"As many as 60 directories, according to this report, suddenly dropped in rank, leading to suspicion that Google has begun aggressively (and likely, manually) targeting paid link directories deemed to be in violation of the search engine's quality guidelines. Some have suggested competitor sabotage via the recently initiated paid link reporting form.
Some of affected directories included Aviva, Alive, Big Web Links, ewebpages, Directory Dump, Elegant Directory, and Biz-Dir. David Eaves, the owner and operator of Biz-Dir told WebProNews that about 550 of his directory pages have been dropped from Google's index altogether."
Linda Buquet :: Affiliate Program Advertising, Promotion & PR (Publisher Relations)
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directories have a lot of outbound links. They may be linking to sites that are doing blackhat.
You can get hit for linking to a bad site. It may be that they just started getting punished for linking to these bad sites, but that is a risk when you run a directory.
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Actually Google start kicking those bad directories and retaining those good directories.. Google now is very choosy... Always want quality, quality....
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With many directories blatantly selling links, selling of site-wide links,
and emergence of link bidding directories, action on such sites should
have been expected.
well, one of the most basic principles of the algorithnms is "If you link to a bad site, you are guilty also"
This is why i tend to stay away from link exchanges and use articles , press releases and social linking.
You do not have to link to them. and then i am in no danger of linking to a bad site.
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The directories which are charging a one time fee are excluded from this penalization. The majority are the yearly charged ones. Really a strong blow to them.