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Is LivingSocial Gaining on Groupon?

LivingSocial is making major gains on its bigger rival, Groupon, which dominates the daily deals space with 50 million users. Once a distant second, LivingSocial's big discount offer from Amazon , which invested $175 million in the company, really put it on the map. LivingSocial added five million subscribers in January, hitting 20 million subscribers.

Source: livingsocial.com

LivingSocial has added three million subscribers just in the week and a half since it offered $20 Amazon gift cards for just $10. (Before the Amazon deal LivingSocial said it had 17 million subscribers,) The company likely took a loss on the deal, but it'll be worth it if those millions become regular users of the service. And customers are taking advantage of the deal — as of today 85 percent of the 1.3 million Amazon vouchers have been redeemed. This weekend, the vouchers were being redeemed at 50,000 an hour.

For the first time, LivingSocial is posing a real challenge to Groupon. Experian Hitwise reports that LivingSocial's traffic surged 80% last week while Groupon's declined 20% in the same period. The week of the Amazon offer LivingSocial's total US visits increased 254% from the December week Amazon announced its investment in the company. In that same period Experian Hitwise reports Groupon's traffic grew just 10%.

But the LivingSocial doesn't just attribute its growth in January to the Amazon offer. Living SOcial notes that it's launched 14 new markets, and on January 13 bought Let's Bonus, which doubled the company's footprint.

Questions? Comments? MediaMoney@cnbc.com

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  • Working from Los Angeles, Boorstin is CNBC's media and entertainment reporter and editor of CNBC.com's Media Money section.