Sounds great in theory, but even for a popular open source library developer this happens so rarely that it rarely pays the bills regardless of license.
"Using a permissive license that allows multi-billion dollar companies"
Most embedded devices by far are not developed by multi-billion dollar companies. Their legal departments are also actively steering away from GPL licenses.
"try negotiating a different license"
In my experience, by far the most companies don't want to negotiate anything. If there's a product with a set price, yes, then it might be purchased. They typically also want some kind of product support with it.
"use your code for free certainly doesn't help changing the mind set of "open source is other people working for me for free"."
How to solve this? Ideally the library developer would get paid AND the consumers get more value for their money. This would encourage more developers to write useful libraries that provide great value in the big picture, but are uneconomical or otherwise too much trouble to deal with on an individual company or product level.
As it is, everyone seems to lose.