Presently, search engines try to disregard paid links in their algorithms. This concept was recently discussed again when famed blogger, trusted source (both in terms of search engines and readership), and Yahoo! employee Jeremy Zawodny started selling paid links on his blog without taking measures to inform search engines that these links were in fact paid for. Lots of people talked about it; see Oilman, WebGuerrilla, and Jeremy himself.

The problem, in my opinion, is that the search engines are trying to (1) not look at things realistically (2) ignore the fact that they created the incentives that encourage paid linking for the sake of increasing rankings. Let me explain:

1. Search engines, Google in particular, base their rankings largely in part on the number of on-topic, quality links a site has. A link from a quality site can do quite a bit to help a site's position in the search engines.

2. So, the inevitable result of this is sites looking to rank in search engines will look to get links from on-topic, quality sites.

This is inevitable and logical -- to fight it is probably futile, or at the very least will cost you a lot of time and money. So why not support it? What if the search engines created a market for selling links (since, if you look at a search results page, that's already what they do, and hence they at least know how to do it)? That would give them a new revenue stream in making a market between link buyers and link sellers and strengthen their relationship with advertisers and web publishers even more. And perhaps most importantly, the more search engines choose to let trusted links determine their value, the more they are creating an intermediary that could create problems for them later on down the road. For instance, what if a group of trusted sites formed a union (or cartel, if you prefer) to sell links for search engine trust only to another network of sites (like a given blog network, for instance)? That, in my opinion, is a much more annoying problem that the search engines would have to deal with.

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