Zagat Heading for Dustbin of History?

Long before Yelp and other online restaurant sites were all still twinkles in computer programmers' eyes, Zagat was using the power of the hive-mind to create definitive restaurant guides that were local, social and portable. That's all over.

When it came to migrating the brand to the web, founders Nina and Tim Zagat cut themselves off at the knees by placing most of their content behind an expensive paywall. Faster than a xiao long bao slipping through greasy chopsticks, market share plummeted. Nielsen estimates that in September had 570,000 unique domestic web visitors compared to 9.4 million for Yelp.

Fast-forward to 2010: remains stuck in paywall purgatory, without the eminence of the Michelin guides or the populist appeal of free sites like Citysearch or "the site that rhymes with kelp."

Still, Zagat remains committed to sequestering its best content behind a paywall, reports The New York Times. Paywalls may work with brands that radiate unquestioned authority or offer unique content. Zagat does neither.

How long these signature maroon books can stay in the black is questionable, especially in cities like Los Angeles, which the Zagat guides never penetrated the way they did New York. Yesterday's long NYT business story notes that Zagat is profitable. Their books, especially custom guides for corporate clients, make still money, though they only comprise 30% of the company's revenue. Zagat's big problem isn't revenue (not yet): it's market share and brand identity.

"There is a massive food community on the Web that exists today," says media consultant Merrill Brown in the N.Y. Times, "and [Zagat is] not widely considered a giant player."

When you put your content behind a paywall -- especially one as steep as $24.95/year (online) or $9.95/year (mobile) -- you reduce instantly and vastly the number of users who will ever see it. Zagat can crow all they want about the "curated" nature of their guides, but the latest generation of eaters has acquired much of their food savvy from websites and mobile apps (gratis). Zagat's decades-long dominance of printed food guides has no resonance for this demographic.

Even with an imminent website overhaul, the Zagat revolution teeters on the brink of obsolescence. People no longer revere the Zagat scripture, and their Little Red Book is suffering the same fate as Mao's. Their best chance at survival lies not in users getting over Zagat's paywall but in Zagat getting over the very idea of a paywall.


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