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Link Popularity | Will Google Declare Paidlinks As Spam?

Matt Cutts had a recent three-part post that has been subject of much controversy. At the center of this controversy lies Matt Cutt’s appeal to report webmsters involved in buying links as spammers.

The series of posts began with this,(http://www.mattcutts.com/blog/hidden-links/ ) in which he equated paid links to hidden links, both seen as unethical acts to boost page rank. In this second post(http://www.mattcutts.com/blog/by-the-way-2/ ), he targeted sponsored themes which became acts suspicious motive too. In the last post (http://www.mattcutts.com/blog/how-to-report-paid-links/ ), he asked webmasters to report paid links in the authenticated spam report form at Google’s webmaster console. Information regarding the following were to be  provided in the report:

Something like “Example.com is selling links; here’s a page on example.com that demonstrates that” or “www.shadyseo.com is buying links. You can see the paid links on www.example.com/path/page.html” is all you need to mention.

 If this is not enough of a hint that Google has started seeing paidlinks as spam, then nothing is. Or, did Matt Cutts get all of it wrong and sent out the wrong message to the webmasters? That is unlikely as it is obvious that the three consecutive posts were planned as a naive mind game. 

There has been a deluge of negative comments to his posts.

What is Google going to actually do to people who buy & sell links and forget to use nofollow? Penalties? Devaluing of all their links? Discounting of only the paid links?
I think we need to know where this is heading before people start firing off reports on who just paid $10 for a blogroll link.
 

In another comment, Andy Beal said that:

What’s next? Asking us to share our Google Analytics data so you can weed out the pages that users don’t find interesting?
With all due respect, this is going too far!
One of the many concerns is this is too open to exploitation by jealous competitors. Anyone can buy links for a competitor and then report him. There are also many paid directories, such as Yahoo! directory which can be seen as violations of the code. 

Matt Cutts has clarified that “there’s absolutely no problem with selling links for traffic (as opposed to PageRank).” While this sounds to be theoretically very simple, how would you classify links from Text Link Ads, EnGadget and Google’s very own AdWords program?

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