Short version: LiveJournal, the San Francisco-based arm of Sup, a Russian Internet startup, has cut about 20 of 28 employees. The company's product managers and engineers were laid off, leaving only a handful of finance and operations workers — which speaks to a website to be left on life support. Is LJ the first of the "social networking/blogging" sites to feel the burst of the bubble? Will others follow? Or was it doomed from the start?
Arguably the first true blogging site, LJ was never really a money-maker. When Brad Fitzpatrick sold it to Six Apart, it was an offer he couldn't refuse (as in CHA-CHING). 6A, however, showed pretty quickly that it had no real idea how to run the place, and only seemed to want it for the numbers and the tech, spinning off Vox and leaving LJ to kinda float. Sup offered $30 million for LJ, and 6A was not THAT stupid, it took the money and ran...and a year later, Sup has now proved it doesn't know what IT'S doing, or apparently care. Sweeping changes and failure to respond to disgruntled users definitely was not a great business model.
The problem, in my opinion, is that LJ is not a social networking site like MySpace, Facebook, and the myriad others out there, yet Sup (and, to some extent, 6A) wanted it to be, hence the unpopular changes. When 6A realized it wasn't going to work, they happily let Sup take it, and as Sup realizes it isn't going to work, they're panicking, too. By the same token, LJ isn't your typical blogging site, either. Instead of a website with a million separate blogs, LJ forms a community of blogs, linked and related and forming internal communities. In that, it is fairly unique (spinoffs using the LJ code like DeadJournal, GreatestJournal, etc. notwithstanding). To run it, you'd have to keep that communal aspect in mind, instead of ignoring it in favor of trying to be the next big teen social site, which is geared much less to the communal and much more to the individual.
IS LJ going to die? Who knows? I'd hope that, if things were going away, we'd hear about it. And, really, unless there are code changes happening, all it really takes to keep things live is a skeleton crew of techs and server space. For now, I'm betting Sup can still pay that small amount of salary and rent. Just wouldn't expect much new, feature-wise...which, frankly, is OK by me, since the feature expansion in the last few years hasn't been anything all that interesting or helpful, anyway.