John Battelle has a great analysis:

"Well, not exactly. First of all, The Times did not overpay by recent standards - the company was in the bidding for Marketwatch (Dow Jones won), and if I recall correctly that company went for 60 times EBITDA. And currently, most internet companies are trading at well above thirty times EBITDA.

So one could argue that the Times got a deal, but in the end, that's not the interesting part of the news. What's interesting is why the Times wanted About in the first place, and the role search - and the long tail - plays in the deal.

In the past few years, About.com has remade itself through paid search - the site was massively optimized to rank well in search engines, Google in particular. The reason was pretty simple - About's revenue is driven by AdSense, and the more optimized it was, the better the clickthrough. I have seen research reports comparing major search sites to About, and the result is pretty stunning - on average, 10-15% of clicks on search sites are paid. But on About, it's over 20%. That's a pretty big difference.

The Times saw About as an opportunity to get into the search game, certainly - lord knows news is not a very profitable business when it comes to paid search. But there's more. About provides the Times a platform to explore microcontent without having to - necessarily - extend the Times' brand to everything. And as I've told anyone who will listen to me, I think microcontent is key to winning in the Web 2.0 publishing world. When publishing folks from mainstream newspapers tell me that blogging is far too small to possibly impact their businesses, I often ask this question: Would you rather have scores of microsites with a combined revenue of $15 million, profits of $3-5 million, and a double digit growth rate, or a newspaper group with revenues of $50 million, profits of $5 million, but declining growth?"

I mostly agree - the Times is surely not the company that could haven gotten into grass root blogging by starting such a project internally. Also nytimes.com is one of the most visited web properties but had never really figured how to put their sites well into Google (you remember - the archive links issue). Also about.com is well into the paid links game but has potential in direct sales. A place where the corporate clients the NYT nurtured over decades can make a big difference. And in any case if all fails Primedia paid a stunning $600+ million plus for about.com before. So even when both corporate cultures and business prove unmixable you will most likely find another buyer. Revenue is revenue, profit is profit :)