Babbel turns a profit after dumping freemium model

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[Germany] With the revelation last week that the incredibly well funded social networking service Ning was dumping its freemium model to move to a paid-for only offering, it’s perhaps a good time to re-visit European startup Babbel.

The Berlin-based language learning site took a similar decision back in November 09, announcing that its then 500,000 users would have to pay up or… you get the idea. Five months on, however, and the decision appears to have been vindicated. Babbel is reporting a Q1 profit for the first time in the company’s history.

“Sales in the first quarter were significantly above plan and now the company is slightly cash-positive a lot sooner than we hoped”, confirms managing director Markus Witte.

Something, he says, likely sets Babbel apart from its immediate competitors, which include Livemocha and busuu. “Our competitors didn’t disclose any figures yet but I doubt that any of them can say the same.”

Babbel won’t, however, disclose how many paying customers it has but tells us that sales of subscriptions since November are in the five-figures. “We’re happy that paying users tend to stay with us and that the churn rate is relatively low”, says Witte.

Cash-flow positive or not, Babbel isn’t resting on its laurels. Most notably this month it finally brought its vocabulary trainer to the iPhone.

The app, which was built in collaboration with German software company Aspirement, comes in a number of different flavours depending on which language the user wants to learn — Spanish, French, German, Italian, Brazilian Portuguese, Swedish, or English. These can either be bought for a one-off fee as a stand-alone app (€5.99 or $7.99) independent of the Babbel.com service, or used for free as part of an existing subscription. It’s quite a clever model in that it lowers the barrier for casual language learners on-the-go, while adding value for more committed learners. The Babbel Mobile iPhone app also offers a free trial.

In another sign of going multi-platform, beyond a purely web-based offering, Babbel has introduced a Windows/Mac desktop app built using Adobe Air that prompts subscribers to refresh their vocabulary knowledge based on previous Babbel usage. The thinking behind Babbel Refresh is to help motivate learners — a sort of Mr Motivator for language learning. It analyzes the learner’s progress, and calculates what should be revised next. The user can adjust the interval of Babbel Refresh reminders according to their own learning routine.

“Babbel is more than just a website,” says Witte. “With this type of independent learning management, Babbel is one of the most up-to-date and comprehensive language learning systems around. The combination of technology, high quality content and innovative teaching methods make Babbel very unique.”

  • http://www.kirstenwinkler.com Kirsten Winkler

    An education 2.0 company that actually makes profit. And I thought this is a contradiction in itself :).

    Well done, proves that old business models worked so long for a reason.

  • http://www.deutsche-startups.de/2010/04/27/lesenswert-google-top-locations-gbanga-womensnet-de-smatch-3daystartup-facebook-babbel/ Lesenswert: Google-Top-Locations, Gbanga, Womensnet.de, Smatch, 3DayStartup, Facebook, Babbel :: deutsche-startups.de

    […] Babbel turns a profit after dumping freemium model With the revelation last week that the incredibly well funded social networking service Ning was dumping its freemium model to move to a paid-for only offering, it’s perhaps a good time to re-visit European startup Babbel. TechCrunch […]

  • Dirk

    Congrats guys, actually one of the most congenial German start-ups out there.

  • http://eu.techcrunch.com/2010/06/23/babbel-introduces-speech-recognition-to-aid-language-learning/ Babbel introduces speech recognition to aid language learning

    […] mark. It doesn’t, of course, disclose how many of those users are paying customers but does claim to be profitable since dumping its freemium model in November […]

  • http://www.sesligoruntulu.com albüm dinle

    haydaa yine kabul etmedi esaji neden bole yapioo ..

  • http://eu.techcrunch.com/2011/04/21/busuu-raises-angel-round-from-fon-founder-martin-varsavsky/ Busuu raises Angel round from FON-founder Martin Varsavsky

    […] although it’s worth noting that Babbel made its own cash-positive claims a year ago after dumping its freemium model in favor of a paid-for offering […]

  • http://eu.techcrunch.com/2011/06/15/babbel-adds-indonesian-polish-turkish-and-dutch-to-its-language-learning-lineup/ Babbel adds Indonesian, Polish, Turkish and Dutch to its language learning lineup

    […] company says that the new languages, which inline with Babbel’s premium model costs €3.30 a month via a three month subscription or free for a single lesson, will be […]

  • http://jetlib.com/news/2011/04/21/busuu-raises-angel-round-from-fon-founder-martin-varsavsky/ Busuu Raises Angel Round From Fon-Founder Martin Varsavsky | JetLib News

    […] although it’s worth noting that Babbel made its own cash-positive claims a year ago after dumping its freemium model in favor of a paid-for offering […]

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