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I didnt think itd really make much of a splash in the tech blog world and the feeds I normally read.

Well, Jason Calacanis stirred up a controversy by claiming that Yahoo! was competing with its advertising publisher partners by creating a site that competes with them. Normally, I tend to think Jason is on the ball with a lot of his opinions, but his post on this subject doesnt seem well thought out.

First, Jason is obviously asking for some help:

Someone please explain to me why they would do something so dumb right now. Rafat Ali? Kara Swisher? Mike Arrington? Om Malik? Henry Blodget? Someone please clue me in because this seems so dumb I cant understand it.

Okay, so my name isnt on his list, but Ill try and explain anyway.

Jason seems shocked that Yahoo! would launch a content site:

Ummm.. hello!?!?!? isnt Yahoos business to PARTNER with sites like Jane and the WSJ? Isnt the point of the Yahoo Publisher Network to support and grow publishers and newspapers!??! What next a consumer electronics site to compete with Engadget and Gizmodo, or a sports site to compete with ESPN and Sportsline? A gossip site to compete with PerezHIlton and Gawker?

Actually, a large part of Yahoo!s business for years has been to create content sites. As the #1 publisher on the web in areas like news, finance, and sports Yahoo!s clearly a company that creates content for the purpose of selling ads on it. Jason is right that part of Yahoo!s business is also partnering with publishers to sell ads on their site, and it would appear that this can create a conflict of interest.

However, were in the world of cooptition now on the web where you compete and cooperate with partners. Yahoo! has had news, finance, and sports publishing partners for years while it also had its own sites in this area. Shine is not a new case of this at all.

Additionally, Jasons own company Mahalo should be well aware of the concept of cooptition as they compete with Google while also partner with Google to display Google search results in areas that Mahalo has no results pages built out. Should Google not partner with Jason and Mahalo because they know that Jason is coming after them?

Next, Jason tries to compare Yahoo! to Google by saying Google makes it clear they wont compete with you:

Folks at Google make a point of letting partners know they will NEVER move into the content space and compete with them. They understand that the partnership with content creators is greater than taking the business away from them. Thats why publisher are so upset with Google for even considering launching KNOL. If I were Google I would NOT launch Knol its going to really jeopardize Googles relationships with publishers.

Well, if thats what Google is telling you Jason, theyre lying. Ever hear of YouTube? Google News? Google Finance? And as you mentioned, the soon to be launched Google Knol? I think these are examples of Google competing with their video/entertainment partners, news partners, and finance partners. Theyre only missing a couple of other big categories before theyre competing with all of them.

And the other big ad providers in Microsoft and AOL/Advertising.com/Tacoda/Quigo also compete with all their partners with their own content properties. So if publishers were to follow Jasons advice that publishers should drop Yahoo! over this, theyll need to drop Google/Microsoft/AOL as well. Thats not leaving many options.

My last point is about why owning strong content sites in areas you partner with publishers actually makes sense for Yahoo!/Google/Microsoft/AOL. What does a Yahoo! publisher partner want from Yahoo? They want Yahoo! to bring them the best advertisers for their content area.

How does Yahoo! get relationships with those advertisers in order to include publisher partners in that ad buy? They use industry-leading content sites where the advertiser knows theyre getting a great audience. Yahoo! can go to a Charles Schwab and say Hey Charles, we know you want to place an ad buy on Yahoo! Finance because its the #1 finance site on the web, but we can also run that buy efficiently across these other 10 great finance publishers we have relationships with.

Thats a much more likely ad sale than if Yahoo! just came to Charles Schwab with the 10 finance publishers. Shine should actually strengthen Yahoo!s ability to get good ad deals for its womens category publishing partners.

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