Despite its recent privacy stumbling blocks, Digital:Convergence Corp. and its high-profile partners are going ahead with plans for :CueCat, a computer device that reads barcodes and takes Web browsers to a corresponding page.
Digital:Convergence this week filed an initial public offering of 10 million common shares at $11 each with the Securities and Exchange Commission.
“Our partners have made independent determinations that this is a technology of the future,” Michael Garin, president and chief operating officer at Digital:Convergence, Dallas. “But this isn't about future direct marketing opportunities. The direct marketing opportunities are here today.”
The :CueCat reader is a free device that allows users to swipe barcodes in magazines and on product labels and go instantly to related Web pages. Users are required to register the software by entering their e-mail address, ZIP code, age and gender.
Since the :CueCat's Sept. 11 debut, Digital:Convergence and partners Forbes magazine, Wired magazine and Radio Shack have distributed 2 million devices and plan to distribute 10 million by the end of the year. Forbes alone sent :CueCats to 810,000 subscribers with its Sept. 11 Best of the Web issue.
Other partners include The Dallas Morning News and WNBC.
In the first 10 days of deployment, there were 21 million unique swipes of :CueCats, according to Garin.
Another publication distributing the :CueCat is Adweek, which is sending it to readers with its Oct. 2 issue.
Meanwhile, on Sept. 15, a hacker accessed the Digital:Convergence database that housed e-mail addresses of consumers who requested the device. The company said that up to 140,000 consumers may have been affected. It sent e-mails to those consumers and offered them $10 Radio Shack gift certificates as an apology.
Subsequently, the security hole was fixed and Digital:Convergence assured consumers that credit-card numbers submitted to pay for shipping :CueCat were stored on a separate server and were not affected by the hacking.
Later, a Sept. 22 report issued by the Privacy Foundation, a consumer education group based in Denver, stated, “The :CRQ software, which accompanies the :CueCat device, appears to transmit all of the information that Digital:Convergence would need in order to record every barcode that every user scans. This tracking feature of the :CRQ software could be used by the company to profile an individual user.”
In response to the allegations, Garin said, “Their claim is 100 percent inaccurate. This technology is designed to totally protect the anonymity of the user. We have a system that does not and cannot identify anybody and does not make any records of the connections that we make.”
Adweek President Mark Dacey said he was not aware of privacy concerns surrounding the device.
“We're simply enhancing the printed page by offering readers an opportunity to learn more from our editors through various destinations we'll create and the additional service to advertisers who want to build their businesses,” Dacey said.
He said Adweek would not supply outside parties with any information about its subscribers and that, as he understands it, neither would Digital:Convergence.