A Latino Internet Revolution

Patricia and Jose Cucufate bought their first computer 18 months ago, eager to keep their three children competitive in the classroom and gain them entry into the Information Age. But Patricia soon left her kids in the dust. With computer prices plunging, she purchased a second machine last year and kicked her business into high gear.

Today she receives about 30 online requests a week for shipments of her restaurant’s pupusas--Salvadoran corncakes stuffed with cheeses, pork and loroco, a Central American palm blossom. The restaurant’s Spanish-language Web site offers a menu and maps directing customers to Los Chorros’ two locations in Inglewood and Hawthorne. An online order form will soon let Internet customers buy frozen pupusas with the click of a mouse. Queries have come from Panama and Mexico, as well as from homesick Salvadoran emigres in Washington state.

Cucufate boasts that Los Chorros may be the first Salvadoran eatery in cyberspace. But she is an unknowing trendsetter in other ways--part of a virtual Latino stampede into the online world.

Once separated from the American mainstream by a vast digital divide, Latino households are now purchasing computers at twice the rate of the overall population. They also are connecting to the Internet at record rates. Though only 2% of U.S. Latinos were online in 1994, 15% of Latino households--or an estimated 4.5 million users--were connected in 1998, according to one recent study. The surge moves Latinos closer to the roughly one in four American households online. Other studies reveal an even higher percentage of wired Latinos accessing the Internet through work, school and libraries.

The statistics have dealt a swift blow to the long-held notion of Latinos as low-tech, triggering a rush to cater to the new consumers both in Spanish and in English.

“The explosion has been just mind-blowing,” said Arturo Villar, publisher of Hispanic Market Weekly, a New York-based trade publication. “There was a misconception . . . about Internet usage and computer purchasing by Hispanics in the U.S. and by Latin Americans.”

A key pioneer of the Latin Internet is StarMedia Network Inc., a New-York based Spanish- and Portuguese-language portal that went public last month and saw its shares nearly double in the first day of trading. Monday the company’s market value topped $2.6 billion. The company first gained its footing with customers in Latin America. Competitor Quepasa.com, a Phoenix-based start-up targeting U.S. Latinos, is expected to launch its public offering in the coming weeks after a months-long promotional blitz on Spanish-language radio and television.

Other portals--one-stop Web sites that serve as gateways to the Internet and feature targeted content and services--are pulling in private capital, tailoring services to everyone from Spanish-speaking immigrants who crave news of their home countries to acculturated Latinos who prefer their content in English. Mainstream corporate players such as Yahoo Inc., America Online Inc. and Prodigy Communications Corp. have joined the mix, along with several Spanish-language media conglomerates.

The prospect of a Latino online revolution is also enticing the advertising world, which views the Internet as a promising way to target a diverse and fragmented community with an estimated $340 billion in annual U.S. spending power.

“Once the content becomes relevant, it is the perfect medium, because you can deliver such segmented interests,” said Tony Dieste, president and chief executive of Dieste & Partners, a Dallas-based Latino ad agency. “You have Los Angeles Mexicanos, Tejanos in Texas, Central Americans in Chicago, Cubans in Miami, Puerto Ricans in New York.”

The same week as StarMedia’s public offering, Dieste launched Samba Interactive, which will build brands for Latinos on the Internet through Web advertising and kiosks in Latino neighborhood malls. Most ad agencies in the mainstream market have already formed or acquired interactive divisions, but Samba is the first in the Latino market.

Dramatic Transformation

Already, the cyberworld is transforming the Latino community. Chat rooms and discussion groups are allowing English-speaking Latinos in Ohio suburbs to engage in political debate with big-city peers on San Francisco-based LatinoLink’s site. Spanish speakers in Miami, Spain and Argentina banter about vampire novels through Miami Beach-based Yupi.com. And Latino cultural events posted on the Web are drawing Netizens from surrounding states.

“You have gay Hispanics online, you have women, . . . poets, political people and social organizations,” said Isaac Cubillos, founder and editor of San Diego-based Latino Beat, an English-language news and information service. “You’re seeing the whole community coming together.”

Entrepreneurs like Cucufate are tapping into long-distance commerce through MundoLatino.com, a mall created by Duarte-based Web Enterprises that aims to link entrepreneurs here with Latin America and Spain.

“I think [the Internet] will take us to the next level,” said Cucufate, who for Mother’s Day bought her mother an online Pizza Hut pizza, delivered shortly thereafter to her San Salvador home.

The spread of Internet technology to the nation’s 30-million-strong Latinos--many with global ties--heralds a new era for communications, said Ana Maria Fernandez Haar, immediate past president of the Assn. of Hispanic Advertising Agencies.

“The Internet is the ultimate border-less Hispanic market, and in that case it’s the biggest market in the hemisphere,” she said. “Current numbers indicate that the growth is taking place now--geometrically.”

Key to the boom is the growing number of computer owners and Internet users in the Latino community, which in 1994 lagged nearly a decade behind white non-Latinos, according to the Claremont-based Tomas Rivera Policy Institute. The institute began tracking the issue in 1996 to ensure Latinos access to the information superhighway.

A report released last year showed a dramatically shifting landscape, with Latino households accessing computers at nearly double the rate of non-Latino homes. While only one Latino household in eight possessed a computer in 1994--compared with one in four for the nation as a whole--an estimated 30% of Latino households possessed a computer in 1998. About half of U.S. households overall are believed to have computers now, studies show.

The studies also showed that while only 2% of Latinos were online in 1994, 15% were connected in 1998. Other studies show even greater growth: A March study released by Forrester Research Inc. in Cambridge, Mass., showed 36%--or 3.3 million--Latino households online at the end of 1998, compared with 33% of all U.S. households. Skeptics call those figures overly optimistic but say a steady growth among Latino users is undeniable.

“Latino households are probably the fastest-growing” among Internet users, said Jeffrey Cole, director of UCLA’s Center for Communication Policy, which recently announced plans for a long-term study to track Internet use in 18 countries. The U.S. study will also be conducted in Spanish.

Statistics on Latin American users have been equally explosive. Figures compiled by IDC, a Framingham, Mass.-based market research company, projected 7 million Internet users by the end of 1999, a figure expected to grow to 10 million next year. Other studies place the current number of Latin American Internet users at 13 million.

Key to the growth here are falling computer prices and an emerging Latino middle class accessing technology through home, college and work. A full 77% of Latino Internet users in the Tomas Rivera study had gone to college, and 40% earned more than $50,000 a year. Of college-educated Latinos, 66% owned computers in 1998, up from 39% in 1994.

“The booming economy we’ve had . . . is a rising tide that has lifted all boats, and more Hispanics have come into the middle class,” said Tomas Rivera President Harry P. Pachon. “Forty percent of computers last year were below $999, and those two trend lines came together.”

The sudden celebrity of well-capitalized players such as StarMedia, Quepasa and Yupi.com has given the industry a burst of momentum. But some smaller players have been chipping away at the market for years.

“I’m feeling vindicated lately,” said LatinoLink President Lavonne Luquis, who launched her company in 1995. “People are finally realizing that Hispanics are indeed online.”

It wasn’t always so.

Five years ago, Allan Ortegaray called a group of friends to his Walnut living room to talk about the future. The Nicaraguan-born Ortegaray, who ran a computer repair and sales company, saw the Internet hatching and wanted to bring it to fellow Latinos.

Of all who gathered at his home that evening, only one signed on to the task--fellow Nicaraguan Tito Lagos. Together they launched Web Enterprises, designing business sites and later creating MundoLatino to promote them. They also held seminars for Central American entrepreneurs.

“The people did not know the Internet,” Lagos said. “They didn’t know if it was a food or an antibiotic or what. . . . We had to do little drawings and explain what is ‘www.’ ”

Fast forward and the picture changes distinctly.

Eduardo Vertiz couldn’t get through lunch recently without his cell phone ringing. “We just got another site,” said Vertiz, director of business development for Woodland Hills-based NetFuerza, the only U.S. Internet advertising representative dedicated to the Latino market in the United States, Latin America, Spain and Portugal. The company helps Latino-oriented Web sites secure advertising.

A division of AdSmart, NetFuerza was formed last fall just as StarMedia raked in $80 million in financing from the likes of Chase Capital Partners and David Rockefeller. NetFuerza has since seen its number of clients grow to 50, from just four in December, although StarMedia is not among them. The lunchtime addition: Hispanico.com, a Pittsburgh-based site that sells Latino books music and videos.

Many of the big portals began their odyssey in the burgeoning Latin American market and are just now turning to Spanish speakers here.

StarMedia co-founder Fernando Espuelas was first on the scene in 1996, building brand dominance in Spanish and Portuguese-speaking Latin America for his portal, which offers e-mail, chat and discussion rooms, as well as searches and guides to the Internet. StarMedia’s move to New York gave it access to capital markets and the ability to lure U.S. Latinos into its pan-regional mix.

“What I saw was a moment in history--the opportunity to reunify the Latin community across the world,” Espuelas said.

A number of competitors have since emerged in Latin America or are expanding there from Spain. Others have headquartered here, with strategies to sweep the Spanish- and Portuguese-speaking worlds, including U.S. Latinos in the mix.

Smaller Players at Disadvantage

The global approach has paid off in volume. Yupi.com, which last month acquired entertainment and online community site Ciudad Futura, boasts of 80 million page views a month, StarMedia 60 million.

But others warn that U.S. Latinos--even those who want Spanish services--will ultimately favor content that addresses their multiculturalism. Bilingual Quepasa.com, the Phoenix start-up, is banking on that. In recent months, the company has teamed up with potentially powerful partners, including Spanish-language television network Telemundo, which owns a stake in the portal and will provide some content and advertising.

Smaller players are also vying to serve more-acculturated Latinos. And others yet are weighing in with niche sites that cater to distinct interests or geographic zones.

“Even my sister is going to launch a competitive service,” joked StarMedia’s Espuelas.

The myriad small players, however, may find themselves in a crowded market once media giants with greater resources and technology savvy move in.

Yahoo is already serving Spanish and Portuguese speakers. America Online recently partnered with a Venezuelan media conglomerate to target Latin America. In April, Prodigy launched a Spanish-language version of its Internet access service for U.S. Latinos. And leading Spanish-language television network Univision is expected to launch Univision Online this fall, tapping the network’s entertainment expertise.

Other online services catering to Spanish-speaking Latinos are cropping up almost daily. Last month, for example, Bloomberg launched Negocios Bloomberg, a bilingual personal finance portal for U.S. Latinos. But Pachon and others say the digital divide--while closing--is still broad.

Middle- and upper-class Latinos may be catching up fast, but lower-income Latinos still lag noticeably, Pachon said. To change that, technology--and instruction--must be more available through schools, libraries and community centers, he said.

Furthermore, hardware and software manufacturers have overlooked the Latino market in the U.S., pushing products more forcefully to Spanish speakers in Latin America, industry watchers say.

“There’s a misconception that the Hispanic in the U.S. is a poor immigrant with lack of resources, and monolingual,” said Gene Bryan, president of HispanicAd.Com, a news site for industry professionals launched in February. “That has thwarted the interests of major corporations that have focused [instead] on Latin America.”

Others point out that the Latino Internet landscape remains wide open, despite the recent frenzy. Specialty niches must be filled if the online world is to become as indispensable to Latinos as it has to the mainstream population.

“The more sites we can create, the more we can generate a buzz about this,” said Markos Alberto Moulitsas, a Boston law student who founded the online Latino/Hispanic News Service last year.

This fall he will join San Francisco-based VivaMedia, which last month launched Picosito.com, a bilingual portal targeting acculturated Latinos in the U.S.

“People are starting to realize we’re the largest minority group in this country if you include the undocumented, and there’s nothing out there. If you try to find a Latino sports site, there’s nothing, which is bizarre because there’s a site for everything. There’s not even a [Latino] Sammy Sosa fan page.”

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The Booming Latino Internet

A sampling of Internet portals, directories and Web sites catering to Latinos here and abroad:

U.S. corporate players

America Online, in a joint venture with Venezuelan media conglomerate to enter Latin American market.

Yahoo’s Yahoo en Espanol at https://espanol.yahoo.com and Portuguese-language Yahoo Brasil at https://br.yahoo.com.

Prodigy Communications’ Spanish-language version of the Internet access service at https://espanol.prodigy.com/. Part-owned by Mexican investor Carlos Slim Helu, who also owns controlling stake in phone giant Telmex and part of online U.S. music retailer CDNow.

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Targeting national audience

QuePasa.com, Phoenix-based Spanish- and English-language portal at https://www.quepasa.com.

Oyeme.com, New Jersey-based Spanish- and English-language portal at https://www.oyeme.com.

Picosito.com, San-Francisco-based Spanish- and English-language portal at https://www.picosito.com.

LatinoLink, San Francisco-based English-language portal at https://www.latinolink.com.

LatinoWeb, Montebello-based English-language directory at https://www.latinoweb.com.

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Latin American portals

Infosel en linea, Mexico City-based portal and Internal service provider at https://www.infosel.com.

Universo Online, Brazil-based portal at https://www.uol.com.br.

El Sitio, Argentina-based portal at https://www.elsitio.com.

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Niche sites

Latino Beat, San Diego-based English-language news and information service at https://www.latinobeat.net.

LatinoLA.com, Los-Angeles based English-language arts, culture and community site at https://www.latinola.com.

LaMusica.com, New York-based English-language Latin music site recently acquired by Miami-based radio conglomerate Spanish Broadcasting Systems, at https://www.lamusica.com.

Musica Virtual Online, Los Angeles-based Spanish-language Latin music site at https://www.musicavirtual.com.

Negocios Bloomberg, bilingual personal finance portal for U.S. Latinos launched by Bloomberg at https://www.negocios.bloomberg