What constitutes a paid link?

There seems to be a lot of talk lately about Google penalizing sites for paid text links. One of the higher profile cases is a site called The Stanford Daily who's page rank dropped from a 9 to a 7 over a short amount of time. On a scale of 1-10, dropping 20% would be bad at any point, but I think we'll all agree that Google's page rank system has an increasingly difficult slope to climb when you are talking about reaching the 7, 8, 9 and 10 ranks. Losing 2 spots at that point is a HUGE blow.

Last month we found out that Google slapped a bunch of paid link directories causing them to lose their high ranking in the search results. Following up this month, Google is punishing sites for buying links. This sparked a conversation at my office which lead to the question, what constitutes a paid link?

There were a bunch of scenarios tossed around in our discussion. Some of them where no-brainers, but there is a lot of middle ground here. In those instances, is it up to Google to be judge and jury on what is or isn't a paid link? Of course it is.

So here's some instances that got thrown around. The question for each is, who should be getting penalized?

Paid Posts
With sites like ReviewMe.com and PayPerPost.com offering bloggers cash for writing an article about a product or site, both of which require full disclosure for the fact that they are paid reviews, it doesn't seem like it would be too difficult to find and penalize these posts.

Text-Link-Ads
This is another great service that links up bloggers with advertisers. With a dead-simple Word Press plugin available to bloggers, it's easier than ever to earn some cash from your inventory (i.e. blog posts). Advertisers can search for sites offering topics of their choosing, then pick a word or phrase from a post on your site and pay to have it link directly to their site.

Powered By / Sponsored by links
With the staggering number of sites using WordPress to power their blog, there are thousands of designers cranking out new themes that are made available free of charge. When you download and install the theme they usually request that you leave the crediting link in the footer. Could this not be construed as a paid link? They provided their service in exchange for the link to their site. You'll find an increasing number of these credits link to both the designer and a sponsor. Search the forums at digitalpoint.com to find dozens of offers for sponsored link spots.

Pay Per Click Ads
I'm not talking about Adsense here. I'm thinking more about programs like Revenue Pilot. Sites that let you do more creative things with their ads than just plopping a rectangle in the middle of a post or sidebar. Sure, the links to not point directly to the buyer's site, but could an argument be made for penalizing the site who's monetizing some space by having a collection of links he'll be paid for each time they get clicked?

Affiliate Network Ads
Again, in most cases, these aren't linking directly to the advertiser's site, but the blogger has an incentive for keeping the link on his site. Sites like cj.com offer a bounty to their publishers on behalf of their advertisers for all traffic that perform a certain action on the advertiser's site. This has to be considered a paid link then, right?

The way I see it, given recent events, if you are getting any sort of benefit from a link, direct or implied, then it has to be considered a paid link and everybody in a 10 mile radius is likely to be penalized.

Leave a comment and let me know who you think is being penalized or should be being penalized for their actions in the scenarios above.

[Dear you fine folks over at Google. I am not receiving any benefit from the outbound links in this post. Cheers, geeeek]

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