If you’ve been reading up on the blogosphere lately, then you would probably be aware of the latest Google PageRank drops that several high-profile sites and blogs have been experiencing since the past couple of days. For one, the Blog Herald itself among a few of our other sites had been badly hit–from a PR 6 to a PR4. Hey, that’s lower than my own personal blog, and for that matter a lot of other blogs out there, including MFA and spam blogs, to be frank.

Other sites–notably high-profile blogs–have been hit, too. And these are not only the blogs, but also popular mainstream media sites, with several very trustworty newspaper sites included. Does that mean Google now deems them–and us–less trustworthy?

What’s the score with this latest PageRank crunch? Are we being penalized for monetizing links? Are we being penalized for bad inter-linking practices? These are the speculations as to what is most likely the reason behind the PR drops.

Andy Beard says these “favorites” have likely been slapped by Google for either (or both) selling links or extensive interlinking within one’s network.

Many of the reputable sources that have received a penalty are part of extensive blog networks, and they have one factor in common. They have massive interlinking between their network sites.

They may also sell links or advertising that passes PageRank on some of their less visible properties, but those properties benefit from the high pagerank sites that link to them, with sitewide links.

It is also being argued whether this is a PageRank update in general, or if Google is just penalizing a few, select sites for going against the Google guideline against artificially jacking up rankings through paid link schemes or link exchanges.

Some blog networks have been affected, while some have not. Those that exercise extensive intra-linking in their blogrolls, like b5media (via Technosailor), 9rules (via Scrivs) and Weblogs, Inc. were highly affected. Others that weren’t much into this practice were left mostly unscathed (if at all affected), such as Bloggy Network.

Whether it’s one thing or the other (as I’m not sure if anyone has actually confirmed the root cause as of this writing), one thing is for sure. Google has just shaken up the online economy. And I say this both as an economist and as a manager of a new media network.

Fact is that around the behemoth search and advertising company Google is built a secondary economy. Blogs and websites use PageRank as one primary metric for reputation and trustworthiness. Many site owners bank on their sites’ or domains’ PageRank, and use these to command or negotiate advertising rates.

It’s like the gold standard applied online. And with this mass PR drop, Google has just devalued the webmasters’ gold. In effect, Google has just caused the value of this thriving industry to fall in a single day. What was a thriving economy is being rendered worth less (while not worthless, of course).

But then again, we can argue that this economy is artificial in the first place–with people putting too much premium on PageRank, and especially with people putting a price tag on PR. But in that case, wouldn’t Google still be morally (and legally?) liable for killing off its competition? Do keep in mind that Google runs its own advertising program and is at the top of its game.

Other new media networks that were affected have expressed they are keeping their heads up high and will continue to cope and thrive. Likewise we at Splashpress Media admit it won’t be easy to overcome this challenge, but we know we will survive and move on and forward. It would take a little shift in strategies and priorities, sure. We live in a changing world. And with the fast-changing nature of new media, we should also know how to adapt well and keep in tune with the times.