Tim Lincecum has had a fascinating career arc. In 2008 and 2009, in his age 24 and 25 seasons, he had elite seasons (7+ bWAR each year), led the N.L. in strikeouts, and won the Cy Young Award both years.
In 2010 and 2011, he was very good, but not great, putting up around 4 WAR per year while finishing 10th and 6th in the Cy Young balloting.
In 2012 and 2013, he was awful...5.18 ERA and 68 ERA+ in 2012, 4.37 ERA and 76 ERA+ in 2013, a -1.7 bWAR in 2012, a -0.6 bWAR in 2013.
Lincecum was due to hit free agency this offseason, and while the Giants wanted to keep him and he reportedly wanted to stay, it seemed like finding a fair contract value for him was going to be difficult. If you go by fWAR rather than bWAR, Lincecum wasn't useless the past two seasons (combining for 2.5 fWAR from 2012-13), and his xFIP was even better than his FIP, so you can argue that his ERA wasn't representative of how he was really pitching, but still, its hard to just ignore the ERA the past two seasons.
However, the Giants apparently were willing to ignore the ERA the past two years, as they have reportedly signed him to a 2 year, $35M deal.
I don't even know how to react to this deal. As Dan Szymborski notes, Lincecum's fastball velocity has dropped precipitously the past two seasons (he's averaged 90.4 and 90.2 mph on his fastball in 2012 and 2013 per FanGraphs), and there have long been concerns about how well he'd hold up long-term.
$17.5M per year for two years for a guy who has been terrible the past two seasons is baffling. I don't know that you can say it is going to impact the market for other pitchers, because Lincecum's situation is so unusual.
But this suggests its going to be a wacky offseason.