Inquiring mind wants to know.

NY times article implies that it is based on time:

"The quartet of Jones, Nathan Adrian, Ben Wildman-Tobriner and Matt Grevers gave Phelps and Co. the swimming equivalent of the pole position — Lane 4, in the middle of the pool — by qualifying first in the heats Sunday night. In the process, they gave everybody the time to shoot for, eclipsing by 0.23 of a second the world record with a clocking of 3 minutes 12.23 seconds. "