Philips is a panicky sort, counseling friends last fall to "buy food and guns" — a bit of mordant meltdown humor reflective of his personality.

But with Miller's arrival, Philips's wit is the proverbial knife at a gunfight. He's no match for Miller, a former lieutenant of Barry Diller at IAC before he joined Time Warner to run AOL from 2002 to 2006, in playing corporate politics and catering to a mogul's whims. And Miller surely does not want a rival with Murdoch's ear.

We'd heard that Philips might take a lesser job running some of News Corp's lesser-known Web properties. But that would mean an exile from News Corp. headquarters — an unattractive prospect for an executive who has earned his keep mostly by keeping Murdoch's favor.

The wunderkind is not just rolling over and playing dead. He may be trying to spin the situation, with a friend saying that Miller's expected to have the same portfolio as Peter Levinsohn, the executive Miller would replace. That's not, as has been reported, the broader role overseeing digital strategy Miller's expected to take.

Rupert Murdoch's media empire, which stretches from MySpace to Fox to the Wall Street Journal and around the globe, is in turmoil after the departure of longtime COO Peter Chernin. Along with newspapers, TV shows, and websites, Murdochland manufactures drama and gossip. Here's what's been filtering out.

The expiration of two lucrative deals are setting a clock on DeWolfe's career. The first is his own employment contract, which he signed in 2007, along with his cohort Tom Anderson, for a reported $30 million over two years.

The second is a $900 million search-advertising deal with Google, which ends in 2010 and which all observers agree is unlikely to be renewed on the same rich terms. On top of that, MySpace's user growth has stalled out, as rival Facebook looks set to grow to twice its size this year. Without those guaranteed revenues from Google, DeWolfe will have a tough time meeting News Corp.'s demands for better earnings. That has led Pali Research analyst Richard Greenfield to predict big layoffs at MySpace.

Amidst this backdrop comes Wall Street Journal editor Julia Angwin's Stealing MySpace. Most of the stories it tells, like Anderson's ties to an online porn business called TeamAsian.com and DeWolfe's creation of a spam empire, have been reported elsewhere (well, here, to be precise). But their appearance in an authoritative book written by a News Corp. employee gives them fresh currency.

The book surely delights DeWolfe's many enemies within News Corp., who may be behind the vicious (and apparently untrue) rumor of a dalliance with Wendi Deng, Murdoch's wife.

So how is Murdoch setting things up for DeWolfe's possible ouster? One perpetual source of friction has been MySpace's autonomous role within Fox Interactive Media, News Corp.'s internet unit which houses a collection of forgettably schlocky websites like IGN and Rotten Tomatoes. Peter Levinsohn, a longtime Fox executive, oversees FIM and MySpace.

One reshuffle scenario we've heard: Levinsohn heads back to the Fox TV and movies business, whose leadership was jumbled up after Chernin's departure. (Rumor has it that an overworked Murdoch has been reduced to setting Fox TV's primetime schedule himself.)

Fox Interactive Media would then be cleaved in twain, with MySpace running on its own under DeWolfe — for now — and darkly mordant Internet wunderkind Jeremy Philips, currently in an amorphous strategy role, taking over the grab-bag of other websites. That would put him in a position to take over MySpace if DeWolfe bolts.

That's just one scenario, which has already gathered doubters. (If Philips has not gathered as many detractors as DeWolfe, it is only because he is not as well known.) But the unsettled leadership would certainly explain a mystery about MySpace's layoffs: Why they haven't happened yet. We've been hearing rumors of impending layoffs since last June, but instead, MySpace has just made minor cuts. The company's expensive, showy San Francisco outpost ought to be on the chopping block, but it's still open. Perhaps a soft-hearted DeWolfe is hoping to push back layoffs until after he's gone?

Wall Street is currently in a bubble of panic. The Valley is currently in a bubble of denial. Neither zone approaches reality. Members of the National Bureau of Economic Research — the only official arbiter of such matters — can't even agree if we're in a recession yet. "It's really hard to say if we're in a recession, because different indicators point in different directions," said Jeffrey Frankel, a Harvard professor and a member of the NBER's recession-calling commitee.

That technical measure of recession ignores the reality on the ground: Home prices continue to slump, gas prices are pinching consumers' pocketbook, and advertisers are aggressively cutting back budgets, even online. Layoffs are grabbing headlines.

But does this really affect the Web startups which so enchant the blogosphere's imagination? Schadenfreude demands that these tiny companies shutter their doors — or if they don't have the decency to close up shop, they should act suitably chastened by the cold economic winds blowing. There's a lot of contradictory advice being handed out: Rely on angel investors! Don't rely on angel investors! My advice: Don't rely on journalists and bloggers for advice on how to run your business.

One might think Valleywag, which eagerly chronicles the mishaps of misconceived startups, would cheer on the notion of a lot of startups starving to death because of an economic downturn. Far from it! Better that they choke on their own vomit — that excess and lack of self-discipline kill them, rather than factors outside their control.

Serious entrepreneurs should be tightly controlling their spending. But that is as true now as it was a year ago, and a decade ago. Retaining pricey PR firms, throwing lavish parties, hiring executives from Fortune 500 companies at mid-six-figure salaries — that can wait until the company turns a profit. If your startup is dependent on a bubbly economic cycle, then it's not being run like a startup.

By all means, those who were never meant to be entrepreneurs in the first place, who lack any real ideas of their own, or any interest in making money rather than spending someone else's, should take this occasion to make a graceful exit from the scene. Six months ago, closing your startup would have seemed cowardly if not insane; now, everyone will nod at your wisdom.

That brings me to the opportunists — the likes of Marc Andreessen, who has been preaching the notion of a coming "nuclear winter" for some time, and Jason Calacanis, who recently wrote about a looming "startup depression."

Were I more impressed with their current startups, I'd nod alongside. But Andreessen's Ning is an unimpressive social-network builder; Mahalo, a gussied-up replica of Yahoo's 1994-era Web directory. Frustratingly for some observers, they have raised enough money that neither company will run out of funds for at least a year. (No one sincerely believes Calacanis when he says he has enough money to run the company for four years, do they?) If their flimsy business models remain unchallenged, their survival is all the more likely. So when Andreessen and Calacanis talk doom and gloom, what I'm really hearing is: "Please don't raise money for a better idea than mine — I can't take the competition."

What history tells us, actually, is that the best companies are started in times like this. The last wave of truly innovative Web 2.0 companies — Flickr, Del.icio.us, Last.fm, Facebook — started at a time when no one particularly believed in their potential.

Many people would benefit from a climate of fear: Venture capitalists, who might get larger pieces of startups; employers, who might hire talent more cheaply; and corporate dealmakers, like Jeremy Philips of News Corp., who might acquire companies less expensively.

But the biggest reason to ignore Philips' fearmongering, in particular? He's not taking his own advice. Rumor has it that, instead of food and guns, he is acquiring a piece of Manhattan real estate. And from what we hear, it is rather too glossy a place to serve as a warehouse for rations and ammo.

(Photo by Gawker Media)

In the spring of 2006, Facebook let it be known that it wouldn't consider acquisition offers under $2 billion. Most laughed it off. But come this fall, of course, Microsoft and Google fought for the privilege to set Facebook's value at $15 billion. Sure, Facebook has the numbers to back the hype, but so does LinkedIn, which actually outgrew Facebook in the past year.