I've been shying away from commenting much on the entire paid link hoopla. There have been countless post of sites that are worried they have been penalized for paid links, buying or selling, only to be proven wrong.
Well, Danny at Search Engine Land is now saying that Google is manually lowering the PageRank of sites selling links and Google has confirmed that. Danny points to the Stanford Student Newspaper(which he previously mentioned in a post), where they went from a PR 9 to a PR 7.
Interesting approach, this way it doesnt hurt relevancy in the engine, just lowers the incentive for people to buy links from a particular site. Check out the article, he points to a few other examples.
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