Google has crossed the Rubicon: mixing paid listings with organic search

Google has begun to mix sponsored results in with its search results in an experiment with businesses in Houston

Google maintains a division on its search pages: organic results on the left, paid-for 'sponsored' results on the right. For years this has been a very important division because it means that Google's organic search results are untainted by lucre. They are selected on the relevantcy of the pages to the search term -- not on how relevant they are to Google's revenues. Yet it seems that this division is dissolving. Google is running an experiment in Houston where local businesses can buy a listing for a flat $25 a month. The New York Times reports on the experience of the Kingpinz Skateboard shop: [These battle lines are drawn in Yellow.]

Mr. Cowie is trying something new: for a flat fee of $25 a month, he is making his listings on Google stand out. Whenever his shop comes up in a search page or on a Google map, it is adorned with a bright yellow tag.

It's working pretty well:

Just type “skateboards in Houston” on a search engine, and his store will be among the first listed.

But take a look at the Google search results page:
Google has paid results in 'organic' search results

Google has paid results in 'organic' search results

This shows a 'sponsored' result in the left hand column. What's going on? Is this a smart business move? Mr Cowie was paying Google as much as $2,000 a month for search ads. Now he pays $25 a month and gets better placement! Is it worth it for Google to lose the trust of its 'organic' search, even though it is labeled 'sponsored' -- for just $25 a month, when it was getting as much as $2,000 a month?!