Google's recent attempts to stomp out link selling increases the very problem Google tries to fight.

What's Going On?

After a year long FUD campaign Google has fired off two rounds at sites it suspects of selling links.

It punishes those sites by lowering their Toolbar PageRank, a more or less fake version of Google's calculated real PageRank. (see also Matt Cutts on PageRank).

Lowering that Toolbar PageRank has no effect on a site's ranking and thus traffic. But as paid links are priced at PageRank, lowering that visible PageRank lowers the amount of money a site owner can make from selling links.

Why does Google do this?

why Google created a problem for itself when it chose links to a web page as one of the corner stones for ranking web pages. In general, the more links from quality sites to a web page, the better.

In doing so it created two markets: one that swaps links and another that sells links.

Google finds that these type of links shouldn't really count and that widespread use would make a mess of search results.

Google doesn't forbid selling and buying links but it demands that those links are marked in such a way that Google can ignore them.

Oddly enough Google doesn't mention that at all in its webmaster guidelines. The only time it's mentioned officially by Google is when it asks Why should I report paid links to Google?

How Google Just Made Things Worse

The very slap on the wrist that Google intents to serve as a solution is actually making things much, much worse for Google. Here's why.

Higher Prices Attract More Sellers

graph2 A good number of high PageRank sites have been hit. In turn a good number of high PageRank site owners will think twice of selling (unmarked) links.

In a market economy such as our that drives up the price. Currently a site such as Lifehacker selling one link on one important page can ask wll over USD $1000.

As less high PR sites are willing to sell a link and the price goes up it becomes more tempting to make high PR sites to sell links or to use an existing one.

Google has taken the first step to make it more attractive to sell links.

Less High PR Links = More Low PR Links

As it becomes less doable to buy (enough) high PageRank links, buyers and brokers will start to go after a larger number of paid links from low(er) PageRank sites.

Google has taken the first step to make it more attractive to buy more links.

Less Money = More Links

Google's shot at sites selling links is so far mainly discussed in regards to well known sites. Examples include Forbes and the Washington Post as well as a number of sites which are considered authorities on various subjects.

worried But the truth is that "out there" there is a much larger army of link sellers: the little guy. People who run a site, most often a blog of some kind, with some AdSense ads, some this, some that -- and also a few paid links.

Those people just saw their additional income cut. They get less money for the same amount of links.

These people will want to make up for their loss in income.

Google's actions cause some to sell more links, if needed on more sites.

In Short

By taking away toolbar PageRank from sites that sell links Google drives the price for high PageRank links up, making it more attractive to consider selling such links.

By decreasing the supply side of high PageRank links, the demand for low(er) PageRank links will increase.

At the same time, decreased income will prompt many to sell more links on more sites.

Net result: more paid links, not less.