Why the web is a haven for the down at heel

The internet is the global network par excellence, bringing its members together on an equal footing. Yet despite its power to mobilize the masses, as recently illustrated by the revolts in the north of Africa, the internet could also be creating a new breed of self-sufficient, self-contained individuals who spend much of their time glued to their various screens (netbooks, laptops, cellphones and so on) and satisfying their socializing, administrative and entertainment needs without actually leaving their homes. These new "digital hermits" have a nearly infinite array of entertainment options at their disposal, from movies to music and videogames. They can download thousands of applications on to their electronic gadgets and enjoy free (or nearly free) services at the click of a mouse.

'Word of mouse' on online shopping works better than word of mouth

Over 90 percent of surfers choose a free platform for their online activities

In this new ecosystem born out of the recession, the world wide web is proving to be much more flexible than the physical world. What it has to offer is more diverse, more accessible and often much more affordable. Legally or otherwise, the virtual universe is building up a growing catalog of free or very cheap goods and services. This low cost market is well adapted to the needs of increasing numbers of "mileuristas" (literally, individuals who earn

1,000 euros a month), the unemployed and pensioners with low purchasing power and few chances of improving their economic situation in the short term.

The exact relationship between internet use and major economic benchmarks like unemployment rates or GDP growth has yet to be explored, but the fact remains that the recession has not made a dent in online activity - in fact to the contrary. The volume of e-commerce just broke a new record for the sixth consecutive time. In the third quarter of 2010, turnover reached 1.9 billion euros, representing a 26.5-percent increase from the same period in 2009, according to the Telecommunications Market Commission.

In countries like Spain, where the crisis has hit particularly hard, consumption of online content and social networking has shot up. Spain now ranks seventh-highest in social network usage: 60 percent of users consult them every day, and the average time spent on them more than doubled in the last year, representing 22 percent of all internet use compared with 10 percent a year earlier. According to Comscore, in 2010 Spain registered the fourth highest growth in online social networking in Europe.

It would be risky to extrapolate that the internet, and more specifically online social networks, are a refuge from the crisis that allows the worst hit -at least virtually - to still feel part of a society that has pushed them out of the labor market.

"We only have time for five or six close friends, and those are the people we still socialize with in person," says Anabel Dodd, an expert at the Bankinter Innovation Foundation. "But when we are going through a personal or professional crisis, it's fantastic for everyone to be aware of it through Facebook or Twitter and be there to offer you support."

In opposition to this optimistic take on things, some observers feel that this explosion of social networks is detrimental to our natural sociability. "There is a growing segment of the population that basically uses these networks as an island in the ocean of the web; that is to say, their surfing is restricted to the communities that they are affiliated to.

In other words, the consolidation of the Facebook phenomenon is creating an ecosystem in which some users are akin to captives. This is a worrisome trend as it contradicts the very definition of the internet as an open space for knowledge and accessibility," says Carlos Lozano, executive president of AIMC, which regularly issues Navegantes en la Red (or, Web Navigators) , a snapshot of Spanish netizens.

But there is a more evident reality beyond these anthropological digressions, and that is the use of the net as a market for goods and services, which levels out the playing field. "Internet allows for the democratization of information," says Gustavo García, co-founder and CEO of BuyVip, a private shopping club. "There is better access to special deals and very ample information about what is being purchased. (...) Internet makes society more equal because everyone has access to the same amount of information."

It's revealing to note that unemployed people have not turned their backs on the internet, in fact they are more addicted to it than ever. Although as a group they still lag behind self-employed workers or students in overall online use, the jobless are the cohort with the highest growth rate in frequency of internet use. This figure climbed from 27 percent of the unemployed community in 2005 up to 43 percent in 2008, and 55 percent in 2010, according to a study by the National Statistics Institute INE.

The jobless do not only seek online entertainment. With a public unemployment system as cumbersome as it is inefficient, the world wide web is also the main channel for up-to-date job listings. Around 27 percent of companies use online job services, while 15 percent of candidates post their resumés on social networks, according to the Informe Infoempleo 2010 report.

"Internet is better optimized than the physical market for just about everything," says Alejandro Suárez, founder of the Ocio Networks blog.

While freebies are not necessarily what all web surfers are after, for mileuristas they may meet a real need. And the internet is there to meet this demand. Regardless of the legal and ethical issues underpinning the practice of downloading copyrighted material (an insignificant debate for most users), the fact remains that websites like SeriesYonkis and CineTube provide a free catalog of movies and television series whose sheer scope would be unimaginable for physical stores like FNAC or El Corte Inglés. Furthermore, it's cheaper and more convenient than going to the movies. In 2010, movie theaters saw revenues dwindle 3.9 percent, and for the first time the number of moviegoers fell to under 100 million, according to the Federation of Spanish Movie Theaters FECE.

This cost-free miracle is also applicable to music (Spotify, Last.fm and so on) and is now beginning to extend to cellphone communications. In 2010, Apple and Google's virtual stores (App Store and Android Market) doubled and sextupled, respectively, the number of their available fee-paying applications. But free ones grew 44 percent faster than fee-paying ones, according to the 2010 Distimo report. Of the three million applications downloaded daily in the US last December, only 350,000 were paid for.

Over 90 percent of users choose free options for their main online activities, from reading the news to listening to music, says the Navegantes en la Red survey. Is "free" an intrinsic trait of the internet, or will it eventually come to an end like all promises of heaven on earth? Lozano of AIMC thinks that the concept of totally free goods and services "is probably one of the internet's greatest drawbacks, because it stresses that the only consolidated business model to date is the one based on advertising revenues only. This creates a great risk, especially nowadays when the advertising sector is weak and most of the market share goes to conventional media, especially television (which hogs 42 percent of the advertising pie)."

While the kinks in the business model are being ironed out, the internet reinvents itself daily to offer things for free that used to have a price, and not necessarily a low one, either. Mobile operators, whose profit margins were upwards of 50 percent, are feeling the effect on their bottom lines. Social networks and applications like WhatsApp, Viber, Skype and Google Talk enable people to send messages and talk nearly for free on their cells. The result is a huge drop in SMS use among web surfers: 42 percent for people 35 and over and 38 percent for younger users.

For this assemblage of young (and not so young), overeducated and underpaid people, the internet is a gateway to a consumer paradise that explains why, for the first time, users' main concern is the price of their connections, rather than speed or quality, according to the latest AIMC survey.

Brands are aware that they must look for their future customers in this niche. Around 86 percent of Facebook users say they interacted at some point with a brand, either signing up for a sponsored event or becoming a fan. Independently of the social network that was used, Coca-Cola was the best-remembered brand, according to a study by The Cocktail Analysis.

Original online fashion stores and outlets like Privalia, BuyVip and Vente-Privee.com have recently been joined by the big players in the traditional market. Zara opened its online store last September and has already extended it to 16 countries, while department store El Corte Inglés just launched its Primeriti club.

Many people claim that consumers are actually better protected online than they are at traditional brick-and-mortar stores. "The advantage of buying online is access to unlimited information at any time of day regarding the price or the quality of a given product. This is definitely something that offline stores do not offer," says Yaraví López-Petersen, in charge of sales for the website Ciao in Spain.

Lozano says that the internet is a nimble, accessible search-and-compare platform. "Besides that, companies have to deal with WOM (word of mouth or word of mouse), an important element for better or for worse. Around 73 percent of web surfers have consulted other people's opinions online, and nearly 50 percent of them really trust this information system."

There may be a correlation with the crisis, but the web follows its own natural growth patterns. "There are two things that power nonstop growth of online revenues: the first is that the medium is far from mature (there are an increasing number of people buying more things from more suppliers), and the second is that in a crisis economy, consumers look for the best deals. The internet is an enormous market with specialized discount channels, outlets and so on, and it is easy to find stocks. In a situation like the present one, consumers really value that," says José Luis Zimmermann, director of the Spanish Association of the Digital Economy.