CueCat FAIL, and the graveyard of bad business models

The CueCat is the archetype of the bad business model. Ted Bahr (the “B” of BZ Media) and I often wave off a bad business model as “it’s another CueCat,” which is about as blanket a dismissal as you can have.

Do you remember the CueCat? It was a cute little barcode scanner – shaped like a cat – that appeared about a decade ago. It was going to link print advertisements to websites. The concept was that you’d have one of those CueCats attached to your PC. Ads in magazines would have bar codes. If you were interested in the advertised products, you’d scan the barcode with the CueCat, and a browser would open, bringing you to the advertiser’s special offer.

• The benefit to the consumer was that the CueCat would save them from typing the URL, and might unlocked special discounts.

• The benefit to the advertiser was that the individual barcodes could be tracked, so marketers would know which ads readers were responding to. Because consumers had to register to use the service, the advertiser would know who they were, too.

• The benefit to the CueCat company, Digital Convergence Corp., would be license fees to advertisers for the barcodes and referrals, and additional fees for access to its database.

The CueCat was an epic dot-com failure. While some advertisers initially took to the concept and licensed the barcodes, few consumers used the device — even after Digital Convergence mailed out hundreds of thousands of free scanners. Privacy concerns after a widely publicized security breach sealed the CueCat’s fate. The company lost millions of dollars.

Once upon a time, I had several of the little cat-shaped scanners – they were mailed out in bulk all across the United States. Sadly, they disappeared a long time ago; they were probably thrown out. According to the Wikipedia, people have found other uses for the scanners, which is nice. You can still buy them on eBay.

There are loads of CueCat-like digital-age business models that have either failed or look like they’re going to. How about WebTV? The Iridium satellite phone system? Or spending millions to setup a big marketing presence for your company in Second Life, yeah, that was a good investment. What about vertical search – where’s that going?

Who else is buried in the graveyard of bad business models – and who do you think will be there soon?