Babbel turns a profit after dumping freemium model

[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 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.”