Why Guardian Media Bought paidContent for $30M

Rafat Ali, founder of ContentNext Media, a Santa Monica, Calif.-based new media startup and publisher of the blog paidContent, puts the blame for his inability to sleep last night squarely on Kara Swisher’s shoulders for breaking the story of his company being gobbled up -– for a rumored $30 million — by Guardian Media Group (GMG). He admits on his blog to being steamed over being scooped on the biggest story of his life – and as a lifelong reporter, I know how that feels.

In a very early morning call he explained that a sale had not been part of his plan; he had been raising another big round of funding to grow his company.  The company had previously raised $1 million for Graycroft Ventures. But the offer to be acquired by a company he respects as much as GMG was simply too good to pass up. The company is going to be run independently from the U.S., he said, and he expects to expand aggressively in Europe and India.

This is a great outcome for a guy who has worked tirelessly to build paidContent over the last six years, one blog post at a time. Rafat is also a long-time friend and — ever since we each started our businesses — a great resource. From a personal perspective, I can only imagine his elation, no matter how short-lived it might be.

Granted, the outcome doesn’t mean that Rafat and his partner in grime, Staci Kramer, get to go and enjoy martinis on a beach somewhere –- they still have to work for their new corporate masters, for the deal does have a big earn-out component. As far as his buyer, GMG, best known for its Guardian and Observer newspapers in Britain, is concerned, this is the right step, a way to buy into the future of media.

While at first blush it doesn’t make sense that a newspaper company is buying paidContent, many overlook the fact that GMG also has a division called Guardian Professional, a multimillion-dollar B2B publisher. With its thriving conference and research business, not to mention a highly influential and targeted audience, paidContent is an ideal Trade 2.0 publisher. It’s no surprise they got acquired.

The B2B publishing business is currently going through an upheaval. Many, like United Business, are retrenching and cutting back on their trade magazine divisions. Their Internet operations haven’t quite been the savior that they thought they would be. In other words, this is a business that can be totally disrupted and as such, reinvented.

As the founder of a company that’s in the same game as Rafat’s, the sale of his company confirms one simple fact: We have a disruptive strategy that involves using technology to build a business that is defining the future of media. Around this time last year I wrote about how broadband has led to new media consumption patterns and how blogs are part of this evolution of media:

This immediate media is information simply adapting to the new methods of distribution…The Internet in its early version upped the tempo, and with the rise of high speed, always-on connections, information is now an unending stream…The more we connect, the more we want to know but in less time. Blogs are a reflection of our time-deprived times.

In order to do this successfully — as Rafat and his team have done — one needs to upend the existing “supply chain” of the media and in the words of Jeff Jarvis, a well-known blogger and an adviser to Guardian Media, explode the news room. By acquiring paidContent, Guardian has placed a calculated bet on the future.

Photo courtesy of Rex Hammock via Flickr

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