Content Is Still King in Cyberspace

Barry Diller is back to making opportunistic grabs in new media.

IAC (Nasdaq: IACI  ) is acquiring The About Group from The New York Times (NYSE: NYT  ) in a $300 million deal.

When the newspaper giant paid more than $400 million for seven years ago, it seemed like a shrewd move. Print publications were threatened by the timeliness of Web-based news, and was a thriving survivor of the dot-com bubble. -- with its 1,000 topic sites, 90,000 topics, and more than 3 million articles -- was once on top of the world. Dedicated contractors fleshed out categories, offering open-ended potential for ambitious guides. receives nearly 100 million unique monthly visitors, but when's the last time that you ran into one of those 3 million articles?

That's the problem. Content mills have mastered the art of cranking out low-cost content coupled with search engine optimization. Using algorithms and gut instinct to put out the articles that Internet users are seeking has helped Demand Media (NYSE: DMD  ) and Yahoo!'s (Nasdaq: YHOO  ) Associated Content -- recently renamed Yahoo! Voices -- push content lower. The arrival of Wikipedia as a resource hasn't helped, obviously.

The New York Times may have been gushing that experienced sequential improvement in last month's quarterly report, but revenue was still down 9% from a year earlier. For comparison's sake, Demand Media's revenue during those same three months rose 17%.

IAC has a habit of collecting survivors of the dot-com bubble that have become laggards. It sees synergies in pairing up with its fledgling search engine.

"'s content will differentiate and greatly increase the authority of's offerings, while Ask's expertise in search technology and user experience will improve the discoverability of existing content on," CEO Greg Blatt is quoted as saying in the press release.

He's right in theory, though it remains to be seen if is the best authority for optimizing's content and guiding the direction of future articles.

The New York Times is relieved. It's been shedding assets this year, unloading regional newspapers and the last of its stake in the Boston Red Sox ownership group. The publisher has been making strides in its online operations and circulation revenue is actually improving. It was never going to make relevant again. Diller's IAC may not necessarily succeed either, but the change of scenery can only help at this point. 

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Longtime Fool contributor Rick Munarriz was a freelance city editor for IAC's Citysearch until 2010. He does not own shares in any of the stocks in this story. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.

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