With some sites it can impossible to remove duplicate content from the equation. Dupe content has the potential to be damaging and its an SEO issue that crops up constantly.
Take this example- a content driven site that has thousands of pages: It may use many of those pages to host content that is freely available to affiliates/partners/sponsors. It will also need to host its own unique content, otherwise why should it rank? It may also need to host content provided by affiliates/partners/sponsors.
This an extreme example, but it shows the diversity of content, and therefore no one method can be used to deal with potential dupe content issues.
Unravelling this is made easier if we start by understanding that at one extreme it is better to have duplicate content than no content- not ideal but better. Moving along that scale it is better to have unique content that is not outweighed by duplicate content. Google may well apply filters for duplicate content, but its hard to find evidence of heavy filtering by Google for large sites that host both duplicate and unique content.
It is likely to be the case that while the duplicate pages may not be able to rank well, the domain as a whole will not suffer to any great degree- and that is what avoiding duplicate content in this case intended to counteract.
The risk from content provided by the site to others can be minimised by marking it as available only for use within a licensing agreement, such as Creative Commons. If links back are provided and cedit is given there should be little impact.
Where content is necessarily duplicated across affiliate/partner/sponsor sites there is no perfect answer. It may depend on the sheer volumes of content- if you have more unique content than is duplicated it should not damage the domain, but it needs to be monitored as could become problematic as and when alogorithms change.
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