italki officially launches its Language Tutoring Marketplace

A few days ago I received an email from Toffler Niemuth of italki.com about their announcement of launching a language tutoring marketplace on their site.

Back in january I already did a brief post about this platform but I think they are a decent alternative to Myngle.com and eduFire.com which are in the same market segment for the asian and indian sector. Therefore, lets have a look what italki offers to teachers and students.

italki is now the fourth platform besides eduFire, Myngle and Livemocha that offers online one-on-one language lessons. What are the differences?

italki started as an online community for language exchange. Up to today they have around 400.000 members. One of the main differences between italki and its competitors is the board of directors and advisors. italki has experienced managers  like Eric Pang, or William Bao Ben as directors and Porter Erisman, former VP of alibaba.com, or Tom Soohoo, former CEO of eLong.com as advisors. This is a huge concentration of business knowledge this start-up can profit by.

italki offers language material for ESL teachers in partnership with languagesoutthere.com as I mentioned in my recent post about partnerships in the education 2.0 market.

A unique thing is the payment system. Students buy ITCs at a rate of $1 = 10 ITC directly from italki. Teachers set their prices in ITCs and get paid by italki on their teacher account. If your account reaches more than 30 ITCs you can withdraw the money to your PayPal account. italki takes a commission of 15%.

The second major difference to its competitors Myngle and eduFire is the that italki makes a difference between professional teachers and tutors. I think this is a great feature to make the choice easier and more comfortable for the students.

An interesting decision of the company is that italki seems to go for the low cost language sector.

Quoting William Bao Ben:
“We have created a platform for educators across the globe to find students and enables students to find teachers and tutors in any language at reasonable fees.”

And Toffler Niemuth:
“It’s also a huge boon for students interested in studying foreign languages.  Many teachers are charging as little as 50 ITC (about US$5) per hour for private 1-on-1 language instruction, which is far less than you’d pay to go to a language school!”

$5 = $4,25 after deducting commission = 3,15 Euro per 60 minutes. I don’t see many European or North American teachers work for this price. Meaning that there might be a market for European students learning at low prices with  Asian or Indian teachers but not the other way around.

That brings me to the last difference. italki is the first platform that announces how many teachers they want to bring into business:

“We aim to create as many as 10,000 part- and full-time jobs through the service by the end of 2009. Anyone can offer their services as a language teacher and earn additional income in these tough economic times.”

With the $5 per 60 minute approach I see these jobs mostly in the Indian / Asian part of the world.

Don’t get me wrong. I still think italki is a great platform. As I already mentioned, I like the design, the functionality and the fact that they distinguish between professinal teachers and tutors very much.

The question is though if they will be able to attract teachers from the European and North American countries if the other teachers offer their services for a price between $5 or $10. But this may also be a deliberate and reasonable business strategy. Speaking for myself I can only say that these prices are not possible for me. I will nevertheless try to offer my services on italki on my normal price level because as italki is a free market place and the teachers set their own rates it might develop differently, too. We will see.

Myngle for example seems to prepare itself and its teachers for the other direction which I will cover in one of my next posts.

Exciting times in education, that’s for sure!

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  • China_Mike

    What an wonderfully friendly, useful interface design! This will appeal to a lot of teachers. I liked the idea of separating tutors and teachers although I wonder about the selection process for professional teachers.

    I wonder if they will be tempted to take the school route at some point in the future like Myngle. Did you find out where they were incorporated?

    The fact that they are advertising such low priced classes might be a real issue in the future. If they advertise this enough they might not be able to attract higher priced instructors. Generally speaking higher priced instructors mean teachers who can sustain a lengthly series of classes. Anyone can teach one class, experience teaches one to string many purpose-filled classes together.

    They say they will create 10,000 jobs. This statement is hard to believe and it greatly depends on what they mean by creating a job. I am surprised no one has called them on this. I would really love to hear how they calculate this figure. It sounds like more advertising bull**** than anything grounded in reality.

    If anyone really wants to understand italki get the book The China Price. This kind of thinking drives a great deal of strategy in China.

  • http://www.kirstenwinkler.com KirstenWinkler

    I don’t think that other platforms will follow the Myngle strategie as it seems to be a step backwards into the old education scheme.

    Another thing is that as soon as the big players in the offline market like Berlitz, Alliance Francaise or Wallstreet Institute will see the potential in online classes and decide to take their courses and teachers online, platforms that “pretend” to be a school don’t have a chance. Especially when there is not one education expert in the management team.
    The strength of these new platforms is the innovation of its teachers. If you press them in a school frame you will lose this part. Which does not necessarily mean that Myngle won’t make profit. I think they will to a certain point.

    If it is a strategic decission to focus on these low cost markets I can only see a perspective for chinese or indian teachers offering their services to european / american students. The question is how big the interest is in learning Hindi, Chinese etc. If there are enough students for 10.000 full- and parttime jobs, I don’t know. Maybe. The quote talks about “additional income in these tough economic times.”

  • China_Mike

    Hmm, the big players are big because they are making good money with off-line classes. Once they walk down the on-line road they face the risk of competing against themselves with lower on-line prices. Kinda of like eating your own young.

    The reason that that entrenched players in some markets don’t try something new is the threat to their existing (profitable) product lines. Clayton Christensen makes references to this interesting effect in his books about disruptive innovation. Established players don’t introduce cheaper innovations out of a desire to protect existing profits.

    I’m not so sure that Myngle is making a mistake moving in the direction of a school. I think perhaps they have decided that is the materials (and quality) that will allow them to distinguish themselves from others not an eBay like business model or a new way to connect teachers and students.

    My feeling is that having iTalki clearly throw their hat into the low-end of the market will speed up this process of conversion to becoming an on-line school.

    • http://www.kirstenwinkler.com KirstenWinkler

      I don’t think that online business equals lower prices compared to the offline business. My prices are the same, online and offline and there was never a discussion about prices.

      It may not be wrong to become a school but only if you have the knowledge and the manpower to do so. As I said Myngle has not one manager with a real background in the education industry. I don’t count “worked for Berlitz”, I mean a manager who designed courses, worked for years as a teacher or something like this.

      And then there is the question of how long these old product lines will still work. There must be a reason why Pearson teamed up with Livemocha. According to a post I read it was Pearson that did the first step after they observed Livemocha for a year.

      With the new e-readers and ebooks there will be a huge shift in this classic market. Combining those devices with online content like tutoring is only the next logic move, I think. Good post on edupirate.com about this: http://www.edupirate.com/2009/03/the-future-of-textbooks-is-online-e-textbooks/

  • China_Mike

    Comparing your income as an individual teacher to the income of a school is, if I may be so bold, the wrong comparison. Comparing the prices of on-line schools to the prices of off-line schools is also the wrong comparison. Comparing the profitability of on-line schools to the profitability of off-line schools is the correct comparison and this is where I think the problem lies.

    Schools who are wedded to an off-line approach may not be able to justify moving on-line to a less profitable model which could negatively impact their off-line brand name and profits.

    Interesting thought about e-textbooks. I don’t see e-books alone having a big impact. The real impact will be when someone gets blended learning right from the start with all the necessary inputs in coordination with perhaps e-books.

    My guess is that these schools are sticking to this like dogs with a bone in the hopes that they can get the content delivery systems and marketing systems “right” and in “balance”. IMHO the endgame for these companies is not creating vast marketplaces for teachers. The endgame is developing excellent content that can be delivered with care and consistency by trained people at a great price.

  • http://www.kirstenwinkler.com KirstenWinkler

    It’s my blog. I can compare what I want ;). Of course I know that this comparison is a bit “basic” but the point is that I don’t see the reason why online always has to go hand in hand with lower prices. Who made up this rule?

    And the only reason I can see why it seems to be a bit odd to take lessons online like we now do offline is that is something new for us. In 10 to 15 years it will be normal, I think even for classic schools or universities. Offline will simply be “old school”.

  • China_Mike

    I know, as a visitor I should watch my step:)

    Not only does on-line go with lower prices but in some instances with free. This is the result of better market clearing power and the benefits of scale.

    Clayton Christensen, who I mentioned above, says, with a confidence backed by calculations,that by 2020 50% of all American high school classes will be taken on-line. The disruptions are coming if he is to be believed.

  • http://edufire.com/gaveston ChrisN

    I agree, Kirsten, that there is no reason why online should be cheaper, nor do I believe that students expect it to be. I also charge the same for my time online as offline, the service I provide being easily as good online as off.

    The benefit for the students is that they can opt for less than my standard 90 minute session, and some initially think 45 or 60 is right for them. After a couple of weeks they settle on my recommended 75 minutes, for which of course they pay more.

    It may be that there are “free” lessons available online (and I’ve been known to offer them myself), but surely every student appreciates that these free lessons can hardly be compared to the tailor-made, customised lessons they get for money…

  • China_Mike

    Chris, I am not arguing that on-line prices should be cheaper I am arguing that in the long run, on average, due to increased competition, prices will be cheaper.

    Now, this doesn’t mean this price pressure will effect every individual. Premium products are resistant to pricing pressures. The question is however, what will a premium product look like on-line? How will a teacher or company signal to his/her customers that they are providing a premium product?

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    Everything available online has the ability to be cheaper.