Firstly the statement that was made by Matt was vague and has not been clarified since, not for want of trying by the SEOmoz crew.

Secondly it is still recommended that you use the attribute for paid links.

Remember a pages PR is not determined by it’s outbound links but by it’s inbound links. For example it you have 10 inbound links from 10 external domains your PageRank would be calculated from the the inbound links.

As well as a PageRank your page also has a certain amount of “link juice” to pass and it is the link juice passed which is effected by the new “nofollow” scare.

- Let’s say our page was a PR3 and had 20 link juice points to pass to other pages.

- If you had 1 dofollow link on the page it would pass 20 link juice points

- If you had 10 dofollow links on the page it was pass 2 link juice points through the 10 links.

- Before the Matt Cutts shock up the SEO world, if you nofollowed 6 of the above 10 links then the 20 link juice points would be shared out between the 4 remaining follow links, passing 5 link juice points each.

- The position now would be that even if you nofollowed 6 links the remaining 4 would only pass on their original allocation of 2 link juice points, it’s as if the nofollow’s are not even in place.

This could effect the PR of your homepage if you pass a lot of PR to internal pages which in turn link back to your homepage, those internal pages would no longer get the PR or link juice.

How does Google distinguish between a paid nofollow and a normal nofollow?? The answer is not easy and don’t think there will be one until Google clarify their position.

I have used nofollow for a long time to prevent passing PR to pages I don’t even want and never will want indexed.

I hope this made sense, I really don’t think there is need to panic, as no drops in PR have been reported and probably will not until Google clarifies this comment further.

Sorry for the second post :)