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Quote:One of the areas of confusion that many have regarding paid links is knowing when a paid link is really a paid link, and when is a paid link penalized. I think a fair argument can be that a payment doesn't necessarily always have to be monetary. Any quid pro quo on a link can legitimately be considered a "paid" link.

But not to worry, Google and the other engines don't work that way. In fact, in their attempt to eliminate all forms of paid links from affecting their natural algorithmic search results Google has left one giant loophole in the paid link witch hunt: paid directory links.
Why directories are exempt

The party line is that with directories you're paying for the site review. The inclusion into the directory isn't automatic based on payment. In fact, many directories will tell you that payment is no guarantee of inclusion and if your site doesn't meet their submission standards that no refunds will be provided...