How do you or more importantly Google, define exactly what a paid link is?
In general, most web definitions state that a paid link is “(Paid Linking) payment made to another website in order to get a link to your own site.”
Google’s Matt Cutts talks about the criteria that Google uses to make the distinction between paid and spam links and also how Google judges the intent of a link.
He admits that it can be difficult to judge the intention of a link, but he does offer several examples that will assist viewers in understanding the way Google may view these links.
He goes on to advise users to check out the FTC’s website and what they define as monetary compensation because a lot of what Google does will fall in line with their criteria.
Original Source: Google’s Matt Cutts answers the question “What does Google define as a paid link?” Google Webmasters