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.

Here’s the complete internal memo from CEO Owen Van Natta, which describes Millard’s position as head of the ad sales group as an “interim” one and announces that former sales boss Jeff Berman is out. (Van Natta’s official statement for public consumption is here.)

Hi everyone,

I want to share some thoughts about our advertising product strategy and give you an update on the structure of our sales organization.

In the last three months we’ve focused our attention on restructuring the business, refocusing the MySpace user experience, and hiring some talented people particularly in the technology and product organization. I’m proud of the progress we’ve made in these areas and now want to focus on ensuring we have the best advertising product, sales strategy, and team in the market.

MySpace has always been a leader in the social media advertising space. Maintaining our leadership position requires that we foster the perfect balance between content and commerce. With this in mind, I’m pleased to announce that we are bringing a new partner into our global organization. Please join me in welcoming to the MySpace team, Media Link – a top media representation and strategic advisory firm founded by Michael Kassan and whose clients have included Microsoft, AT&T, Unilever, Home Depot, and Colgate-Palmolive. Michael is an internationally recognized leader operating at the intersection of the media, advertising, and entertainment industries. He’s the founder and managing principal of Media Link and acts as an advisor to many of the Fortune 100’s best-of-breed global brands

Media Link will be focusing on two primary objectives. First, the firm will provide guidance as we reconfigure our ad products to meet the current needs of the marketplace.  As a key strategic advisor and partner, they’ll provide us with an external perspective on the larger advertising market as well as insight into what top clients (and those we’re looking to attract) are asking for.

Second, as part of this process on an interim basis the firm will help manage our day-to-day sales organization under the leadership of Wenda Harris Millard. Many of you know and have worked with Wenda in the past and for those who haven’t she’s truly an internet advertising pioneer. Her reputation on Madison Avenue is unmatched and after holding executive sales posts at Ziff Davis, Yahoo, and Martha Stewart Living Omnimedia she recently joined Media Link as President.

After more than three years of managing a highly diverse set of responsibilities at MySpace including content and sales roles, Jeff Berman has decided to explore other opportunities. During his tenure at MySpace, Jeff brought leadership to our sales organization and built an incredible team with expertise across every advertising vertical. I appreciate all the support that Jeff has given the new management team and look forward to welcoming new sales talent to compliment the tremendous group we currently have in place. We wish Jeff the best in his future plans.

Within our sales team, we have a deep bench of talent responsible for managing one of the most dynamic advertising platforms on the Web. I’d to like recognize the sales team for their hard work and dedication in creating meaningful ad solutions for our roster of advertisers.

Our senior sales team (in alpha order) includes:
·         Chris Carlson – Regional Vice President of the Mid West
·         Angela Courtin – SVP Marketing, Entertainment, Content
·         Shari Friedman – Vice President of Entertainment Sales
·         Mitchell Kreuch – Regional Vice President of East Coast Sales
·         Abe Thomas – VP of Online Marketing
·         Valeh Vakili – SVP Sales Strategy and Operations
·         Sam Wick – SVP of Strategy for MySpace Music
·         Andy Wiedlin – Regional Vice President of West Coast Sales

I appreciate your dedication and focus on delivering for our advertising partners during the last few months. I hope you’re as excited as I am to take our sales organizations to the next level.

Full disclosure: News Corp., owner of MySpace, also owns Dow Jones, which owns this site.)

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?

CBS Interactive continues its integration process, which now calls for the further combination of several portions of the division into unified groups oriented around similar content. This important move allows us to better align our premium content for our audiences and our advertisers, and also results in reduction in certain areas that are now duplicated in the new organization structure. We believe these moves are necessary to continue building CBS Interactive into the most creative, most efficient, most profitable and fastest growing Internet company in the media business.”

News of the re-org was first reported by paidContent this morning. No details yet on how the restructuring will play out, though a person familiar with the situation did confirm that the company will push CNET’s News.com news site and CBS’s own CBSNews.com units closer together. Both groups have already been reporting to former CNET exec Joe Gillespie since the merger went through this summer. More details as I get them.

UPDATE: Here’s the complete re-org memo.

A note to CBS employees: Since this is one story you folks are going to have a hard time covering, feel free to pass along your tips to me. You can reach me directly at peter@allthingsd.com. If you want to be completely anonymous, which is understandable but less useful to me (I won’t have any way of reaching you for follow-up) you can use the blind tip box here.