Can a New Breed of Geolocation Apps Beat Privacy Fears to Make It Big?

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Every year, a new crop of geolocation apps springs up at South by Southwest. A city swarming with techies and parties is fertile ground for developers looking to test and promote their products.

But when the crowds leave Austin, Texas, so does the buzz surrounding most of these apps. A few of them — most notably Foursquare and Gowalla — have ridden the SXSW wave to mainstream popularity. Most, however, are quickly forgotten.

(MORE: Complete SXSW Coverage)

This year, there are a few contenders trying to succeed where past companies have failed: Highlight and Glancee. Both of them run quietly in the background and use your phone’s GPS to locate other members, listing how far away they are from you and what mutual interests you have based on things listed on your Facebook profile.

They both also have a tough road ahead of them. In January, Forrester Research released a report that found that only 5% of mobile users actually use location-based apps; of those people, only 5% use them every week.

So, why aren’t people warming to social geolocation apps? The answer is that they face two pretty big hurdles. One is that they need to reach a critical mass of users before non-techies start signing on. Nobody wants to be the only one at a party, after all.

The second issue is privacy. Having someone browse through your entire photo history on Facebook? Creepy, but at least you don’t know it’s happening. A weird stranger popping by the bar you’re at because he saw your location on his iPhone? That’s creepy in a much more tangible way.

“Especially for women, it can be dangerous to show where they are on a map,” says Andrea Vaccari, co-founder and CEO of Glancee. “We would never want someone to just say to a girl ‘I found you on this app and now I want you to talk to me.'”

Glancee’s solution is to encourage people to make contact via the app before making contact in real life. Users don’t see exactly where other users are but instead are given a range of distances. If you notice that a fellow user is within a mile, you can then message them and ask if they want to meet up.

So, are apps like Glancee and Highlight ready to move beyond the SXSW bubble?

“To say these [kinds of apps] are going mainstream right now is a stretch,” says Vaccari. “There is a lot of excitement because it’s South by Southwest and it’s a very particular crowd of early adopters who get excited about new technologies.

“In the long-term, I think Glancee is something that works for the average user, not just the tech addict in San Francisco who is happy to share everything about his life.”

Of course, many other entrepreneurs have thought the same thing — that their app was going to be the one that was finally adopted by people outside of the tech industry.

Loopt, one of the earliest entrants into the geolocation game, was bought today for $43.4 million by Green Dot, which hopes to integrate the app’s technology into its prepaid debit card business. The app itself, however, will eventually be discontinued.

Vaccari doesn’t think all social geolocation apps will suffer the same fate.

“In the beginning, people were scared of Facebook, having their pictures and real names online. Now it’s sort of normal. We think it’s going to be the same for these apps.”

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