The paid links debate pits Google against enterprising webmasters.

Google has made it clear that it disapproves of paid links (see this post and this one too at Matt Cutts' blog for more details) because paid links undermine the usefulness of links as a measure of the worth of a web page. Once links become a widely traded commodity, search engines like Google which use links to rank web sites can no longer be said to effectively index the web -- they will merely rank sites according to the amounts their owners are willing to spend on them. Google's response has not been to ban offending web sites but simply to penalize them, and that seems fair to me. However, the webmaster response to Google's "crusade" has been very mixed, as one might well expect considering that many incomes are in jeopardy.

Although Google is concerned with the bonus the buyer of paid links receives, many webmasters are sellers rather than buyers of links. Writing a paid review might simply be a way for a small-time blogger to earn a few bucks and add some content to his site. Publishers who are thinking about signing up for Text Link Ads aren't likely to be motivated by the prospect of lowering the quality of Google's search index -- they're much more apt to have paying the bills next month on their minds. For such webmasters, paid links are a lot like advertising and affiliate links: a way to make money. Why, then, does Google insist that paid links should be treated so differently compared to the "acceptable" ways to make money online?

I think Google is correct to be concerned about the effect that paid links are having on PageRank. Google's main business is still search -- anything that threatens the usefulness of Google's search results is bad for Google, and, since most searchers use Google, bad for most web users as well. On the other hand, Google is also in the advertising business in a very big way, so companies like Text Link Ads are competing with AdSense for prime real estate on potentially millions of web pages. Google's crackdown on paid links could be perceived as an attempt to weaken a competitor -- indeed, the seemingly artificial difference between a text AdSense ad and a paid link sold through Text Link Ads supports such a conclusion. The difference IS deeper than it seems on the surface, though: AdSense ads aren't giving "link love" like Text Link Ads are.

Perhaps an unsatisfying compromise will eventually be made: paid links and paid reviews are fine by Google so long as they can be easily identified and ignored by search engines, such as through the use of the nofollow attribute. So, links can still be sold, but their benefit to the buyer will be much reduced. If this is strongly reflected in the price of the link offered to the seller, it may no longer be worthwhile from the average webmaster's point of view to sell links; it may be that only high traffic sites will be able to sell links for a decent price in the future.