LivingSocial, just like Groupon, is nothing more than a pyramid scheme. It's the businesses who sign up that get the shaft.
Remember how WalMart destroyed Vlasic pickles? These outfits work the same way. They sign up businesses who are lacking customers and profits with wild stories about how they'll steer so much business their way. The only problem is that they insist you offer whatever it is that you sell at such a deep discount that, after they take their cut, you lose money. Many businesses get so flooded with these "discount deal" customers that it forces them to close.
Now add in the "creative accounting" used by these "deals" outfits. Their expenses are out of control as can be seen in the picture -- reminiscent of the mid 90's "business model" of bloated staff with nothing else to do with their well-compensated time than play ping pong, foosball, all while feasting in the company-funded "kitchen." Trouble making payroll and no cash in the bank? No problem! Just sing up more businesses and use that cash flow to keep creditors at bay. In other words, these "deals" outfits aren't profitable. They use today's dollars to pay off only what they have to from yesterday's bills. The gap widens until they're exposed as a scam just like Groupon.