But Spotify has yet to make a key expansion: To the U.S., where the big music labels worry that consumers will love everything about the site except paying for it. That’s bad, since Spotify is supposed to work best as a subscription service.

Most Americans have never heard of Symbian, though it remains the biggest player in the global smartphone market (as long as you use a broad definition of smartphone). But it’s telling that Spotify made a point of making its service compatible with Apple’s (AAPL) iPhone and Google’s (GOOG) Android handsets first.

In any event, Spotify is only available via mobile to paying subscribers, who shell out around $16 a month in the U.K. (and less in some countries). They key question for the music business is how many subscribers there are.

Spotify won’t release statistics, but one number that I’ve heard from people close to the company is 100,000, which works out to less than two percent of the company’s overall user base (free users can listen to the service only on their PCs and have to endure a small smattering of ads). But U.S. music industry executives worry that the subscription number may be even lower than that.

The two sides continue to chat, and conventional wisdom is that the service will indeed get to the U.S. one day. But at one point, Spotify was talking about coming to America in 2009, but that looks just about impossible. Now, CEO Daniel Ek is talking about the first half of 2010.

The voluntary layoff program begins Dec. 4, a few days before the company spins off from Time Warner (TWX). If AOL doesn’t get enough volunteers, it will ax people on its own.

This is lousy news for employees, who are faced with a “jump now or wait to be pushed” decision, but it is designed to cheer investors: AOL says the cuts will drop its annual operating expenses by $300 million. Through the first nine months of this year, AOL’s operating expenses ran around $1.8 billion.

Meanwhile, AOL is looking to shed some parts of its business altogether. It has hired bankers to sell off its ICQ messaging service and is considering dumping MapQuest, among other assets.

Armstrong’s (expensive) goodwill gesture: He is giving up his 2009 bonus, which was to be at least $1.5 million. His explanation to employees: “As a member of our team and the person who takes accountability for the results of the company, I am making the decision to forego my 2009 bonus. That decision is a personal one and is not a sign for the future payout of the overall bonus plan for employees.”

Here’s the text of the company’s filing with the Securities and Exchange Commission:

On November 19, 2009, AOL Inc. (the “Company”) informed its employees of proposed restructuring activities as part of its continuing cost reduction initiatives aimed at aligning the Company’s organizational structure and costs with its strategy (the “Restructuring”). The Restructuring is conditioned upon the successful completion of the Company’s previously announced spin-off from Time Warner Inc. (the “Spin-off”), as well as the approval of the Company’s new Board of Directors that will begin service in connection with the Spin-off. It is anticipated that, if approved, the Restructuring will include the reduction of approximately a third of the Company’s current employee base, which will be conducted on a voluntary and involuntary basis. The goal of the Restructuring is to reduce ongoing annual operating costs by approximately $300 million. If the Restructuring is approved, the Company expects to incur restructuring charges of up to $200 million, substantially all of which is expected to be incurred from the date of the Spin-off through the first half of 2010.

This assertion comes from the analysts at Bernstein Research, who I think have been pretty levelheaded about this stuff over the past year or so. From the “stuff you probably already knew” file:

• The ad business is still declining–in the U.S., Web ads will be down three percent for 2009–but should start moving up again next year, when Bernstein thinks they’ll climb 7.6 percent. Remember that those numbers will be off a depressed base.
• Search is improving more quickly than display.
• Google’s (GOOG) grip on search isn’t weakening a bit–if Microsoft’s (MSFT) Bing push is having any effect, it’s at Yahoo’s (YHOO) expense.
• The mobile Web is going to be big, but not that big. Mobile ads may account for seven percent of U.S. Web spending in 2012.

Okay. Back to work.

Viacom (VIA) says Q3 ad sales dropped four percent in the U.S., which is two points better than Q2. Companywide, revenue dropped three percent to $3.3 billion, which is what Wall Street expected, but the company slashed enough costs to produce an earnings surprise: After adjusting for one-time charges, Viacom posted earnings of 69 cents a share, well above the 57-cent consensus.

The company’s overall results do a nice job of illustrating why media companies and investors are so enamored of cable TV these days: Even though ads are slumping, the company was able to wring more out of cable system providers (and their subscribers), which more or less kept overall cable revenue flat.

Viacom’s movie business is much less meaningful than its TV operations, but in this case, it underperformed enough to drag the rest of the business down. Viacom blames a six percent drop on crummy DVD sales, which it says suffered compared with strong results a year ago.

But every studio in Hollywood is grappling with crummy DVD sales: The only real question is whether that’s a function of the economy or something larger.

I’ll  listen in on the call (8:30 am ET) and report back if there’s anything else worth noting.

UPDATE: CEO Philippe Dauman mentions the new “Sponge Bob Tickler” for the Apple (AAPL) iPhone app, which I believe means that at least one Viacom employee has won a private bet. Waiting to hear more about Q4 guidance.

The core question: Are Dauman and other Viacom execs mildly optimistic about recovery because of an easy comparison with a year ago or because ads are really coming back? A little of both, Dauman says: “Right now the tone is feeling better, but we have to be cautious.”

Overall, Forrester predicts, U.S. consumers will purchase three million e-readers by the end of this year. That’s a bump from the analyst shop’s earlier prediction of two million. It thinks Amazon (AMZN) will claim 60 percent of the market, with Sony (SNE) taking 35 percent and the rest going to also-rans like iRex.

Have to say, I find that one a bit head-scratching: I gather that Sony’s device is supposed to have created a footprint overseas, but while I see the occasional Kindle on the subway or an airplane, I have never, ever, ever seen a Sony reader in the wild. Have you?

For what it’s worth, Forrester figures e-reader sales will double, to six million next year, pushed by media buzz along with the introduction of new devices, including the Apple (AAPL) wondertablet that everyone is convinced will show up–someday. They may even be right.

Analyst Imran Khan says he talked to 20 ad buyers and planners, who control a collective $1.6 billion in ad spending, and they tell him that they’ll spend more in the second half of 2009 than they did in the first six months. But that’s not useful information, since ad spending is traditionally weighted that way.

More tellingly, Khan’s correspondents tell him they think spending will be “roughly flat to down” in the last six months of 2009, compared to 2008. And as we’ve discussed before, ad spending started plummeting in the second half of 2008. So if it isn’t improving now, that’s unpleasant news.

More pleasant: Things should get better next year:

2010 ad budgets are looking positive. 25% of respondents see upside of 5-9% in 2010 and an additional 25% see upside of 10-14% vs. 2009. Approximately 40% think that ad spend in 2010 will be roughly flat with 2009 levels.

Looking for more concrete data? Wait a week. Earnings season kicks into high gear Thursday, Oct. 15, when Google (GOOG) hands in its Q3 report card; in the following weeks we’ll also get updates from big media players, including Yahoo (YHOO) and Time Warner (TWX).

The announcement, predicted in multiple reports this week, came via the carrier’s earnings report this morning, and has almost zero detail. Here it is in its entirety:

On 28 August, the Company and Apple reached a three-year agreement for the Company to sell iPhone in China. The initial launch is expected to be in the fourth calendar quarter of 2009. This will provide users with brand new communication and information experience.

At a news conference, executives from the carrier announced that they would sell two versions of the 3G iPhone, but didn’t say much more. Other reports suggest that Unicom, the second-largest carrier in China, agreed to buy five million handsets from Apple (AAPL) for the equivalent of $1.5 billion in order to snag the deal.

That bit of data comes from a new NPD Group report, which says that smartphones market share reached 28 percent in Q2 of 2009, up 47 percent over the last year.

Which isn’t a shock, since the phones continue to get better and cheaper–remember when Apple’s (AAPL) first iPhone cost $600, all the way back in 2007? And all sorts of players, from mom-and-pop software developers to manufacturers like Palm, (PALM) have bet their business on the notion that one day not that far from now, nearly every phone will be a smartphone.

But in the meantime, “feature phones,” the plain vanilla handsets that you almost never read about on this site or any other tech-focused publication, continue to dominate the market, which continues to expand. NPD says sales volume increased 18 percent, revenue increased 18 percent, and the average sales price for new phones increased four percent, to $87 a pop.

[Image credit: cod_gabriel]

It’s part of Gartner’s annual “Hype Cycle for Emerging Technologies” report, which is basically a fancy version of one of those “What’s Hot in 2009″ issues that magazines like Entertainment Weekly put out (EW is still around, right?).  Gartner has been pumping these out since 2005, and if nothing else, they’re fun to look at. Click the chart to enlarge:

The gist, as I understand it, is pretty straightforward: The promise of new technology moves much faster than the technology itself, which means that expectations get inflated, then deflated, before the technology eventually becomes mainstream (if it ever does). Can’t tell you what methodology Gartner uses to assemble the chart, but I have a hunch that you could figure out the top of the expectations peak with a simple Google (GOOG) search.

Of course, even though the chart looks cool, there’s more art than science here. As Reuters points out, Gartner’s 2006 report told us that Web 2.0 would would go mainstream by 2008. Today, Gartner tells us that Web 2.0 is still another two-to-five years away from breaking big. Meanwhile, be advised that we still have more than a decade before “human augmentation” plays in Peoria.

And I’m still not sure what it is, exactly, that you’re supposed to do with this knowledge. Should Amazon (AMZN) be psyched or worried that e-book readers have reached the top of the hype cycle? If the tablet computer is already climbing up the “Slope of Enlightenment,” does that mean Apple’s (AAPL) presumed-to-be iWant is already late to the party?

But who cares? I love the terminology. I always imagine that the “Trough of Disillusionment” can be found somewhere near the horse latitudes, or perhaps the Fortress of Solitude.

So says ad-tracking firm TNS Media Intelligence, which pegs the slump at 9.2 percent for the last three months of the year, compared to an overall drop of 4.1 percent for all of 2008.

I’m sure that someone, somewhere, will get some benefit from knowing exactly how terrible the ad market was several months ago–we also know, for the record, that ad sales were very bad during the first three months of 2009. But every media person I talk to is consumed with the state of the market right now–and what it might look like six months from now.

The good news: Some of the people I’ve talked to recently actually have good news to report. Or at least, good news as measured by the standards of  the “down six percent–or 20 percent–is the new flat” era.

For instance, execs at big Internet publishers tell me they think the decline in display ad spending may have bottomed out last quarter, which would bode well for restructuring efforts at wounded giants like Yahoo (YHOO) and Time Warner’s AOL (TWX).

Cable executives are even more bullish, and some of them, like Viacom (VIA) CEO Philippe Dauman, will even say so in public: “Signs over the last weeks have been encouraging,” he ventured during the company’s earnings call on Friday.

Let’s be clear: Viacom’s U.S. ad revenue dropped nine percent in the last quarter. So “encouraging signs” doesn’t mean “roaring growth.” And some moribund industries, like the magazine business, are still moribund (and broadcast TV’s day of reckoning is coming this month)

And even this faint optimism may be nothing more than delusion fueled by the stock market’s recent run or the hopes pegged to the notion that people have to start buying cars again, some day. Assuming the recession/depression lasts for another year or so, you can expect the ad market to really recover a good six months after that, since ads are a trailing indicator. But they do have to come back, some day. Right?

Portfolio’s ad pages were down more than 60 percent in the first quarter of 2009. If you account for the magazine’s decreased frequency–it published two issues in the first free months of the year, down down from three last year–that works out to be a 40 percent drop. Here’s how its peers performed during the same period, via the Magazine Publishers of America:

McGraw-Hill’s (MHP) BusinessWeek: Down 39.8 percent

Time Warner’s (TWX) Fortune: Down 26.3 percent

Privately held Forbes: Down 15 percent

Bear in mind that the revenue numbers for each title are likely down much more dramatically. That’s because the two categories of advertisers that the business magazines have depended on to fill their pages–financial services and autos–have all received extra-vicious beatings from the economy since last summer. So the publishers are particularly vulnerable to rate card pressure. And I’m told that luxury and travel advertisers, which had stayed relatively strong through the end of 2008, fell off dramatically this year. So that can’t be good.

My contribution to the aforementioned bone-picking: Like everyone else who wrote about Portfolio yesterday, I mentioned that the magazine and Web site had reportedly been launched with a budget of $100 million or more. But let’s be clear–that’s $100 million (or more), to be spent over a five-year period.

Portfolio was around for two years, and was gestating for a year before that, and a bunch of the budget was likely spent up front. So Condé Nast likely did burn through a very large pile of cash–the New York Times’s David Carr reports that the magazine spent $30,000 last fall to “procure the services of a real elephant to menace a model at a photo shoot.” And I’d love to know what the total actually was (for the record, I asked, and no one will tell me). But it’s a stretch to think Condé Nast actually burned through nine figures on this one.

Yesterday, for instance, Omnicom (OMC) reported that “organic revenue”–an accounting term that factors out wildcards like currency fluctuation and acquisitions–dropped 6.6 percent in the last quarter.

Today we hear from heavyweights Interpublic Group (IPG) and WPP, which have similar tales to tell. Interpublic reports a 5.6% decline in organic revenue; WPP says 5.8 percent.

Not mentioned in WPP’s three-month update: Any info about its sensational lawsuit against ad start-up Spot Runner, which it accuses of being a privately held pump-and-dump scheme. While the Spot Runner imbroglio is sexy, it has no impact on the company’s top or bottom lines.

But Omnicom management made hopeful noises yesterday about a recovery that might appear by the end of the year, and WPP has the same supercautious optimism: “The first half of 2009 will clearly be very difficult, with the second half, although continuing to be tough, likely to improve relatively. Any recovery, of sorts, will probably come in 2010.” Small comfort, but I’ll take it.

Turns out that many of them were doing the same thing–the Facebook part, that is. Web traffic-watcher Hitwise says Mark Zuckerberg’s site accounted for 1.93 percent of all U.S. Internet visits on New Year’s Eve. That’s up 75 percent from a year ago, when 1.11 percent of you checked in at the site at some point in the day.

But New Year’s wasn’t Facebook’s busiest day last month. That distinction belongs to Christmas Eve, when it set a site record of 2.18 percent of U.S. Internet visits, up from 1.42 percent in 2007.

You can draw your own conclusions about what those stats mean, or read Hitwise analyst Heather Hopkins’s theories here–she thinks snowstorms in the Northeast kept people trapped in their homes with nothing to do but post on their pals’ walls.

But I think the best explanation here is the simplest one: Contrary to predictions that Facebook would burn out as its core college audience grew tired of it, the site has continued to grow–it now claims 140 million active users worldwide. So you’re going to see records like this broken a few times a year.

Increases in digitally downloaded albums and songs were not enough to offset a nearly 20% plunge in CD sales in the U.S., according to year-end figures published Wednesday by the Nielsen Co.’s SoundScan service… U.S. album sales including digital downloads fell 14% for the year, while factoring in individual song downloads, sales were off 8.5%.”

This is either the seventh or eighth year in the last decade where you could have run a similar paragraph, depending on who’s counting. The big picture is that the industry peaked in 2000, when online file-sharing/stealing/swapping/whatever-you-want-to-call-it became mainstream. It has yet to recover.

That recovery is still a long way off. Despite years of talk, the industry is still yoked to the inexorably declining CD business, which makes up the overwhelming majority of its sales and profits. So it’s going to keep declining for quite a while before it bottoms out.

The good news: If you’re only interested in listening to good music, and don’t care about the industry behind it, you have more options than anyone has ever had in the history of man. Enjoy yourself, and have a very merry new year. See you in 2009.

[Image Credit: Backstreet Boys concert photo, which has nothing to do with the clip above, via Anirudh Koul]

It’s now very old news that the online ad market is going to get roughed up next year. But by how much? If you want, you can take a gander at this week’s prognostications from Interpublic (IPG), WPP and Publicis. But online ad sales people I talk to say there really isn’t much point in placing any bets on 2009 until the end of this month.

That’s because ad sales have basically stopped until the end of the holiday season, I’m told.

There are some exceptions: If you want, say, prime placement at Yahoo (YHOO) to promote your blockbuster over the July 4th weekend, you have to pay up now. And Google’s (GOOG) search ads aren’t purchased in advance, anyway. But in general, no one wants to commit money to the Web until they see how they did in December.

That may sound like common sense, but it’s a change from past years, and it’s a story I keep hearing. Latest example: A sales executive from a very, very large online publisher told me he has multiple seven- and eight-figure ad deals hammered out and ready to go. But buyers have walked away and are letting the deals sit for the rest of the month, until they assess their holiday sales.

My ad executive is an optimistic sort (obviously), so he figures they’ll sign the paperwork eventually. But he also assumes that said buyers will try to use this month’s data as a hammer to knock down prices by 10 percent or more. I’ll check back at the end of the month, and see how that optimism is holding up.