The location-based applications Foursquare and Gowalla–which reward users with points for “checking in” at different places–are all the rage in some social groups. But many other people balk at sharing their precise location and struggle to see the point of doing so. A new location-based application for mobile phones called face2face hopes to attract new types of users by offering more filtered, useful information and providing more privacy controls.

“Location is more a platform than it is a particular service,” says Hameed Khan, CEO and lead developer of face2face. In other words, simply sharing location information isn’t enough–it also needs to be incorporated into a useful application. His application doesn’t require people to sign up to a new social network in order to use it. Instead, users can tap into their connections on Facebook, LinkedIn, MySpace, and Twitter–then see if any of their connections are nearby.

Unlike some services, which bombard users with the location of everyone in their social network, face2face only notifies users when a contact is nearby, and it does not give out that contact’s exact location. This is a subtle difference, but an important one, according to Khan. “We want to look just at what’s within walking distance, so oversharing doesn’t ruin it,” he says.

The application also comes with privacy settings that let users decide if they want to be invisible to others, and who they want to share their information with. Once users know they’re near each other, the application lets them communicate, by text, phone, or messages on a social networking site.

Khan says users need a good reason to share their location information, and developers need to assure users that their location will only be shown to people they trust, and that this will be done in a way they can understand and control. Khan adds that social and location information can also make advertising more relevant. For example, in the future, instead of simply offering coupons to nearby coffee shops, his app may offer coupons to a coffee shop where a friend is already sitting.

But some say proximity-based services could make targeted advertising feel more invasive. “We’re gallivanting into finally commercializing one of the last parts of life that isn’t filled with ads: friendship and hanging out,” says Michael Coté, an IT industry analyst with the research firm RedMonk.

Others, notably in the music industry, offer location-based applications that are more clearly useful. An early example was an iPhone app for the band Nine Inch Nails that filtered posts from users based on proximity. Fans at the same show could use the application to communicate with each other and the band. Rob Sheridan, the band’s creative director, says: “It was perfect for us as a band on tour, because we have events where our fans gather together in close proximity, and I’ve found that events really are the best use for this type of thing.”

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.