nealrodriguez - 7:57 pm on Feb 6, 2009 (gmt 0)

Reputable sites that sell links won’t have their search engine rankings or PageRank penalized–a search for [daily cal] would still return dailycal.org. However, link-selling sites can lose their ability to give reputation (e.g. PageRank and anchortext).

[mattcutts.com...]

that said, my experience with this issue was when google started the 'paid link' hunt the buying sites didn't get penalized, but did lose page positioning because they had previously built it through paid links; it was also seen in a decrease in tool bar page ranking.

so if 1 out of 10 of your ibl's were paid you would lose that proportion of ranking; if 10 out of 10 of your ibl's were paid then you lost all your ranking.

same thing that has happened with article directory submissions and most directory submissions; they used to be worth a lot more. if your site's ranking was derived solely from such sources, it's exposure on the se's decreased due to the constitution of your link base.