Google’s Webmaster Central team has posted a video Matt Cutts that answers the question: “Will Google consider Yahoo! Directory and BOTW as source of paid links? If no, why is this different from another site that sell links.
this is a very important answer for all of us. Look at it!
Summary:
Question : what kind of directories are seen as a source of paid links and if yahoo and botw directories charges money to list your websites and links then why they are not seen as any other sites selling paid links?Answer : This is more like the regular template answer of matt cutts.
What is the value of a directory. Do they charge money to list your site, what is the editorial value of the directory. How do they list sites, do they only add links that are being submitted or they find links on their own?
If the editorial value is low, means all links submitted are approved then directory is selling paid links. fly by night directories, directories asking for submissions on the basis of page rank etc. directories accepting text, (am sure he means keywords here, or anchor text).
He says yahoo directory has good editorial value so its a good directory.