For sure, the $30M acquisition price would be too rich for many to pass up, but I think Rafat Ali’s decision shows just how much his finger is on the pulse of the industry he began to cover out of his apartment six years ago on a hot summer day.

Like many, I turned to Ali’s ezine when new media was a joke, untouched, unloved… and Ali’s honest and one-step-ahead-of-everyone-else coverage was the best in the game.

We ranked Paid Content’s parent Context Next as # 2 in our Elite Eight Tech Blog Networks, not because top-ranked Valleywag is a better online source than Paid Content (in their own way, they’re both good reads) but because Valleywag’s parent Gawker Media is arguably one of the best publishing companies - period.

Two side notes:

- I always poked fun at Ali (with nothing else but utmost respect and admiration though) for choosing a URL called PaidContent.org, no, not because of the .org, but because ultimately, “paid content” was a flop, it was free, ad-supported content that paved the way for new media’s resurgence.

- In January 2006, when I left my old gig at AskMen as VP of Sales, Rafat and I explored me helping sell ads for them, but in all honesty, my strength lies in consumer advertisers, and Ali’s site skews B2B. And, truthfully, within 3 weeks of my departure I launched WatchMojo.com and dove into video content.Which takes us to the big question: why now? Let’s address those:

The Guardian Media Group did buy the gold standard in B2B new media/digital business coverage… and it will be hard for anyone else to attain that lofty exit price, for a few reasons.

Free Content is Hard to Scale

The main reason is that as much as scaling content is hard, scaling a blog is even harder… because the instant a blog adds new writers, it dilutes itself. Ali did not dilute the quality when he added his barrage of writers. I’ve met a few and read them all and would have them on my masthead anyday… however, PaidContent became the gold standard because of Ali’s quick wit and hustle.

Which takes us to the next points:

The pace and speed of blogging has changed

When Ali launched, he could bide his time to make sure the stories were true and accurate. Today, rumors and heresay are good enough for one to press publish… and that takes us to the next, main issue:

Heightened competition

I still read Paid Content, but maybe a bit less. It’s nothing against PC, but between Tech Crunch, SAI, Valleywag and yes, countless of sites like our own HipMojo.com, there is way too much similar news. I think that Ali knew that this competitive pressure, combined with the backdrop of the US economy, meant that exits down the road might not be near the $30M price he was being offered…

Which of course touches on another point:

The US Dollar is in the Toilet, Look to Europe for Exits

The Guardian Media Group paid 15M GBP for Paid Content… effectively.

Last but not least… it’s interesting that Ali tips his hat to M&A boutique shop Mesa Global… the bank that I assume repped him in the sale… why is that odd? Two long standing advertisers of his were M&A boutique firms: JEGI and DaSilva & Philipps. But, don’t worry, I am sure those are fine firms… I assume Mesa clinched the deal through an inside connection, perhaps? I could be way off… maybe they were just a commercial bank that provided him with financing early on, or better yet, it’s the other way around and Marc Patricof introduced Rafat to Alan Patricof.

Which takes us to the last point:

Smart Fundraising

I think the reason why Paid Content was able to sell now was that it had only raised $1M from none other than VC dean Alan Patricof. A lot of companies go trigger happy and raise $5-10M before knowing what their business will look like… meaning that they won’t be able to accept most offers. In this case, Ali played it wise, keeping a lid on investment which left the ROI as high as humanely possible for a site that launched on one hot summer day six years ago.

All in all: congrats to Ali, his team, and the smart people who backed him.