Sports Illustrated employees just got laid off and Sports Illustrated bought a website whose writers do not get paid and do not require costly outlays such as health insurance and worker’s compensation.

On January 18, Time Inc. announced that they were laying off 298 employees. Advertising Age reported that the layoffs were mainly editorial positions at People Magazine, Time Magazine and Sports Illustrated.

A memo announcing the layoffs to the staff made it clear that Time Inc.’s goal is to catch up to the rest of the media world and establish itself solidly on the web:

While we continue to invest in our core magazines, we are also focused on transforming our work force and broadening our digital capabilities in order to become a truly multiplatform publisher.

“Broadening our digital capabilities” is a good idea because Sports Illustrated’s website, SI.com, lags behind other sports websites. It has far less traffic than ESPN, Yahoo Sports, AOL Sports, and CBS SportsLine. Not to worry. On February 1st, Sports Illustrated bought fannation.com, a website which aggregrates sports news and has original content generated by fans who sign on and start their own blog. This is a similar structure to MVN.com (Most Valuable Network); in fact fannation calls its fan blogs Most Valuable Blogs.

I don’t know how much Sports Illustrated paid for fannation.com but Time Inc. paid $20 million to become a minority investor in fannation.com’s parent company. And that brings up a few interesting questions.

Are paid sports journalists being replaced by unpaid sports bloggers? Was that what Time Inc. meant when they talked about “transforming our work force”? Sports Illustrated employees just got laid off and Sports Illustrated bought a website whose writers do not get paid and do not require costly outlays such as health insurance and worker’s compensation.

Newspapers and magazines are being supplanted by legions of bloggers who do everything from dredge up documents about the Kobe Bryant sexual assault case (smokinggun.com) to high level political reporting from the Lewis Libby trial (firedoglake.com). Libby is the former head of staff for Vice-President Dick Cheney charged with obstruction of justice during a federal investigation into the leak of a CIA agent’s identity to the media.

Firedoglake bloggers do not get paid. Their accommodations during the trial are paid for by donations. MVN, unlike most fan sports websites, does turn advertising income over to its writers though it’s not very much. If an advertiser buys ad space on a specific blog, the writer(s) on that blog get a percentage of the income. At most it’s probably a few hundred dollars a year.

But what if the site you write for gets bought out for big bucks? It’s safe to say that none of the bloggers on fannation got any of that $20 million Time Inc. paid for part of its parent company. Of course, none of the millions of people who uploaded videos to youtube got any of the $1.65 billion google paid for youtube either but I doubt that anyone was put out of work by videos being uploaded to youtube. Especially now that youtube has gone corporate and is taking copyright protected videos off its site left and right.

There are websites that pay for content. The New York Times reported that a series of comic videos called Ask A Ninja made more than $20,000 for its creator on revver.com last year. The same article says that youtube is looking for ways to pay its users. It’s not a difficult problem. If youtube needs help figuring it out, they can just call me up. You pay the user based on the number of views of their video or you pay them based on the advertising income generated by their video.

As for me, I’ll just keep on tying to generate ad income here and if MVN gets bought out by Sports Illustrated, or ESPN or any other publication for that matter, I’ll be standing in line waiting for a few crumbs to fall my way.