What is your association with the magic numbers 2.0? Social Media, networking, chatting and, of course, no cost or at least freemium.
Well, not anymore. At least not in education. With the launch of Babbel 2.0 the company says “Good bye” to freemium and “Hello” to advertising free premium services.
Markus Witte, the Managing Director of Babbel wrote a long and detailed blog post on this decision that will of course heat up some discussions between the free users of the platform. First reactions of other companies like VidSchool and busuu on TechCrunch Europe blog are not what one would call “shocked”.
To quote Markus Witte:
[...] we have no real role model we can emulate or by whom we can “be inspired”. It’s pioneering work, and it requires expertise to be constantly rethought and redone.
I think this is true for every company in the online education sector but Babbel is now of course going even a step further by leaving the freemium path and entering the terra incognita of paid services. But wait. Isn’t there a native tribe on this new continent?
Of course there is. Like Columbus did not discover an empty world the paid online language learning platform is already occupied by Rosetta Stone. So infact, Babbel has somekind of a role model now.
Nevertheless I think it is a courageous step to change your business model in a radical way like this. Basically Babbel is now rebooting their whole community, starting new from scratch. Of course this time it will be easier than two years ago. They now have two years of experience, they have a complete product and they have two years of data. But a community built on the idea that the service is freemium cannot be totally converted into a paying one, at least I would be very suprised.
Since the beginning Babbel have focused very much on the usability and the design of the product. This concept can also be seen in the Babbel commercial below.
And as you know, Babbel was even nominated at the European TechCrunch Awards for their website design. So there has always been a premium feeling included in the product which did not quite fit the freemium idea. They will also strongly focus on the technology itself as the content will be more and more provided by renown publishers from now on which again is a parallel to the Rosetta Stone concept. Quoting Markus Witte:
Our idea is to create a new kind of online learning system that adjusts itself to the needs of the learner and makes it easy to comprehend new subject matter without too much effort. [...]
To significantly improve our service and to approach that user-centered learning environment we’re dreaming of, we’ve put together an extensive team of professionals from different disciplines. Software developers and internet specialists work side by side with more than 20 teachers and language experts. Simultaneously, we are striving to make this complex application easy to use and more or less imperceptible behind the content.
Generally, I think it is possible to sell a premium language course online. But the new pricing of Babbel does not fit this idea and the look. 4,95€ to 8,95€ per month do not look premium. The price looks (and feels), for the lack of a better word, cheap. So, as the step itself of going totally premium is courageous the realisation is inconsistent. It is as if Babbel wants to leave a door open for some of the old community members to jump on the new model. But I don’t think that this is likely to happen.
There are a couple of reasons for this. One is simple but has a big effect when buying things: guts. As I said, the price does not match the promise. If everything is so great and the material is from big publishers and there is no advertising in the program then why aren’t they able to sell it for a higher price? Where is the catch? And even if there is none, people simply won’t trust it and therefore don’t hit the “buy now” button. To my mind a service like this has to charge at least 19.95€ per month up to 49.95€ per month.
And that is because the second important factor is that this new product is made for a totally different customer group. The freemium model attracts people who might have an interest in learning a language at some point in their life but they are not super focused in achieving this goal. Contrarily they are happy about every distraction they can get. That’s why they chose a community based model where they can chat and learn a bit. And if they get stuck with their Mandarin, they start some Icelandic. You might want to call them casual learners who visit the platform not for a fixed goal but for the social factor.
The new Babbel model like the Rosetta Stone model is focused on the language learner who really wants / needs to learn a new language. This means there is a clear goal and a fixed schedule. I contrast to the community member this learner is focused and only uses the service to achieve the goal. This user is also most likely a lone warrior who does not need the support and distraction of a community. Hence there are no emotional attachments, it’s just a service the user pays for. And this means after the user accomplished his / her goal, he / she leaves and stops paying.
That means the drop rate for the new Babbel 2.0 will be higher than before. If the social glue is missing there is only the mission left. My prediction is that most users will use Babbel 2.0 for about three to six months. Therefore Babbel needs to make the same amount of money in a shorter time plus if you take into consideration that the customer might not return after the personal goal has been accomplished you have to add this into your calculation, too.
Bottom line: I do think there is a market for Babbel 2.0 but I would recommend to burn down all the bridges. No regrets. If you want to be premium, and the Babbel product has all the potential to be premium, you have to charge premium. Otherwise people will spend too much time searching for the catch instead of starting to learn.