I read this as a reaction to the 'you say I shouldn't buy links, but then you tell me to pay Yahoo, who don't nofollow - wtf?' dialog.
I don't think Google's stance on directories, particularly dmoz and yahoo, have changed but they have recognised the hypocrisy of their anti-paid-link stance while recommending paying directories.

You know what would be nice? If Google Webmaster Help had a history of changes along the lines of a wiki (not the anyone-editing bits :)). I can imagine joe newbie webmaster reading it last week and going back to check today and thinking "I'm sure there was something about directories in here" and not knowing why its changed. M2CW

Interesting move here. I agree that it was a bit confusing before when they said "don't buy links, but submit to Yahoo (a paid submission). I thought though that Yahoo ran them through a redirect, which should appease Google?

I won't try to analyze their motives and intentions, but Google has certainly come across as being gross hypocrites for allowing people to buy links from "editorially reviewed" directories while hammering people for buying links from other sites that don't necessarily sell links to just anyone.

Google has a long way to go before its link philosophy re-establishes any serious credibility.

If we assume that it's Google's mission to catalogue all of mankind's information in some discernable way -- then maybe directories should be a 'specific search'. Google should place a DIRECTORY link at the top of Google along side IMAGES, NEWS, SHOPPING and GMAIL. Why?

Think about it this way.

Say you walk into your local library looking for a book on 'Nutrition for Cancer Patients'. The library catalogue computer tells you to go to section 600, row 7B. But when you get there entire shelf is filled with reference books pointing to other sections of the libraries.

If I want 'references' - then I will browse the reference section. But I don't want 'references'...
I want RESULTS.

I imagine this could also give Google a valid reason to crush their Ad Words competition without being perceived as 'Evil'.

This will also give Google an opportunity to get rid of all the spammy, useless directory sites that create directories for the sole purpose of running Ad Sense programs.

There is some nice traffic coming from directories, especially to local business
sites. Also, we should differentiate between "niche value added directories" (ones that include reviews ie)and "just link directories", I believe the second ones will be fine as long as - ironically :) - they are much more than just directories.

Google is getting over-critical about backlinks. When MSN and Yahoo are counting also links found in blogs, social networks etc, Google marks them as spam.

Jack http://seoapplied.blogspot.com/

It's only fair that Google shouldn't rank ALL including Yahoo's paid directory.

I haven't recently paid for a link from DMOZ.
No one has, so using the DMOZ portion of the change as an indicator of a new threat paid links doesn't make sense. You don't pay for your submission to the ODP... (Of course I know Yahoo is a paid link,) However since they chose to remove both a paid and non-paid directory from the list, it could be a wider signal that the strength of any directory is in question.

I was just about to start advertising my wee site and I thought the obvious way to do this was to list in directories. This post has me thinking twice though. I know Google hasn't said it but are directories now deemed bad neighbourhoods ?? I obviously don't want to promote my site and find it having a negative impact !! Some clarification from Google would be appreciated on this.

dmoz sucks I'm glad google is dropping them

DMOZ was and is a joke, and for Google to have used that as a PR or even valid URL to index was again a joke, unless you were an editor or knew one, fat chance you got inclusion into their precious directory. Google is starting to unravel at the fringes I think, with this being another sign that they can't control the spam and ad-only sites cluttering the results. MS should have forced the Yahoo! deal and at least 2 SE's would have been offering up decent results...blah...

Also agree DMOZ sucks and may have been a useful tool back in the early days of the web that is now outdated and outclassed by just about every other alternative out there. Also agree that advising you not to buy links and then suggesting you buy one from Yahoo is speaking out of both sides of their mouth - especially if Google and Yahoo ever end up on the same dance floor together.

I'm not sure removing these items means Google is now frowning on all directory links - I think it just means they no longer feel they're necessary or hold special value for ranking purposes. If directory links bring traffic to your site, they are certainly serving a purpose even if they have no bearing on your rankings or PR.

The really crappy directories that Google would be likely to frown upon aren't going to bring traffic to your site anyway and - in my experience at least - neither does the ODP.

Just one thing: i follow visitor analytics and never got even one click from DMOZ directory. maybe it was more useful in the past or for some other countries...

Google is getting serious about backlinks.That is why this is happening.

Anyways thanks for sharing. :)

I've received 3 clicks from dmoz all of 2009.

Well, this just goes to show the future in going to be in traditional offline marketing.

I submitted to dmoz months ago and they still have not added me. It sounds like I am not missing too many clicks from that though.