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jay herrattiOnline business directory Citysearch announced today that it’s laying off most of its editorial staff and switching to a freelance system.

The news is much less dramatic than what a source told us earlier — that the Citysearch site (which is operated by CityGrid Media, itself a subsidiary of online company IAC) was shutting down. Apparently, our source wasn’t the only one to hear that, as the rumor of a Citysearch shutdown spread on Twitter. (You can see Citysearch responding to Twitter gossip here.) Kara Nortman, senior vice president of publishing at CityGrid, said the rumors reflected a misunderstanding of today’s news.

Nortman declined to provide the specific number of people being laid off, but she said it’s not the entire editorial team. (TechCrunch reports that it is less than 3 percent of the workforce.) She also said that it reflects an “evolution” of the site, as Citysearch starts featuring more content from other sites that are either owned by CityGrid or part of the CityGrid network.

I’m always suspicious when people use words like “evolution” when explaining layoffs, but for better or for worse, the decisions seems to be in-line with broader changes at Citysearch. Back in June, the company changed its name from Citysearch to CityGrid to reflect that the CityGrid ad network is now a bigger part of the business. Chief executive Jay Herratti (pictured) said the move was “basically putting our name where our money is.” (CityGrid even supplies advertising to Citysearch competitor Yelp.)

But Citysearch is still important to the company, Nortman said — it’s “the best expression of everything CityGrid has to offer.” In other words, it’s a showcase for content produced on CityGrid websites, and with 18 million unique visitors each month, an important part of the CityGrid ad network.

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