About Time: Times Sells It To IAC For $300 Million
About.com is about to add a new chapter in its short but storied history as the Web’s first important content farmer, changing hands Sunday night from one of the world’s most elite content organizations, The New York Times Co., to one of its shrewdest, Barry Diller’s IAC, which agreed to acquire it for $300 million in cash.
The deal is part of the New York Times Co.’s overall strategy to liquidate “non-core” assets and focus on its major newspapers and digital publishing extensions, especially The New York Times. The deal also reflects the declining value of content farms in a world of increasing content clutter, including even more sophisticated, algorithmically based content engines such as Demand Media, prosaic content aggregators like BuzzFeed, and a torrent of brand content from marketers and content seeding platforms.
Given the growing morass of marginal content, The New York Times Co.’s decision to unbundle About.com seems like a smart move, and signals a vision that context, not content may actually be king in a digital publishing environment where content has become ubiquitous and seemingly undifferentiated, especially as the lines between professional journalism, user- and brand-generated content seem to be tipping the scales. Earlier this year, Facebook released research estimating that in 2003, the Internet was generating one petabyte of new content annually, and that this year it would generate one petabyte of new information every two or three days.
The New York Times Co.’s decision also reflects the changing economics of generic content relevance in a marketplace of information glut. The New York Times. Co. acquired About.com from Primedia in 2005 for $410 million. Primedia acquired it from its founders for $690 million, which means About.com is now worth about 56% less than it was 12 years ago.
Part of that devaluation reflects the shifts in the supply of content and the increasing role of aggregators. About.com was originally founded as the Mining Company by Scott Kurnit and other investors to cull the most meaningful content from expert editors and writers on the most important subject matter, quite frequently how-to tips and general reference information. But over time, the novelty of such content access has diminished as other portals, aggregators, farmers, and increasingly, social media users themselves piled on.
Making matters even worse, Google overhauled its algorithm for indexing and ranking that gave far lower weights to the kind of “low quality” content generated by farms, and higher value for content it deemed to have higher value, especially from news organizations like the New York Times that generate important, original content.
According to an entry on About.com, Google’s February 2011 content algorithm shift, dubbed the “Farmer Update,” affected 11.8% of all U.S. search queries, and dramatically downgraded the results and visibility for content farmers, including About.com.
For 2011, the New York Times Co. reported that digital revenues for the unit fell 25% and profits declined by 67%.