— Google's purchase of restaurant review empire Zagat will help the search engine expand its social and local search footprint, but the big question on gourmands' plates is: Will Google do away with Zagat's paywall?
The idea of opening access to Zagat and allowing consumers to share their own opinions, and read others', holds some appeal. But foodies and analysts are worried that if Google tries to mimic Yelp.com's free-to-all model, Zagat could lose the trustworthiness and cachet that come from its concise, well-informed reviews.
"Hopefully, Google manages the asset well, because it's a wonderful brand," said Mike Hickey, equity analyst at Janco Partners.
Over its 32-year history Zagat has grown from cult status to culinary influencer, expanding to review other businesses like hotels and golf courses in more than 100 countries.
The privately held company likes to keep its numbers close to its vest, but according to its marketing materials, Zagat's iPhone app is among the five top-grossing travel apps on iTunes.
Besides a simple, three-part numerical evaluation, a signature element of Zagat's reviews is commentary from patrons who fill out surveys about their dining experiences. You could say Zagat was crowdsourcing reviews long before the Internet — let alone Yelp — was a twinkle in anyone's eye.
While other media outlets have struggled with readers' resistance to paying for content, Zagat has thrived. But Zagat fell behind when its paywall left it out of Google results; sites like Yelp.com and OpenTable.com filled that vacuum and turned their brand of open-source reviewing into a key part of the search experience.
"They were pioneers in doing what they did, but not pioneers in bringing it to the web," noted Jim Friedland, senior Internet analyst at the Cowen Group.
Zagat says Google isn't planning to change the current pricing structure, although some analysts think this could change in the future, given Google's affinity for all things open-source.
"I think they would probably bring the wall down and encourage greater adoption," Janco's Hickey said.
He adds that Google likely views Zagat as a way to enhance the value of its local search offerings. The money Google could earn from subscriptions would be dwarfed by the advertising revenue potential, especially if the company layers Google Offers, its contribution to the daily-coupon trend, into local search offerings.
To preserve Zagat's reputation as an arbiter of taste and gourmet sensibility, Cowen's Friedland suggests that Google could adopt a tiered access model to scale up in size without taking the brand mass-market.
"There's no question they'll probably make more of it free," he said, but adds that the product would benefit if Google retains some vestige of a pay-to-play model in which foodies get access to more sophisticated content.
Friedland also suggests that the iconic print guidebook will become less important, or perhaps cease to exist.
"That kind of content — rankings that are updated frequently — are the kind that's most affected by the Internet and most challenged as a print product," observed Michael Norris, senior analyst for the trade books group at Simba Information.
Norris notes that he doesn't expect the print product to die out entirely. He thinks it could simply be scaled down in the future.