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If you, like many others, have made a new year’s resolution to learn a new language at any point, you’ve likely heard of Duolingo. Its method of language learning through a free, game-like app has taken the world by storm. But how does Duolingo make money if its app is free?
In this article, we’ll discuss how Duolingo operates, how it creates revenue, and how it stacks up against the competition.
Key Takeaways
Duolingo makes money through paid subscriptions, ad revenue, and selling translation data.
Duolingo started as a way to help websites translate their content into other languages while giving app users free language learning lessons.
Duolingo offers more languages and has more users than both Rosetta Stone and Babbel.
In This Article
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- What Is Duolingo?
- How Does Duolingo Make Money?
- Duolingo’s Business Model: The Brilliance of Crowdsourcing
- How Is Duolingo Funded?
- Why is Duolingo So Successful? The Gamification of Learning
- So, Where Does the Extra Money Come From?
- What Languages Does the App offer?
- How Does Duolingo Match Up Against the Competition?
- Duolingo for the Greater Good
- Duolingo FAQ
- Sign Up For More Advice and Jobs
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What Is Duolingo?
Language learning platform Duolingo is the brainchild of CAPTCHA and reCAPTCHA creator Luis von Ahn, and co-founder Severin Hacker, who was von Ahn’s grad student at Carnegie Mellon University in Pittsburgh.
Duolingo comes in the form of a smartphone app and is the world’s hottest language-learning tool. It allows users to learn a new language while translating sentences and words into different languages to be used across the web,
How Does Duolingo Make Money?
The short answer here is that they don’t. At least, not yet. The company isn’t profitable but was cash flow positive in 2019. Von Ahm is planning for an IPO by the year 2021.
That being said, the company does bring in money. It does this in a number of ways. From selling data (that the users provide) to premium subscriptions to ad revenue from the free version of the app.
Duolingo’s Business Model: The Brilliance of Crowdsourcing
Other language learning tools, Rosetta Stone, for example, have historically been only available to those with the disposable income to fund their learning. One thing that von Ahn wanted in this product was that it be available to people of all socio-economic classes. And he did that by making it free.
The second part of the Duolingo business model is Crowdsourcing. Von Ahn’s former company, reCAPTCHA, was a trailblazing effort in the world of Crowdsourcing. The program would present users with two words, one that his algorithm was having trouble deciphering and one that was in place to verify that the user was a human.
By typing the verification word correctly, reCAPTCHA then had confidence that the user typed the other word correctly, and thus, it had been discovered. Duolingo is doing something very similar.
Von Ahn’s goal with Duolingo, and his research, is to make the web accessible to people everywhere, no matter what language they speak, read or understand. He created Duolingo to crowdsource people from around the world to translate the web for him. And do it for free.
But it isn’t a one-way street. The users of Duolingo get something in return. They get to learn a new language. Science has proven that Duolingo’s teaching methods actually work. So not only does the web and von Ahn win, but the users become fluent in languages they want to learn.
How Is Duolingo Funded?
Venture Capital-Backed with a Plan for the Future
Because of his previous successes, von Ahn didn’t have a whole lot of trouble getting investors to jump on board the Duolingo train. Some of the main VCs that got on board with Duolingo were Ashton Kutcher, Tim Ferriss, Kleiner Perkins, CapitalG and Union Square Ventures.
Only about 2% of Duolingo’s active user base pays for the premium version of the app. The fee is $84 a year. But because their base is so huge, that is revenue upwards of $36 million. Von Ahm expects that that number will only grow as more users realize the value of the app and support it with premium subscriptions.
Why is Duolingo So Successful? The Gamification of Learning
The same reason why Candy Crush and arcade-style video games are so successful. They are easy to start, offer a recess from daily boredom, and are, frankly, fun to play.
Duolingo is a lot like those games in many ways. It has virtual prizes for getting things right and reaching milestones. It sends you notifications when you haven’t logged on in a while. And it progressively gets harder as you go.
So, Where Does the Extra Money Come From?
Put simply, crowdsourcing mass translations.
One of the unique ways that Duoling has generated revenue is through the sale of user data to companies like Buzzfeed and CNN. But this isn’t data that was taken in secret from the users, it is data that the users are providing Duolingo.
The data is translated words.
They use sentences from sites across the web that they want to have translated, and have users translate the sentences for them. They are able to sell the translated articles to companies that want to broaden their audience and go global.
What Languages Does the App offer?
Duolingo offers 36 different languages. There are the most common language courses, such as Spanish, French, English, German, Italian, and Portuguese. But Duolingo also offers a wide range of uncommon language courses. They can do this because of their crowdsourcing business model.
Some of the languages they offer that aren’t ones you might see in other services are:
Esperanto
Klingon
Navajo
Hungarian
Haitian Creole
Yiddish
Maori
Finnish
How Does Duolingo Match Up Against the Competition?
Duolingo’s most notable competition is probably Rosetta Stone. But there are other companies that offer similar services for learning new languages. The Berlin-based company Babbel is also in the mobile linguistics business but differs from Duolingo in the fact that they charge users an $85-a-year subscription fee.
Compare that to Rosetta Stone’s $120-a-year subscription, and that free version of Duolingo isn’t looking too bad. And that is exactly what language learners all over the world think.
Duolingo’s worldwide usership blows its competition out of the water. Rosetta Stone has roughly 500,000 active subscribers, while Babbel boasts around 1 million. Duolingo’s active usership is upwards of 38 million.
While the disparity could be down to the fact that Duolingo is free where those others are not, there are a few other differentiating factors at play that could be deciding factors. For one, Duolingo offers more languages than its competitors. They offer 36 while Rosetta and Babbel offer 25 and 14, respectively. Another factor could be that Duolingo is just a bit easier.
Duolingo for the Greater Good
Duolingo’s mission is philanthropic and its approach is genius. They get to offer free access to language education, which is something that can change lives for the better. At the same time, they make the wonderful resource that is the internet more accessible to people that it, in the past, has not been accessible to.
Duolingo FAQ
How much does Duolingo make a year?
Duolingo makes about $250 million a year. In 2021, Duolingo reported $250.77 in revenue, which is an increase of 55% from 2019, when it made $70.76 million.
What percentage of people finish a Duolingo course?
Less than 1% of people finish a Duolingo course. This number is higher or lower depending on the language being learned, but studies show that 0.01% of Spanish language learners finish their Duolingo course.
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Author
Chris Kolmar
Chris Kolmar is a co-founder of Zippia and the editor-in-chief of the Zippia career advice blog. He has hired over 50 people in his career, been hired five times, and wants to help you land your next job.His research has been featured on the New York Times, Thrillist, VOX, The Atlantic, and a host of local news.More recently, he's been quoted on USA Today, BusinessInsider, and CNBC.
As someone deeply immersed in the realm of language learning platforms and technology, I can affirmatively assert my expertise in the field. I've closely followed the evolution of language learning apps, including Duolingo, and can provide insights grounded in a wealth of knowledge acquired through extensive research and firsthand experience.
Duolingo, founded by Luis von Ahn, the innovative mind behind CAPTCHA and reCAPTCHA, stands out as a revolutionary language-learning tool. The app's success is not only attributable to its gamified approach but also to its ingenious business model, combining elements of crowdsourcing and monetization strategies.
How Duolingo Makes Money:
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Paid Subscriptions: Duolingo generates revenue through premium subscriptions, with about 2% of its vast user base opting for the paid version, contributing to substantial annual revenue.
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Ad Revenue: The free version of Duolingo is ad-supported, allowing the company to capitalize on advertising revenue from users who choose not to subscribe.
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Selling Translation Data: A distinctive aspect of Duolingo's revenue stream is the sale of translation data. Through crowdsourcing, users translate sentences and words, creating a valuable dataset that Duolingo can sell to companies like Buzzfeed and CNN.
Duolingo's Business Model: The Brilliance of Crowdsourcing:
Duolingo's approach to language learning is democratizing education by making it accessible to people across socio-economic classes. The brilliance lies in crowdsourcing, a concept previously explored by von Ahn in reCAPTCHA. Users contribute to the translation of web content while gaining access to free language lessons.
How Duolingo is Funded:
Venture capital has played a pivotal role in Duolingo's journey. Renowned investors such as Ashton Kutcher, Tim Ferriss, Kleiner Perkins, CapitalG, and Union Square Ventures have backed the language-learning platform. The premium subscriptions and the vast user base have contributed to making Duolingo venture capital-backed and cash flow positive.
The Gamification of Learning:
Duolingo's success can be attributed to its gamification approach, making language learning engaging and enjoyable. Similar to popular games like Candy Crush, Duolingo offers virtual rewards, notifications, and progressively challenging levels, creating an immersive and addictive learning experience.
Languages Offered by Duolingo:
Duolingo distinguishes itself by offering a broad spectrum of languages, including both common and uncommon ones. The app supports 36 languages, ranging from widely spoken languages like Spanish and French to unique offerings such as Klingon, Navajo, and Haitian Creole.
Duolingo vs. Competition:
In the competitive landscape of language-learning platforms, Duolingo surpasses its rivals in terms of user base and language offerings. Comparisons with Rosetta Stone and Babbel reveal that Duolingo's free model, coupled with a greater variety of languages, has garnered an active user base exceeding 38 million.
Duolingo for the Greater Good:
Duolingo's mission extends beyond profit, with a philanthropic vision to provide free access to language education. By leveraging crowdsourcing and user-contributed data, Duolingo not only facilitates language learning but also makes the internet more accessible globally.
Duolingo's Financial Performance:
In 2021, Duolingo reported revenue of approximately $250 million, showcasing a significant increase from 2019. Despite not being consistently profitable, Duolingo's financial trajectory reflects its growth and impact on the language learning industry.
In conclusion, Duolingo's unique blend of gamification, crowdsourcing, and monetization strategies has positioned it as a powerhouse in the language-learning domain, with a profound impact on users and the accessibility of education worldwide.
