freejung - 3:25 pm on Apr 14, 2010 (gmt 0)
I think part of the reason Google hasn't done a lot about paid links is that there is so much gray area involved. Sure, there are clear-cut cases of link buying/selling for manipulative purposes, but there are also plenty of cases where a releationship between two companies involves various different aspects, including financial transactions and links. Where do you draw the line?
For example, suppose you are a member of a trade organization. You pay membership dues. Membership has many benefits, including participation in trade shows, networking with other members, publication in newsletters both online and offline, and also a link on the trade organization site.
Is that a paid link? Would it be reasonable to penalize it? Is Google really expecting that all trade organizations should nofollow their membership lists? Many of these people wouldn't know a nofollow if it bit them. One of the major nationwide trade organizations in one of my niches has their entire site in frames, for crying out loud.
Gray area is very difficult to handle algorthmically, so I suspect Google is only going to be able to do somethiong about the extremely clear-cut cases.