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how are they detecting and deciding that content isn't of value?
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See, Bill, that's a pivotal question if you're creating low-value content and trying to make it look like its worth something.
It's less of a concern when you know you're building an original and valuable site.
Like I said before, one obvious problem with link lists is that 99% of links going in and going out are artificial. The bigger LLs have more one-ways due to higher precentage of rejections, higher submits/day, etc. Still those one-ways are losing their power too because they still leave an obvious pattern (identical anchor text, link in a table cell, instead of a paragraph block, etc), and also because even when one side drops a link, it doesn't mean Google forgets who *used* to link to what.
And I'm sure algorithms and heuristics Google uses to detect low-value content is way more involved than any of that. (e.g. looking at ratio between affiliate links vs outbounds to non-commercial sites, percentage of links from low quality site vs authority sites, visitor bounce rate, visitor behavior once they arrive at a site, how long they stay, etc).
Sidebar/footer Link trades for the sake of higher search ranking (instead of branding/traffic) and indiscriminate reciprocal linking tactics are things of the past. As long as small LL owners refuse to accept that fact, they will have a long road ahead of them.