Ex-newspaper employees’ buy-out money used to compete against newspaper

By Steve Outing

Ah, the irony. … I had a great conversation earlier today with a journalist recently laid off at a major U.S. regional paper. Of the more than 100 journalists laid off with him in recent months, he’s gathered about 40 of them together to create an online news service covering the state, and competing against their old employer. (Many of the others have gone into other lines of work, like teaching, PR and corporate and government communications.)

The model hasn’t been entirely worked out yet, but it will be strictly a digital news entity, and it could be either for-profit, non-profit, foundation-funded, or even (unlikely) endowed by someone with a fat wallet. I’m not naming the location of the newspaper involved, on request, because the initiative is not far enough along that they want lots of people peeking while the construction zone is still very messy.

How is this funded during the start-up period? Did the group find a willing foundation to chip in some seed money? Or find an angel investor who liked their plan?

Not yet. These discarded newspaper journalists are using the buy-out money from their former employer, which for some of them is up to a year’s salary. They can afford to donate their time to developing the new state news service up front, expecting to get paid down the road when the project is further along and a business model has been settled on.

Of course, not all laid-off newspaper employees are lucky enough to get nice severance packages. But at larger papers where the departing typically do get some money to walk out the door for the last time, you can bet that this isn’t the only group that decides to use that financial cushion to donate their time and create a digital news service that will compete against the company that sent them away.

What I find interesting about this is that for many papers, including this one, there have been significant cutbacks in what they can do. In other words, as newspapers cut back, they’re leaving holes in coverage that others can fill.

What irony that newspapers’ own (severance) money in some cases like this is paying for the creation of new entities (commercial or non-profit) that will fill the holes the papers have created. And these new news entrepreneurs won’t have to be held back by any legacy print thinking; they can take all the online advice from digital-media gurus that their ex-employers have paid lip-service to or ignored and run with it. (Not to suggest that it will be an easy task, of course.)

Are there any other laid-off newspaper employee groups who have come together like this group to create a digitial news alternative to the newspaper (that is, that haven’t launched yet)? I’d like to know about them, so please get in touch if this describes you.

Author: Steve Outing Steve Outing is a Boulder, Colorado-based media futurist, digital-news innovator, consultant, journalist, and educator. ... Need assistance with media-company future strategy? Get in touch with Steve!