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New York-based Scanbuy, the maker of the proprietary “ScanLife” Mobile 2-D Barcode Reader and “EZCode” code format, has been on a tear of late, scoring a series of high-profile campaigns that have buoyed the prospects of the nascent channel and rekindled the “open” versus “closed” mobile barcode debate.

Scanbuy’s recent announcements include an OOH integration campaign with American Airlines at four major airports, including LaGuardia and O’Hare. American Airlines also joined Car & Driver, Citysearch, Discovery Communications and Sears in participating in Scanbuy’s “cross-carrier pilot.” Additionally, Scanbuy has also found success in Europe, launching with MTV France’s “Crispy News” and landing a few handset pre-load deals in Spain. The company also recently announced their ScanLife reader has been ported to the iPhone and will be available for download upon launch of the iPhone App Store (expected June, 2008).

While all of these are obviously positive steps in driving mass adoption of 2D barcodes, it needs to be pointed out that the Scanbuy technology suite is a proprietary (closed) system, meaning that the “EZCodes” in question can only be read by ScanLife’s reader; Consumers attempting to read the EZCodes with other, so-called “open format” readers will not be able to interact with the code. The “open” format, which is used by the Android “ZXing” and many popular European and Asian reader brands, is based on a design by the Japanese Denso Wave company, and it is “open” in the sense that the company does not exercise their patent on the technology - meaning that the standard is essentially “free.”

Business Models. Companies like Scanbuy and ShotCode that utilize a proprietary code format primarily make their money by charging brands to create the codes, as well as redemption fees (which are levied every time a consumer scans one of their codes). This is in stark contrast to the “open” format model, where the printing of codes, “scans” and even some cases the readers themselves are all essentially free. These companies primarily make their money by either bundling in other, related mobile marketing services (such as SMS or mobile website creation and hosting), as well as charging for analytics services quantifying QR campaign performance.

Now, you may be asking yourself, “Why would a brand would pay to use a proprietary 2-D code format when they can essentially use an open format for free?” Well, for now the issue is scale: The install base on proprietary readers is greater than that of the “open” readers. That said, with the coming of Android handsets this Fall (all of which will include an “open” QR reader preloaded on the device), the real question is how long will the proprietary readers be able to maintain their advantage…

In the meantime, competing standards are the price one pays for innovation. Let us hope these issues resolve themselves soon, as the quickest way to kill this exciting new market is with fragmentation. I think we can agree that requiring users to have a half a dozen or so readers installed on their phones is a nightmare we’d just as soon avoid.

This entry was posted on Monday, May 19th, 2008 at 6:30 am and is filed under qr codes, scanbuy. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.