets as you go from free to more highly paid. And that structure looks to us like roughly the structure of all of these businesses...

The reality is that in this new model, the vast majority of people will only deal with the free model. So you'll be forced, whether we like it or not, to have a significant advertising component, as well as a micropayment and an additional payment system. The technology around micropayments is getting to be possible now. The transaction costs were so high before, you couldn't do the 1 cent, 3 cent kind of a model, but it looks like the new technologies around aggregation will allow that at the payment level