Maybe it's my middle class New York upbringing which causes me to overvalue the Zagat brand but go back 10-15 years and there was no one else who had nailed local wisdom of the crowds quite so elegantly as Tim and Nina. Zagat became the default arbiter of taste, selling many of their little red books. My guess is that the product extensions into shopping guides was marginal at best but overall the business is probably an enduring cash cow. They've got a subscription-based website and are moving into mobile. But at the end of the day, those books are driving all the revenue.
Which is why i'm not surprised they failed to do more with it. A private company throwing off big $? Likely not too much of an urge to take risks. Reminds me of how James Hong at Hot or Not talks about the few years where they just sat back and collected dough.
What could they have been? Well, how about craigslist + yelp? They had the concept of user gen before it became trendy and great brand that could have stretched. At the very least open up that website and make it ad-supported. Trust me, it's not going to cannibalize the book - better to eat your own lunch than have someone else come and take it.