Duolingo · B2C · language learning app
Keep lessons free and sell learners' translations to news sites
Small revenue; dropped by 2016 (price race and low translation quality)
What they did
What happened
- Stage
- pre-monetization
- Effort
- Built and live for a few years
In their words
Why Your Free Users Are Your Real Growth Engine – Cem Kansu, Duolingo CPO
David BarnardWow.
Cem KansuAnd it actually generated some revenue, even though very small. So we would have customers that are, at the time, the big news outlets as well, like CNN, BuzzFeed, they would feed an article they wanted to translate from English to Spanish.
Cem KansuAnd then our users in bits and pieces would translate that article and we would crowdsource a translated article and then provide a translated article back to CNN. It was actually a genius model. If you want to do something crowdsourced, it's actually, you're serving both sides a positive value.
Cem KansuThe challenge with that model was though is twofold. One of them is translation. Also, this is pre LLMs. Translation now has changed a lot post LLMs, but this is, you have to remember this is 2013 as well. Even then, translation was a race to the bottom business model.
Cem KansuSo if we were providing a service for, I don't know, however three cents, 10 cents, $3, whatever it is, there was always somebody else trying to do it for a little cheaper by having someone in the Philippines translate it for cheaper. So there's always a race to the bottom. It is hard to scale for that reason.
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More from this episode
- Charge $1-3 to fix a broken streakA good share of users paid; showed how much users value their streak
- Show one ad only after a lesson ends, and test it against retentionRetention mostly neutral, at most a slight hit, across ad tests
- Count ad complaints per million users and compare them to other complaintsMissing-course complaints were 3x ad complaints; ads launched
- Block gambling and sketchy ad types, even if it costs revenueAccepted lost ad revenue for better experience; no numbers
- Sell ads directly to brands and have app characters introduce themUsers like the format; slow to sell because it's custom
- Use the end-of-lesson ad slot to advertise your own paid planGuest says house ads beat programmatic ads; no numbers
- Run 3-6 month holdouts for changes whose effects show up lateNew push lifts can turn negative after about 6 weeks
- Sell a one-time ad-free month at $3, $5 or $10 to test demandUptake far above expectations; led to the subscription
- Launch a plan with no ads, offline use, and 'support our mission'About half of early buyers paid to support the app; started a run rate
- Offer a free trial even though the app is already freeOne of the biggest unlocks; guest had expected it to flop
- Tell users on the paywall you'll remind them on day 5 of a 7-day trialWon A/B tests by easing fear of subscription traps
- Change the buy button to say 'Try for $0.00'Beat 'Try for free' on both trial starts and trial-to-paid
- Give subscribers unlimited hearts so mistakes never stop their lessonsBig turning point: raised subscription conversion and retention
- Make paid features free when a test shows they earn littleTook a small revenue hit on purpose to grow free users
- Add new subjects inside the main app instead of launching new appsSeparate apps were 'hard mode'; in-app works better, but many users still don't know
- Offer live human tutors on demand in a higher-priced planFailed: users joined, panicked and left; later replaced by AI video call
Tags: crowdsourcing, business-model, b2b-side-revenue