Yahoo made a huge critical blunder today: they decided to compete with their customers. Today they launched a content site called Shine dedicated to women. It looks really slick, and they make a point of talking about all the great editors they have working on it from Jane and the Wall Street Journal.

Ummm….. hello!?!?!? isn’t Yahoo’s business to PARTNER with sites like Jane and the WSJ? Isn’t 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?

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. That’s why publisher are so upset with Google for even considering launching KNOL. If I were Google I would NOT launch Knol… it’s going to really jeopardize Google’s relationships with publishers.

Anyway, back to Shine: wow, really dumb idea on Yahoo part. I would kill myself if I was running the publisher network right now. Can you imagine what it would be like to go to WSJ, Jane, iVillage, Glam, or Sugar publishing and try and get them to support Yahoo services?

• Yahoo sale person: “Hello, I from Yahoo. We would like you to use Yahoo Publisher Network and share ad revenue with you”
• Glam/Sugar/Jane/publisher “oh, really? That’s great! I hope you take the profits and put them into your competing content site that will drink our milkshake!”
• Yahoo sale person: ” You bet! We will drink it up…. we will drink your milkshake.”

When Microsoft takes over Yahoo this will create even more problems. MSN/Live is trying to compete with Google AdSense and Yahoo’s blunder is going to feed right into Google’s “we won’t compete with publishers” position.

If I was running a women’s site today I would make a point of puling everything I have off of Yahoo and building a voting block of women’s sites to do the same. If Yahoo wants to go “winner take all” that’s their right, but the niche content sites should stand up for themselves and vote with their partnership dollars for a true partner who doesn’t run off with your business in the night.

Maybe this is Yahoo’s plan to save itself? Maybe if the launch media properties and kill off search and the adnetwork they can convince folks they are Newscorp 2.0?

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 can’t understand it.