Privacy was a key concern, Sheridan says, because, while the band wanted to communicate with nearby fans, members didn't want to give away their exact location, such as the hotel where they were staying. Sheridan says he came up with a toggle that added "location fuzziness," which randomized users' location within a mile radius.

Superglued--another app for the iPhone--filters status updates and pictures by proximity to help fans find information relevant to a particular event. Rush Doshi, cofounder of the company behind the app, says new features will let fans meet up at shows.

An application for iPhone and Android designed for the upcoming Lollapalooza music festival will include features that allow attendees to see their friends' locations at the event. "One of the biggest things people are trying to do at these festivals is keep up with and connect with their friends," says Michael Feferman, digital marketing director at C3 Presents, which produces the event.

Face2face is hoping to show that proximity data can be useful whenever a person is out and about, not just at a special event. This could also extend the reach of location-based advertising. However, providing such advertising is useful, Coté feels users won't mind. "If it told me where to get a good happy hour special with some friends I hadn't seen in awhile, I'd be glad to see another Progressive ad or hear what The Most Interesting Man in the World had done at the bar I'm at," he says.