How many consultants provide links through to the companies they work for?
How many software firms provide links through to their major corporate clients?
Not my company. Never going to happen.
If you make a donation to someone, and they decide to give you a link back, is that a paid link?
If you are a consultant, and are paid to analyse a company, but to make the findings known publicly, are you supposed to stick nofollow on all the links?
If you are a VC or Angel investor, should you have to use NoFollow linking through to companies in your investment portfolio?
Are developers working on an open-source project allowed a link back to their sites (cough Wordpress) Yep, and then use that link equity to dominate search engines on whatever topic they please?
Hmmmm, if it really works that way, why not?
If you are a blog network, or large internet content producer, is it gaming Google to have links to your sister sites, whether there is a direct financial connection or not?
Makes business sense, so why should those links get condomized? Probably a question of quantity. No visitor would follow a gazillion of links to blogs handling all sorts of topis the yellow pages have categories for.
Should a not for profit organisation link through to their paid members with a live link?
Sure, perfectly discloses relationships and their character.
A large number of Wordpress developers have paid links on their personal sites, as do theme and plugin developers.
What's wrong with that? Maybe questionable (in the sense of useless) on every page, but perfectly valid on home page, about page and so on if disclosed. As for ads, that sort of paid links is valid on every page - nofollow'ing ads just avoids misunderstandings.
If you write a blog post, thanking your sponsors, should you use nofollow?
Some people give away prizes for links, or offer some kind of reciprocation.
If the awards are honest and truly editorial, linking back is just good practice.
If you are an expert in a particular field, and someone asks you to write a review of their site, and the type of review you write means that writing that content might take 10 hours of your time to do due diligence, is it wrong to accept some kind of monetary contribution? Just time and material?
In such a situation, why would you be forced to use nofollow on all links to the site being reviewed?
Disclosing the received expense allowance there's nothing wrong with uncondomized links.
Imagine someone created a commercial Wikipedia, and paid $5 for every link made to it.
Don't link. The link would be worth more than five bucks and the risks involved can cost way more than five bucks.
Where is the precise definition of a paid link?
Now that's the best question at all!
Disclaimer: Yes/No answers are kinda worthless without a precisely defined context. Thus please read the comments.
Related thoughts: Should Paid Links Influence Organic Rankings? by Mark Jackson at SEW
Paid Link Schemes Inside Original Content by Brian White, also read Matt's updated post on paid links.
Update: Google's definition of paid links and other disliked linkage considered "linkspam"
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