A story in the WSJ (with a follow up here on webpronews) discloses that a deal between Yahoo and some major newspaper groups will be announced on Monday. Evidently, these publishers will begin selling online advertising into Yahoo HotJobs and Yahoo Local Search. This is a big departure for the newspaper industry. They rarely do deals of this magnitude with Internet companies that they don’t control.

Such a deal should help these Publishers better leverage their most valuable asset — their local sales team — by providing them with more online reach. Employment, autos and real estate classifieds drive most of the profit for a newspaper. These businesses are at risk as classifieds quickly move online. Most newspapers are steadily losing share of the online audience. This requires Publishers to make some tough calls in these categories – aggressive enough to keep them in the game but not so aggressive that they put their cash flow at risk.

The HotJobs deal sounds like a no-brainer for Yahoo but it’s a difficult decision for the newspapers. At the end of this deal, will they be able to retain account control with their local advertisers – or will these relationships accrue to Yahoo? It will be interesting to watch this high stakes game play out.

Oodle will also be announcing more deals with newspaper groups – working with them in classified verticals where they can be much more aggressive. One will be announced on Tuesday (with a company involved in the Yahoo deal). (Follow up note: Today we announced a deal with the San Diego Tribune. Although they weren’t part of the announcement yesterday, they did sign a deal to use Yahoo Hot Jobs).

The disruption in classifieds isn’t simply coming from the fact that the business is moving online. The underlying business model for classifieds is changing. To really be aggressive and compete with sites like Craiglist, newspapers need to transition from a publishing-centric model (where advertisers pay-to-post) to a leads-centric model (where anyone can publish for free but advertisers pay for more visibility and leads).