Not many use nofollow - of those that do most are likely to be automated blog type of software. As such high number of nofollows can actually be used by a search engine as a heuristic of site content on which should be treated with special care.

It's one of the many those things where humans inertia prevents something from falling apart - for example if enough people revolted against current DNS system then we could have ended up with something better, but until this happens we are stuck with it even though there are alternatives out there. Same thing with nofollow - even if you do what you say, most others won't do it. And it is very likely you will get your site red flagged.

Indeed. Not to mention that sites are judged in part by who they link to.

And it is very likely you will get your site red flagged.

I am not sure about this. Matt Cutts from Google asked us to put nofollow on much more links than only "user generated content" where the tag originally was invented for. I currently use nofollow in the comment section of my blog and on my forums where I have no 100% control over what type of links people insert, and on my own content in affiliate links. General links from my sites to other sites are without nofollow.

I have seen no adverse effects on this.

You have to remember that the whole nofollow hype is only known in the group of more serious webmasters. The average John Smith making a mom and pop site has never heard of it. Also, those webmasters that do know the nofollow tag often already used other systems to prevent PR leakage or link spamming by running their external links through redirect scripts in directories forbidden by robots.txt, or with links written in javascript.

As a blog/forum owner I must say that I have seen little to no effect on the amount of comment and forumpost spam after I switched the nofollow tags on.

I am not sure about this.

Neither am I. What I am sure about is that it makes sense to have a parameter that would have a percentage of links marked with nofollow from a given site - it is a useful thing for analysis, "red flag" does not mean "blast from deathstar", just one of the parameters.

Spammers sure don't care much about nofollow tag. Perhaps that was the original idea as a substantial growth in links marked as nofollow can serve as yet another red flag.

Hmm. So given that Wikipedia and plus all other MediaWiki sites (by default) are set up to nofollow to external links, I'm guessing that it isn't blast-from-the-deathstar bad.

Caveman, that's a good point about Google considering sites a page links to. I didn't realize that.

So it seems that PageRank may not be a "tragedy of the commons" case thanks to (1) Caveman's point, (2) webmasters' general inertia and ignorance, and (3) non-link methods that Google uses to establish a ranking (click-throughs from search results, # of visits from people with the toolbar?).

And for my site (which is generally very white-hat) I think for me the best strategy is: By default, nofollow everything, but "whitelist" internal links plus important industry-related sites.

Thanks!

You can be 100% sure that top resources are treated as an exception one way or another, ie TrustRank sort of thing. This is not to say all external urls are trusted there, but some red flags certainly won't be raised. Good to be a celebrity, innit?

By default, nofollow everything, but "whitelist" internal links plus important industry-related sites.

No, not at all, at least not in my opinion. Stop worrying about controlling PR so tightly. If you feel that adding links to external sites is of value to your users, then by all means go ahead. It makes your site more useful, and one of the byproducts of that is that you enjoy more one-way inbound links as a result.

The engines have an uncanny way of sorting this all out. How do you think that some big directories rank so well? Most of their contents are outlinks. IF bleeding PR was that important, these guys would be having trouble. Niche directories also still rank well if the directories are truly high quality.

Also, you seem to be assuming that straight PR is very important. That was true years ago, but if FAR less true now. I've got sites with low PR and less than 200 backlinks beating sites with higher PR and thousands of links.

Focus on quality and it will all come back to you.