Google’s Matt Cutts has a new blog post up about paid links. He says he was contacted by an unnamed newspaper who saw its Pagerank drop from a 7 to a 3, and wanted to know why. The reason, as Cutts explains, was because the site was selling links that passed PageRank, which is, of course, a violation of Google’s quality guidelines.

Cutts shares an email he sent to the newspaper (leaving out the identifying info). Here’s a chunk of what he had to tell them:

In particular, earlier this year on [website] we saw links labeled as sponsored that passed PageRank, such as a link like [example link]. That’s a clear violation of Google’s quality guidelines, and it’s the reason that [website]‘s PageRank as well as our trust in the website has declined.

In fact, we received a outside spam report about your site. The spam report passed on an email from a link seller offering to sell links on multiple pages on [website] based on their PageRank. Some pages mentioned in that email continue to have unusual links to this day. For example [example url] has a section labeled “PARTNER LINKS” which links to [linkbuyer].

So my advice would be to investigate how paid links that pass PageRank ended up on [website]: who put them there, are any still up, and to investigate whether someone at the [newspaper] received money to post paid links that pass PageRank without disclosing that payment, e.g. using ambiguous labeling such as “Partner links.” That’s definitely where I would dig.

Cutts goes on to suggest that after the site completes an investigation, and gets rid of any paid links that pass PageRank, it submit a reconsideration request.

In the comments section of the post, Cutts notes that a drop in PageRank toolbar is an indication of Google’s decreased trust in a site. In this case, because of link selling.

Of course since the Penguin update (and even before it), people have been getting messages from Google about bad links, and it’s caused a lot of panic. This panic seems to be reflect in the comments of Cutts’ post, with some webmasters wondering if they should simply place nofollow on all of their links to avoid Google penalties.

Well, if everyone put nofollow on all of their links, it would pretty much render PageRank meaningless, wouldn’t it?

One reader suggests that PageRank shouldn’t even be made visible to the public, as high PageRank blogs draw more spam.

The subject of paid links also came up in this Webmaster Hangout Google hosted yesterday.