Is there a future in Pay per Post blogging?

Good question. And, quite frankly, I don't absolutely know the answer. But I've considered the issue quite a bit lately (due mainly to Matt Cutts' pronouncement that Google would be taking a harder and closer look at advertising links that are being sold on every type of website there is: personal sites, blogs, internet news outlets, etc, etc) and I have a feeling I know where this is all eventually heading.
But let's back up a bit first and explain a few things for those who may be new to issues like this.
You see, once upon a time there was this thing called the Internet and there was this other thing that sat on top of it called the world wide web. In the web were these things called websites and they linked to each other. Sometimes, they linked to each other simply because they liked each other. And sometimes they linked to each other because they were motivated by the prospect of financial gain, which the generation of web traffic could sometimes successfully facilitate. And this was all cool.
Then came Google, a search engine that, like every other search engine before it, indexed webpages and ranked them. Google's ranking algorithmns used a great many criteria, chiefly among them concepts such as pagerank and anchor text.
However, regardless of the individual criteria used for ranking sites, Google's system inevitably boiled down to one thing: the number of inbound links a site possessed. Links, in the Google ranking system, were synonymous with democratic votes, which were cast by individual websites. In essence, Google's ranking system allowed websites themselves to decide which other sites should appear highest in the rankings (known as SERPS, or search engine results pages) for a given niche, or content area. And this was all cool.
But then the inevitable came. The spammers and the scammers. They had been there from the beginning of the web, of course, but with Google preeminent among the various search engines and easily commanding the lion's share of online searches conducted by users, their tactics changed. Now, the activities of the spammers and the scammers became increasingly focused on manipulating the Google ranking system that was so heavily dependent on links and anchor text...and their principle tactics revolved around obtaining, you guessed it, a lot of links with favorable anchor text.
That's as far as I'll go on the history lesson. Now, let's look at the status quo.
1. Internet advertising revenue is jumping sharply and increasing every quarter. Most of this revenue is being captured by Google, of course, and so, obviously, the focus of white hat and black hat SEO types is to try and achieve optimal web positioning for websites ranked in Google. The primary mechanism for this is the acquisition of links, links that, in the best case scenario, A. have pagerank, B. emanate from established websites, and C. have very favorable anchor text (i.e. the text in the links matches the desired keywords of the link purchaser).
2. Websites of all types, in an attempt to monetize their content, are increasingly turning to selling advertising links to other websites. This is often done under the pretext that "traffic" is being sold, something which google has no problem with. In most cases, however, advertising links are being sold to pass "reputation" (pagerank and anchor text) to sites that wish to significantly improve their Google rankings.
3. Google, as a business model, is committed to providing superior search results (primarily relevant to Yahoo and MSN, its chief competitors) and, ideally, seeks to provide the "best" search results for users. To faciliate this end, Google relies on a system that ranks websites according to links, but not simply any kind of link. The Google system presupposes that the best websites in any content niche are:
A. Those sites that possess links that are freely given and are given without financial motivation.
B. Those sites that possess links from relevant sites (either from websites that are thematically related or from pages of websites that are topically related).
C. Those sites that possess freely given links that are both relevant and which emanate from sites that are, themselves, considered to be important, based on the number of freely given, topically relevant inbound links that they possess.
Given this status quo, it comes as no surprise that Google is adamantly opposed to link selling when the purpose of selling links is primarily intended NOT to generate traffic for the link purchaser, but, rather, to manipulate search engine rankings via the passing of reputation, i.e. by giving pagerank through anchor-text-optimized outbound links.
Google's position in this regard has always been consistent. Sell links for advertising and you're ok. Sell links for pagerank and you risk some fairly severe consequences.
So, what's changed? A virtual (no pun intended) explosion of link selling. Link selling on the part of newspapers who are attempting to makeup for a slide in revenue generation, and link selling on the part of personal blogs that are attempting to monetize their content creation are simply two obvious examples.
How does this potentially threaten Google? By posing the potential to interfere with a ranking system that inherently relies on counting links that have been freely given and not paid for.
To this end, Google is strongly pushing the notion that outgoing links that are purchased by advertisers should be indicated by the use of rel=nofollow, a link attribute that was originally designed and promoted to combat blog spam.
Why are Matt Cutts and Google promoting nofollow? To allow websites to sell advertising links in a fashion that does not manipulate search rankings. Basically, to allow websites to earn ad revenue and, at the same time, to say to Google "I'm playing by your rules and I'm not trying to game your system".
The only problem with nofollow, however, is this one basic reality: the vast majority of advertising links are not purchased for the web traffic they provide. They are instead purchased chiefly so that purchasing sites may acquire links, pagerank, and favorable anchor text, and, thus, may rise higher in the rankings.
In other words, if link sellers were to suddenly slap nofollow on their outgoing advertising links, they would, most likely, suddenly find that no one wanted to buy their links. The response might sound something like this:
Hey Buddy, did you really think I wanted that link for the 25 visitors you sent me last month, none of whom bought anything? Get real, I bought those advertising links because I wanted pagerank from your site. Take the nofollow crap off your links or I won't buy them.
Now, how does all of this relate to pay-per-post and other systems that allow individual bloggers to generate revenue with their blog postings? Simply in the same way that it affects every other website that sells advertising links. If the nofollow attribute is included on outgoing advertising links, Google will have no problem whatsoever with it. If advertising links are sold, however, without the use of nofollow, Google may have a problem with it.
"A problem with it". What does this potentially mean? In extreme cases, where links are being sold in huge quantities and are being sold with the overt claim that link buyers may achieve significant search engine ranking benefits (a good example of this might be a site that runs an ad stating "Pagerank 6 links for $200 per month. Get more pagerank and get a page 1 ranking in Google"), the outcome might be fairly severe, such as a total de-indexing and removal from the Google search engine. In less severe cases where link selling without the use of nofollow is being conducted, the chief consequence might be that a site would have its ability to pass reputation (pagerank and anchor text benefits) stripped from it.
Losing the ability to pass reputation, of course, would have no effect on a site's own rankings or on its ability to pass pagerank within itself to its own internal pages. However, its ability to "power other websites" would effectively vanish overnight.
Would a website or blog that had its ability to pass reputation removed also lose its ability to sell advertising links, even to those sites that buy links chiefly for the purpose of acquiring pagerank and anchor-text-optimized links? Not necessarily and certainly not immediately. Link buyers, when they buy links, often rely on the Google toolbar ranking that a site has.
However, as most SEO professionals are full aware, toolbar rank does not always equate with actual Google pagerank. In fact, a site's actual pagerank may be markedly different from the toolbar pagerank that is only accurate as of the last toolbar pagerank update.
In the past, sites that were under a google penalty had their toolbar rank "greyed out" (a solid grey bar, minus any green), while sites whose toolbar rank indicated a pagerank less than 1 simply showed a solid white bar.
But would that be the case for a site found guilty of selling advertising links chiefly for their effect on search rankings? Certainly, from Google's perspective, it would be a practical strategy to not alter a site's visible toolbar pagerank. This would have the effect of keeping a link seller, a link buyer, and any intermediaries involved (such as TLA, or text-link-ads) completely offguard.
In other words, none of the parties involved would ever know, with any certainty, if their link-selling/link-buying system still possessed any efficacy. And this, in itself, might be very effective at preventing an adaptive response from those who attempt to manipulate Google's search algorithmns.
On the bright side, however, such a tactic might also effectively allow pay-per-post bloggers to continue to earn revenue in this fashion. Would not the advertisers, the buyers of such links, at some point become savvy to the fact that the advertising links they were purchasing were suddenly providing "no juice"? Perhaps. But, then again, perhaps not.
In many cases when the optimization and promotion of a website is ongoing, there are too many variables involved to ever know with any certainly which parts of a ranking strategy are working, and which are not. And, in all candor, advertisers who buy links for search engine ranking purposes tend to be numbered among the least knowledgeable and least sophisticated in terms of search engine theory and savvy.
Thus, for these reasons, there may actually be a solid near-term-future for pay per post blogging...though that future may itself be short-lived.
