When Startups monetize! Babbel switches on paid courses

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Babbel – the language learning site emanating from Germany – releases it’s first premium product tomorrow. It’s the first sign of their business model and begins their monetization. I’m told the objective is to establish a “freemium” model with a free basic version and payed premium products on top.

So far the site has around 250,000 registered users since launch in January 2008 and is growing mainly in Europe and North Africa. Babbel offers 5 languages that can be used both as reference and learning languages: English, Spanish, French, Italian and German.

An example of this is the Spanish course it will offer (for German speakers) which will be priced 19 Euro (for a single payment). This has unlimited use for 3 months guaranteed with, crucially, a money-back garantee for 20 days. This single payment model differs from the subscription models of other sites and the idea is to make costs more transparent for the customer. The trouble with language courses is that you can pay through the nose for a lot of courses and then just not use everything. Other aspects of the site are likely to remain free for a while, such as vocabulary trainers, writing exercises and all community features as live chat, message boards, internal mail.

This is the first course to be monetised, but clearly Babbel are testing the water to see what happens with this and how the other courses will fair. When startups monetise they often lose users.

However, co-founder Markus Witte tells me “We’re not switching, premium products are an add-on. The site stays free. We’ll loose nobody.”

Babbel has backing from German investors Kizoo and VC Fonds Berlin, although it’s understood to be less than a million euros.

Members of the Ruby on Rails-driven Babbel teach each other via an Adobe Flash/Flex interface. The shtick behind Babbel is that it has a design inspired by a game console, incorporating user-generated images and human voices into the teaching, like shopping or flirting.

Competitors to Babbel are myriad but many have a differing take on language learning. Mango Languages, which launched in September of 2007, offers ten languages. LiveMocha also features social networking. LingQ, offers vocabulary and grammar drills. Babbel bought FriendsAbroad, while VoxSwap has video services and integrates Skype. And Learn10 puts language practice into a widget.

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