On one hand, "Time" managed to engage in real time a very large audience, spawned it's own micro-culture, and kept everyone interested for weeks. It was truly an innovative use of the medium.
On the other hand, the story doesn't read well in retrospective. Check all the comments here complaining - trolling aside, it doesn't translate very well into any other medium. I doubt even its fans would watch it again in real time and feel half the interest they did at first. Contrast with "Saga" (the 2nd place), which you can re-read several times and still enjoy it.
"Time" was a one-time work - if you didn't catch it back then, now it's too late. The story (IMHO) is average at best, but the delivery was incredible. I think the judges favored medium and delivery over content, and I'm not decided on whether I agree with that.
Any work of literature includes the medium and delivery as well as the literal content (words and drawings). There is no such thing as disembodied content, no matter how much we might like to think of a webcomic merely as a collection of timeless propositions and vector graphics.
If a musician had performed a marvelous work in a unique context that can never be repeated by any other performer nor even by the artist himself (e.g. the cellist of Sarajevo), should that make his work any less valuable? You also mentioned translating into other media. If the best novel of the year happens to be extremely difficult to turn into a feature film or Broadway musical, is that a fault of the novel? (e.g. Lovecraft's novels have often been considered "unfilmable".)
"Time" was more like a musical performance than a typical webcomic, despite the fact that it was delivered in the form of a webcomic. You had to be in the virtual concert hall at the right time in order to get the most intellectual stimulation out of it. Once it's over, it's over, and playing an MP3 recording of the concert just doesn't compare to the real thing. Moreover, the next time you hear the same orchestra play the same song, it just won't feel the same. It happens all the time in the performing arts.
We who live in a world where anything can be easily mass-produced tend to under-appreciate things that cannot be reproduced. Somehow we're supposed to multiply the value of a thing by the number of times it can be used as well as the number of people who can use it. This is OK for most goods and services, but I'm not sure if it's an appropriate way to judge works of art. After all, reproducible works of fiction are a relatively recent invention. Before the printing press gave rise to the modern novel, almost all good stories used to be performances of one kind or another.
Perhaps it comes down to what 'best story' means, though. I've often felt that one of the characteristics of a truly ground-breaking story (or work of art—or work of science, even) is how obvious it feels in retrospect, but I wouldn't want that to disqualify the creativity embodied in such stories from being rewarded. I think that there is ample room for awards both for stories that stand the re-read test, and stories that deliver a one-shot 'big bang'.
On one hand, "Time" managed to engage in real time a very large audience, spawned it's own micro-culture, and kept everyone interested for weeks. It was truly an innovative use of the medium.
On the other hand, the story doesn't read well in retrospective. Check all the comments here complaining - trolling aside, it doesn't translate very well into any other medium. I doubt even its fans would watch it again in real time and feel half the interest they did at first. Contrast with "Saga" (the 2nd place), which you can re-read several times and still enjoy it.
"Time" was a one-time work - if you didn't catch it back then, now it's too late. The story (IMHO) is average at best, but the delivery was incredible. I think the judges favored medium and delivery over content, and I'm not decided on whether I agree with that.