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Are Subdomains the Answer for Panda Penalties?

A new article in the Wall Street Journal suggests that one site owner has found a remedy for sites that have seen a huge loss of traffic from the Panda update: subdomains. According to the article, lost 50 percent of its traffic following the algorithm change, and their management team was frustrated after tighter editorial changes and other fixes failed to yield any results.
While they were combing through the site, they noticed that some pages were incorrectly indexed as subdomains but that those same pages were seemingly unaffected by the changes. They contacted Google with their findings, and Google responded last month by suggesting they try subdomains for content. Hubpages started using subdomains for some of their authors and noticed a recovery in traffic to pre-Panda level. Now the site plans to roll out the change site-wide with each user receiving a subdomain similar to having a blog on Tumblr or WordPress.
It remains to be seen whether the change will work but I think this is definitely a viable strategy if you own a site that has a large amount of user generated content. Due to the fact that UGC can vary significantly in quality, separating poor authors with those that create quality work should in theory result in more traffic to authors whose work was dragged down by association. However if your site is mainly composed of poor quality content, you will likely see no real changes from redoing your site architecture because low quality content is still low quality content no matter where you put it.
It will be interesting to see if other article sites like Ezinearticles implement or at least test some form of subdomains. This is by no means an easy task because of the redirects and time that is involved but for businesses that have a UGC business model, this may be a necessary change to restore traffic.