When San Francisco watering hole The Boardroom signed up last year to capture video at the bar and stream it live to the Web, manager Casey Gray liked the idea as a way to promote new business and remotely check in on what was going on.

So much for the best laid assumptions.

"At the time we didn't have any security cameras here, so it provided a service to me. I could hop on the phone and see what the bar was doing," Gray said in a phone interview from The Boardroom, which straddles the city's North Beach and Telegraph Hill neighborhoods. "I had 24-hour access, but the video might only show to the public for a few hours a day" on the Web. The service he was using was called BarSpace.

But after customers complained -- including several male patrons who expressed concern that their girlfriends could check up on their activities via the video stream -- The Boardroom turned off the camera after only a few months of operation.

"We stopped it because it was creepy and people didn't like it," Gray said. "There was push back from a lot of different people."

In what must feel like a deja vu moment, Gray is letting another startup put video cameras in another bar called Tope, which he owns. Only this time there won't be any streaming video of embarrassing or relationship-destroying bar room shenanigans.

Call it a sign of the times. Tope is one of about 20 bars launching a service called SceneTap in San Francisco on Friday. This may just be the start. SceneTap could conceivably prove useful for a variety of retail companies, providing data on when customers shop in stores, what items they browse, and other in-store behaviors and patterns. But it also raises expected hackles of privacy watchdogs who worry the data could be combined with a person's online footprint to do what even Google can't do right now -- match your Internet activities with your offline world. (Oh wait, they could do that by using SceneTap in Google Street View cars!)

I left my personal data in San Francisco

SceneTap's devices, located near the front entrance, keep track of the number of people who enter and exit a venue and use facial detection software on video feeds to figure out what gender and age customers appear to be. It provides that traffic and demographic information to bar owners who can design marketing and other promotions to target specific audiences, while users of the SceneTap app can see which bars in their area are "hopping."

That seems to be a far cry from sending live video to the Internet like the BarSpace service did, yet SceneTap has hit a a nerve in San Francisco, touching off a frenzy of criticism on blogs and social media sites.

"The people here care about our bars and clubs, we care about each other, and we take our privacy seriously around here," writes Violet Blue, a blogger at CNET sister site ZDNet. "We also know a lot about tech, so a startup that rolls in to carpetbag an invasive app space into clubbing is -- in most ways -- doomed to fail. There isn't much SceneTap could have done to smooth over the idea of putting cameras into bars -- in this city, anyway."

Managers of several bars in Chicago and Madison, Wis., where SceneTap has already launched, told CNET that they had not received any privacy complaints regarding the video cameras' presence in the bars. The service is also operating in Austin, Athens, Ga., Bloomington, Ind., and Gainesville, Fla., according to the company's Web site.

If SceneTap is getting this much heat before its San Francisco launch, how did BarSpace fare? Its domain is up for sale and the app is nowhere to be found.

BarSpace co-founder Michael Deignan told CNET that he and the other founders moved on to other ventures and shut down the service earlier this year. It had launched in 2009. "Up until we turned it off we had great traffic and a lot of customers," he said. "It made more sense to go over to a new company while it is hot and get it started. It's a resource issue."

Asked if there had been privacy complaints or lawsuits filed over the streaming video, Deignan said: "There were no lawsuits and no complaints. If there were, it's nothing I heard about."

In fact, the startup got a spike in business following reports in The East Bay Express and the San Francisco Weekly last July that BarSpace was streaming from nearly 50 bars, he said. "It wasn't anything like the shit storm SceneTap is dealing with."

Even though live video is perceived as more invasive, BarSpace's video was taken of the whole room and not close up, and it was grainy with faces were blurred out, according to Deignan. Whereas, SceneTap appears to be doing data mining, he said, adding "Have you seen 'Minority Report?'"

Andrew Nieman, director of business development at SceneTap, assured CNET that SceneTap is neither a reincarnation of BarSpace, nor a scene out of a scary sci-fi movie.

"We are not a check-in aggregator. We don't show you what people are doing there. It's a snapshot of data. It's like getting a text message from a friend" who is in a bar describing the scene, he said. "We don't record anything. We don't want to have the liability of having anything recorded and it would be expensive to store all the feeds in the cloud...Our system offers a lot more anonymity."

SceneTap is using facial detection software, which gathers 12 data points off an image, as opposed to facial recognition software, which grabs 36 data points, according to Nieman. The data contains information related to facial characteristics and compares that to a data base of generic faces belonging to a wide range of anonymous people and looks for the closest match, he said.

Just because SceneTap isn't doing more advanced facial recognition, which is used to identify specific faces, and doesn't store the data or stream it live now, does not mean it doesn't have the ability to add those capabilities or won't at some time in the future. Did anyone ever think Google circa 1999 would be so much more than just a search engine?

"I don't see us needing to go to that level or wanting to," Nieman said. When pressed later for additional comment on criticisms that the company's spectre could evolve, he provided this statement: "SceneTap has no intention to use any type of facial recognition technology. If facial recognition, not to be confused with facial detection, becomes mainstream in the future and widely used commercially across an array of industries, we will assess the situation at that point."

Smile for the camera

A big privacy concern with facial recognition is that it will be matched up with data in the cloud and thus identify you, and in many cases out you, depending on where you are or what you're doing.

"Even if they are warned, it's a bar. People's expectations of privacy in a place like that are" high, said Sarah Downey, online privacy analyst at online privacy firm Abine.

Many bars have security cameras installed, and no one seems to mind those. But, so far, their use has been as a deterrent or to rewind for crime investigations. "This is not security," said Downey, who created a rundown on facial recognition technology. "This is people watching."

James Martin/CNET

In the rush to create innovative mobile apps and services, developers are failing to adequately understand the difference between activities and spaces that are public versus those that appear to be public but are considered private in context, said Jules Polonetsky, director of The Future of Privacy Forum. "We expect to be able to be obscure in public. We get that we are in a crowd, but we still don't believe that everyone of us is such a celebrity that whenever we step out of the house it's fair game for the app developer to use the data," he said. "Folks are trying to figure out what the lines are and it's not clear. That's why we see app developers pushing the envelope and causing a backlash."

The brouhaha over the privacy implications with SceneTap is causing at least one San Francisco bar owner to reconsider the decision to use the service.

"I'm almost about to yank the whole thing," said Colin O'Malley, owner of John Colins in the city's South of Market district. "I didn't think it was that big of a deal."

His plan has been to give it a shot for the three-month free trial and see if he's really getting enough valuable information about customer demographics. But not if customers complain.

"If it's too invasive for people, hey, I'm a man of the people and we'll yank it out," he said. "If it starts to affect my business, it's not worth it."