Reports...
...LIVE was never completely offline. We did have some spotty issues over the weekend, but the XOC (Xbox Operations Center) was fully staffed (as it always is 24/7/365) and they addressed the issue as quickly as they could.
According to The Bitbag, Microsoft will be compensating their Xbox LIVE Gold customers for the problems the service has been having over the holiday—somehow.
An unnamed Microsoft contact told the site:
...we will definitely be doing something for our Gold members that weren't able to get online over the last week.
Subscriber rights to some sort of refund seem a little vague here, especially since Microsoft has said that the service isn't technically down.
Source: Kotaku