Buying or selling links that pass page rank is in violation of Google's webmaster guidelines and can negatively impact a site's ranking in search results."
But they don't consider all the paid linking as malicious, or as “violating the guidelines.”
They say “Not all paid links violate our guidelines. Buying and selling links is a normal part of the economy of the web when done for advertising purposes, and not for manipulation of search results. Links purchased for advertising should be designated as such. This can be done in several ways, such as:
Adding a rel="nofollow" attribute to the tag
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