In a post mostly designed to claim Karnak the Magnificent status, with a brief time out to praise another blogger who used to work for him for quoting him, Jason Calacanis explains to us why YouTube is "not a real business." The circle is about to collapse on itself and we're still in the first paragraph.

Anyway, for those like me who were bored with the story and didn't really follow it, NBC made YouTube take down uploaded videos of the "Lazy Sunday" Saturday Night Live skit that got so much run recently- mostly because it was so available on the net. Many think, and I agree, that NBC shot itself in the foot by squelching the kind of buzz a dying of old show like the once hilarious SNL needs. This is exactly the kind of knee-jerk reaction you'd expect from old media, but some people found it compelling and there was much blogging about it.

Jason goes gives us all the reasons why YouTube is not a real business, primarily because it allows people to upload video that might be pirated. First, he compares YouTube to Kazaa and that file-sharing ilk. Then he takes a quick 180 and says that YouTube shouldn't be shut down because it's just like the phone company: it provides the dial tone (upload space) but what the customer does with it is up to the customer.

Does this mean that the phone company is not a real business either? Actually, it's probably not, at least in its traditional form, but that's not what Jason's talking about.

Does this also mean that Flickr is not a real business? Good thing nobody told Yahoo that. How about all the file storage sites that people actually pay for (a novel concept in Web 2.0)? Does a pirated MP3 make those non-businesses as well?

I could almost get there on the argument that YouTube is not a real business, since I have said many times here that relying solely on ad revenue is not a good medium or long term business plan, mainly because you have too many players fighting over too few ad dollars in a very cyclical and fickle online ad market.

But then we get to the good part.

Jason tells us the good businesses.

Digg, Engadget and MySpace.

Engadget, of course, being one of the blogs in the blog network Jason sold to AOL, for allegedly big dollars. He still works for AOL, presumably over the blog network he created.

I wonder if he sees even a hit of irony here?

The others, while hugely popular and wildly successful by Web 2.0 standards, also rely almost entirely on ad revenue dollars.

Being at the front of the line when the limited ad dollars are passed out is a huge advantage. But it doesn't make you IBM and, in my opinion, it doesn't create the dangerous bubble valuations we keep getting hints of.

So these may or may not be real businesses, but just like "strange women lyin' in ponds distributin' swords is no basis for a system of government," the possibility of a pirated file is no basis for deciding that something isn't a real business.