Groupon – from rags to riches to rags again?

A few days ago, I decided that to spoil a friend and me with a massage. Searching the web for some nice and cheap places, I suddenly remembered that someone told me about this site Groupon. Groupon is a site, that offers discounts on e.g. massages, haircuts, etc.
And really, entering the website I found a deal, that offered two massages for the price of one. Wow!
Thinking more about it, I wondered how is this possible?Why would companies participate?What about Groupons earnings?
Questions over questions, so where to start?